Airbnb for income and some things you need to know about it.
Since it’s inception, Airbnb has grown rapidly and millions of people now earn money as part-time hosts. Some folks rent out their personal living space when they travel, and others rent out a room or basement apartment in their primary residence. I am an owner-occupant landlord with a four-family property. I live in one unit, rent two other units to long term tenants and the fourth is the Airbnb or STR (short-term rental). The short-term rental isquite a bit of work and can be frustrating too, but I’ve found that it helps pay the bills and offers flexibility that owner-occupant landlords may appreciate.
Overall the income potential for my STR is approximately 25% to 50% greater than what it is for simply renting an apartment (this may not be the case in all parts of the country).
These are the main issues I have found over 4 years of being a host:
It can be seasonal - the busy season here in Denver is May through October. The other months can be mostly vacant.
It requires cleaning and turnover, sometimes rapidly. If you have a guest check out at 11am, and you need the unit turned (cleaned, restocked) on a weekend, that can be a scramble.
Laundry - there are several options - do it yourself, pay your cleaners or use a laundry service to handle it. Regardless of the choice, it still requires keeping track of it and making sure that the laundry is properly done, looks good and smells fresh. Towels can wear out and guests may damage them.
A big issue I have with Airbnb is that they will “verify“a guest using only a phone number or an email address. In my humble opinion, that’s not adequate. Whenever I check-in at a hotel, I am required to provide a drivers license or other government ID. I believe that should be the minimum standard. There is some risk that the person showing up to inhabit the unit is not the person who you think you are renting to. I have had that happen. It is against Airbnb policy to rent a unit for another person, but it occurs.
People may be coming and going into the wee hours of the morning. If you live in the property that has the Airbnb, they may wake you up coming in a common entrance foyer. When Taylor Swift came to town last summer, people flew to Denver just to see her, and Airbnb rentals were booked solid. Sometimes concerts run late and people may be out for a drink afterwards and so may not come in until 2 AM in the morning. If they’re walking up steps and being noisy, that can be annoying. You want be sure that the guests have high ratings from past Airbnb hosts. Want quiet guests? There’s nothing wrong with renting the 55+ crowd only. I’ve done it at times over the years and I prefer it, because the older guests (like me) tend to go to sleep at reasonable hours.
Licensing, inspections, and taxes - some cities require licensing (and license fees) and a property inspection and have a lodging tax that has to be collected. Other cities restrict Airbnbs, allowing only a few, or none at all. Be sure to check the legal requirements in your town - many cities have a specific Facebook page for the local Airbnb operators group and you can pick up some good info there.
You can expect that there’s going to be above average wear and tear on the apartment and be prepared to have the carpet cleaned annually as well as regular painting touch up and other issues. You probably spent a couple hundred thousand dollars on your apartment, so you should keep an eye on your property. If you use a management company to handle rental, bookings and turnover, you still want to check up on them regularly. They might be a great company, but it’s not their property that they are renting.
On the plus side, Airbnb provides some insurance coverage. The income (minus the various fees and taxes) goes into your bank account about 24 hours after the guest checks in. That’s a very nice feature. Airbnb handles the credit cards and bookings. In Denver, Airbnb collects the 10% lodging tax and remits that directly to the city, although hosts must file quarterly tax reports.
Startup costs are nominal. Adding a keyless lock, and fresh linens to an empty apartment may be all that you need. If additional furniture is required, I’d look on Facebook marketplace. I prefer my own lockable and private space to live in, so if you don’t have a spare bedroom with its own bath and private entrance, you might have to invest some money to separate it.
Another benefit is that the Airbnb is also the apartment that my kids and friends stay in when they come to visit me, but can be income-producing when family is not here. When I have family coming I simply block those days off my Airbnb calendar. I also block days when I travel, as I don’t want guests in the unit when I’m not around. I lose some money doing that, but it’s my preference. You can see some pictures of my Airbnb here - it’s decorated and themed for the Denver Botanic Gardens, one of Denver’s biggest attractions.
I’ve been a host for four years and I like the income. It helps pay the costs of ownership of my house – and helps me keep up with soaring property taxes and rising home insurance costs. Additionally, it adds a little structure and purpose to my semi-retired senior years. While I never get to meet most of my guests, occasionally I do - and it can be pleasant to have a conversation.
In short, an Airbnb can be an excellent source of supplemental income for any homeowner, but it definitely requires work, possibly licensing and a city inspection, and a modest investment in getting it set up and going.
Overall, I definitely recommend it to any homeowner looking for some extra income.
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