How To Make Extra Cash From Your Rental on Airbnb
Airbnb actually now has more listing than hotels have rooms!
Short-term rentals have become a booming business for people looking to make a little extra money. Online platforms like Airbnb have seen an explosion of property owners listing their properties. The rapid growth stems from travelers now opting for short-term rentals over hotels for a more personal and private experience. Airbnb actually now has more listing than hotels have rooms!
What started out as homeowners renting out extra space(s) in the homes, has turned into landlords renting out entire houses as short-term, furnished spaces. Many landlords are making significantly more money per month with short-term rentals than traditional rentals.
How Does Airbnb Work?
Airbnb serves as a broker between a property owner (host) and the guest. They don’t own or manage any of the property listings, but simply pair travelers and hosts through its platform for a fee. After opening a free account, you list your rental property with an enticing description and lots of photos.
Renting your space for extra money means it’s a business, whether full-time or a side gig. Which means you’ll need to report the income, but since you’re running it like a business, you can also deduct expenses as well — everything from the Airbnb fees to toiletries. Also, if your renting only a portion of your property, it can be treated similarly to a home office. You can deduct a prorated portion of all the property’s expenses, based on square footage, like depreciation, taxes, and insurance. We do recommend getting advice from a tax professional regarding this.
Managing Your Airbnb Rental Property
1) Location, Location, Location. Just as with any real estate investment, where your property is located will affect several factors. Vacancies will fluctuate, and pricing will reflect demand. Seasonal vacations properties will have a natural ebb and flow while properties in popular metropolitan areas may have more consistent traffic.
2) Check your local ordinances, as short-term rentals are illegal in some areas. You may need to register your property, apply for a permit, and meet code requirements. With the popularity of such online platforms, cities are pushing for legislation to regulate what has been up until now, very much a free-for-all. One critical point for property owners is what constitutes a “short-term rental.” The issue here is, if a guest stays for too many consecutive days, they can be considered tenants. With that, a whole set of laws kick in like eviction and squatters rights. You need to research this in your city and be aware of the laws.
3) Depending on your situation, you may want to consider hiring a property manager. Your guests are choosing your property because they prefer an Airbnb over hotels. Airbnb spaces are often cheaper, give a better local experience, and can offer more privacy. But, treating your Airbnb like a business requires a significant time investment — communicating with interested prospects and responding to guests can take up more than several hours per week. Then there’s keeping your property in tip-top shape, regular cleanings, providing clean sheets, toiletries, snacks, etc. If you don’t have time for all these issues, hire a professional to manage it for you.
Deciding to start Airbnb-ing your property requires a different strategy than more traditional rentals. If your properties are regularly occupied, you will need to invest more time into maintaining it based on guest turnover. The short-term rental market can be very lucrative, and with the right plan, can make a great addition to your real estate investment portfolio.