Maybe you are having difficulty selling your home, or maybe you are having second thoughts about selling it at all—but you still need to cover maintenance costs and you would like to make a profit. Airbnb is a platform that allows homeowners to list rooms for short-term rental in their home or the entire home, apartment, or other type of property.
If you think being a host on Airbnb is something you can dip into while waiting for your home to sell or that using this service will be easier than simply finding a long-term, tenant, you might want to do a bit more research—it’s possible you don’t have the mindset to be an Airbnb host. However, if you are interested in business matters, and are willing to spend some time and make a commitment, the potential financial benefits are great.
Listing your home is free and the Airbnb website is easy to use. You upload photos, set rental terms, write accurate but appealing descriptions, and write an eye-catching title for your listing. You need not make your home available year-round, but can specify dates when guests may stay.
After that, you're ready to interface with potential guests--of which there could be many. Airbnb has now been around for enough years that customers feel good about its reputation for providing travel accommodations. The Airbnb system also processes guest payments (minus a 3% to 5% service fee) and remits the money to you—by way of your preferred payment method—after the guest has checked in.
Airbnb also has an online help desk that will answer questions and assist with decisions such as setting a rental fee or determining what local taxes and rules may apply.
If you don’t have time for day-to-day management (for example, if you’ll be moving out of state), Airbnb contracts with a third-party host service. It will (for a fee) provide services like restocking essential supplies, cleaning, corresponding with guests, and handling issues that arise during a guest’s stay.
Your account also comes with something called a “host guarantee”. This is a form of insurance, covering up to $1 million of damage caused by guests (over and above whatever security deposit you might charge them). This is not, however, anywhere’s near a substitute for a homeowners’ insurance policy.
The usual pricing structure of short-term, night-by-night stays means that you have the potential to earn more per month than you would if you simply rented your house or room to one tenant on a long-term basis. Research your local rental market, which will dictate the going rates for monthly and nightly rental stays. When determining rental rates and your likely profits, be sure to also account for the cost of vacancies, which are an inevitable part of renting out a home.
Here is where the commitment comes in: To be a truly good host, you want to offer more than just the basics. Airbnb lists standards that hosts must comply with when offering property for rental. These are ones typically expected of regular B&B hosts and landlords—availability to answer guests’ questions, provision of clean and safe accommodations, a smooth check-in and check-out process, and accurate advertising and description of the property.
But part of the benefit of listing on Airbnb is that you can maximize your earnings while having the safety of operating through an accredited business. And to fully access that benefit, you need to do more than just tidy up your home.
You’ll want to clean, decorate, and perhaps update your home to make it feel inviting. Extra finishing touches—nice linens, guest robes, a few coffee table books, big screen television, Wi-Fi access, a new sofa, and a fresh coat of paint—can make a big difference. Also think about offering coffee, pastries, bottled water, fresh fruit, and flowers. You will also want to courteously respond to all potential guest and guest emails and be available to address questions and issues that arise.
You will need to look into what state and local rules, taxes, fees, and permit requirements apply to renting out your home on Airbnb. Short-term rentals are typically subject to the same rules as hotels and or inns—that is, buildings used for commercial property.
First, check to see whether the zoning laws in the area where you live permit short-term rentals—some don't. And some permit short term rentals only when the owner is on the premises, which may not fit your future plans.
Also, you may have to obtain a permit to use your home in this way, and pass an inspection.
If you live in an apartment that is rent controlled, you may be limited in the amount you can charge guests. When you consider this and other fees and taxes that apply, turning your home into a short-term rental may be more costly than the potential benefit.
You will also have to register to pay state and local sales and occupancy taxes—unless you live in one of the few states where you are exempt from these taxes. The rules vary according to jurisdiction, but such taxes are ordinarily remitted on a monthly or quarterly basis and are in addition to federal taxes owed for rental income.
When you rent your home for a period of time greater than 15 days per year, you will have to pay tax on the money earned from those rentals. Expenses that you incur to clean, prepare your home for rental, and buy other sundries and supplies may be deducted from the rental income you earn.
Check in with your accountant and your relevant state agency for more information, and see Legal Restrictions to Renting Your Home on Airbnb or Other Rental Services.
If you live in an apartment, coop, or condo, community rules may also apply. Make sure you check with your homeowner’s association or other management entity about its rules for subletting or allowing Airbnb rental. It’s common for community associations to limit such uses, so as to maintain a stable population and avoid neighbor complaints.
There are always risks when renting out property. The first and most obvious is that you may not find enough guests to stay in your place, in which case you will have invested time and money for little return. Or, a guest may cancel last minute, or arrive and then leave a bad review, leading to a drop in demand.
Careless guests might also damage, or at least add to the wear and tear on your furnishings, carpets, appliances, and fixtures. Airbnb’s host guarantee offers some protection against damage, but dealing with this can be a bother, and some items may be difficult to replace.
There is also a risk that someone may extend his or her stay long past what you had in mind. By carefully screening your guests you'll have some sense of their trustworthiness, but surprises happen. It is wise to take a few precautionary steps to protect yourself. Using Airbnb’s payment processing system, as long as the guest remains, Airbnb will continue to charge the person and deal with collection issues.
In any case, it’s best to limit potential guest stays to less than 30 days (or less than the minimum number of days to become a tenant under your state’s law). If a guest has been in the home for 30 days or more, some states may consider the guest a tenant, in which case landlord-tenant laws will apply and you will have to go to court to formally evict the guest.
As long as your guest is not a tenant, you can ask him or her to leave and the person will have no legal right to stay. If a guest still refuses to leave, contact Airbnb for assistance.
If you choose to have a guest for longer than 30 days, it is wise to have the person sign a contract at the time of check in.