Home-sharing sites like Airbnb have transformed the idea of “stranger danger” into a gold standard among homeowners. The idea of renting out your home for a few days is currently practiced by more than 3 million people worldwide. The concept began as an attractive option for those who spent a lot of time away from home. Being in nearly 65,000 markets makes it attractive for those seeking to expand their cultural knowledge.
Of course, there are risks that come with inviting strangers into your home. There’s also the influx of strict sanctions from local officials in several highly-traveled locations like New York City who are cracking down on Airbnb listings. Recently the city issued thousands of dollars in fines to many residents who were unaware they were operating illegally. The bottom line is: When considering renting out your home, the outcome can boil down to a few key factors.
Airbnb: The Pros of Home Sharing
The streamlined process of posting your pad is fairly simple. The website walks you through the process, from home pricing to bookings, payment setup and legal processes.
Airbnb hosts list their properties – from single rooms to houseboats and even a castle – on the Airbnb website. You decide when to make your space available and at what price. It’s free to create a listing, and hosts decide how much to charge. Hosts can use each listing to promote properties through titles, descriptions, photographs with captions and a user profile.
Airbnb provides these services in exchange for a 3 percent fee for payment processing. Your guests pay Airbnb’s 6 to 12 percent booking fees.
The service has granted income opportunities for both experienced property managers and ordinary people. Anyone can become their own boss. Families are able to keep their homes in tough times by renting out an extra room. Mothers can stay home with their newborns with a little financial help from Airbnb. Some hosts claim earnings up to six figures.
Then there’s the extra security that comes from providing feedback, both as a guest and host. Granted, it may not be as effective as installing security cameras. But it provides some sense of whether someone will be nice and polite or trash the place.
Airbnb: The Cons of Home Sharing
The majority of current hosts will agree it isn’t as easy as it sounds. The biggest risk comes from owning property that may get damaged.
While most transactions occur without incident, some hosts have fallen victim to severe cases of vandalism. In San Francisco, a woman returned from vacation to a bizarrely destroyed apartment. A man in Oakland came home to a drug-related disaster. In Stockholm, two ladies returned to discover their home being used as a brothel.
While Airbnb states on its website that you’re unlikely to experience any issues with property damage, their Host Guarantee program provides protection for up to $1,000,000 in damages to covered property. This covers all possessions including cash, rare artwork, jewelry and pets.
Even though Airbnb has grown by leaps and bounds, there are still markets that just don’t have enough demand to support hosting. Make sure to find out if your town or building allows for short-term rentals — many cities and homeowners associations prohibit them.
The website won’t indicate whether you’re complying with local laws. It’s your responsibility to know the regulations.
One of the biggest issues hosts could face is a tax bill. The amounts vary based on how much you earn. You may receive a tax form if Airbnb lists your property.
It is your responsibility to report earnings when filing your tax return. This is relevant even to those who don’t receive any documents. It should also play a role when weighing your overall costs versus potential earnings.
Time can be an issue for those already balancing a full-time job and family. HomeAway estimates that people with a vacation home spend an average of 8.4 hours every week trying to market and manage it. This includes the few hours of prep prior to arrival and following departure, and staying connected to the needs of both prospective and current guests.
This also doesn’t account for the additional amount of time and money required at the beginning when preparing your space. This includes compiling pertinent information and investing in additional household goods.
Airbnb: The Pros of Providing Top Guest Experiences
Success in becoming an Airbnb host isn’t just about following the nuts and bolts of short-term rental rules and regulations. In reality, it’s more about the time guests spend at your home.
Being a stranger in a person’s home, especially if traveling to a foreign country, can be stressful. Make sure to avoid certain situations as a host. This includes running out of toilet paper, not providing a spare key, showing up unannounced, and not having towels.
Guests, especially those not acclimated to your area’s climate, shouldn’t have their vacations disrupted due to indoor allergies. Make sure your home is clean and organized. This doesn’t mean your standard cleanup and quick wipe down. Dust, vacuum and pick up your pet dander.
It’s important to have a clear target audience from the start. Identifying your market will help you reduce vacancy and position your rental unit for success. For example, if you live in a high-rise condominium in Los Angeles, California’s Financial District will probably not attract a family of four looking to spend the week on a Disneyland® adventure.
Your neighbors are another factor that plays a large part of hosting on Airbnb. The reaction when (not if) varies greatly by city and neighborhood. If your city already has many angry neighbors petitioning the council to ban or restrict Airbnb, you’ll want to extra careful before listing your unit.
Airbnb: The Bottom Line
Airbnb has provided an additional means of earned income that wasn’t offered to people a few years ago.
These opportunities come with both risk and reward. It’s up to you to decide your comfort level when it comes to working around unclear laws, sharing valuables with strangers and taking on legal liability. Then again, if you’re willing, you could end up with thousands of extra dollars.