In the past few months, I’ve noticed a number of my friends listing rooms in their home or their entire home on Airbnb. Much of this has to do with the fact that we live in the Washington, DC area, and this week, there are a lot of visitors coming in from out of town for Inauguration related activities. Hotels in the area can be very expensive, so this seems like a great way to provide reasonably priced accommodations while making a bit of money.
But is it worth it to you? What does it take to be an Airbnb host?
First off, it helps if you live in an area people want to visit. Sure, people visit just about every town around the world, coming in to visit family or friends who may not have room to host them. But certain places are much more likely to have successful Airbnb rentals. Do you live in or near a big city? Do you live in a vacation destination? Those are all very helpful things in determining whether or not your Airbnb will be booked.
Next, make sure it’s legal. If you live in an apartment or condo building, even if you own your condo, you may not be allowed to lease out your space per the building rules. Finally, check your local laws. A search on Google showed me that technically, in my county, rentals of less than 30 days are illegal. Are there still places in my area that are listed as available to rent? Yes. I’m not sure how that works out, but the last thing I want to do is rent out my space and then have to cancel last minute or pay a penalty for renting my space.
So you think you’ve got the permissions you need and you live in a good area. What next? Figure out what you’re renting! Do you have an extra bedroom in your home you’re willing to share with guests? Do you travel for work and have the opportunity to rent out your entire home while you’re gone? Both of these options have plusses and minuses. Obviously, if you’re renting a room, you have the ability to be around and make sure that your guests aren’t getting into trouble. Renting a room is also much cheaper, so you might have more takers. That said, you’ll also be making less money and you’ll be sharing your space with a stranger.
Renting your whole house is probably more profitable. But are you ready to open up your home to strangers? Airbnb does have some good policies in place to protect you if something goes wrong (which you should read in full before making your decision), but you still need to remember to lock up all of your valuables. And if you have pets, what are you going to do with them while your guests are there? Plenty of people rent out their homes with pets (typically cats) present in the house. (Personally, I’d be too worried about something happening to one of my cats. Not purposeful injury, of course, but something like the cat slipping unnoticed out the door.)
You also need to be ready to help out your guests if they need anything. You know how if something goes wrong in a hotel, you can call the front desk and they will come fix what you need? That’s a necessity for Airbnb too. So if you’re renting while out of town, you’ll need to have a friend on call to help out.
You also need to be sure that your place is in good condition for your guests. That means you need to clean! You can charge a cleaning fee as part of your rental agreement, but you do have to provide a clean, safe space for your guests.
Finally, don’t forget about the tax implications. No, good old Uncle Sam isn’t going to let you just rent out your home and not pay any taxes on the income. Be aware of your responsibilities when it comes to both federal and state taxes.
Still not sure? Take a look at Airbnb. See what’s available to rent in your area. Check out what your neighbors are charging and decide if it’s worth it to you. Personally, I’m much too paranoid to open up my home to strangers, but I’m happy to stay in Airbnbs when I travel, and I’ve never had any issue with my hosts.
For other ways to make money on the side, that doesn’t involve opening up your house to strangers, check out these articles.
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.