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What to Know Before Becoming an Airbnb Host

Written by Posted On Monday, 04 February 2019 11:20
What to Know Before Becoming an Airbnb Host

Airbnb is an exploding part of the gig economy. Since its inception, many people have been making money in some form or another from the Airbnb ecosystem. Whether you are an Airbnb host, co-host or someone who provides services around Airbnb listings, there is much money to be made in this segment of the hospitality industry.

 

As a real estate investor and personal finance writer who also covers entrepreneurship, I became curious about becoming an Airbnb host myself. So, naturally, I decided to see what all the fuss was about.  What started out as an experiment has led to a pretty consistent, lucrative stream of income for my family.

 

Airbnb hosting is not guaranteed, automatic income. But it's something that every serious real estate investor should explore. Before you get started with Airbnb, here are some things that you should know to help make your Airbnb business a success.

 

Find out what you can make in your area

This should be your first order of business if you are considering becoming an Airbnb host.  Before you invest the time, energy and even money to start an Airbnb business, you want to know if you will actually make money and if your revenue will mean profitability.

 

You can do research by going to the Airbnb website and finding out how much money you could earn per month based on the location of your property. The Airbnb hosting calculator (referral link) will give you a ballpark figure of what you could earn as a host in your area.

 

Keep in mind that these are mere estimates and actual earnings will depend on a number of factors such as the type of property you will be renting out, seasonal demand, and how your property might compare with nearby competitors.

 

Aside from the Airbnb calculator, you can also do your own research by simply creating an Airbnb account as a traveler and researching listings that are in your neighborhood or ZIP code. The search results will give you an idea of rates that you can expect to garner for your own Airbnb rental.

Treat your Airbnb like a real business

Not everyone wants to make Airbnb hosting their main source of income, but there can still be benefits to treating it like a real business.  For instance, when you report your Airbnb earnings as income, you can receive some tax benefits on some expenses you may incur as an Airbnb host.

 

For example, we purchase snacks, nick-nacks and even furnishings for some of our Airbnb listings. Because we have a business entity (though it's not required to get the tax benefits)  we are able to deduct some of these expenses from our income.

 

Another neat side effect of treating our Airbnb like a business is that we were able to open a business credit card. With this card, we got a great introductory 0% APR, a cashback bonus after meeting a spending requirement, plus rewards points we can cash in for money or for travel.

 

It's nice to be able to get these extra perks as business owners because they certainly help with some of our money-related goals. Plus, these benefits help us meet personal goals like traveling more or using the extra cash to balance out our budget.

 

Start small, then go big

Before you go purchasing an entire, separate property for your Airbnb business, you should consider testing the waters by renting out a spare room in your own home or even leasing property as an Airbnb rental arbitrage strategy.  

 

With the latter, you don't actually have to own a property to be an Airbnb host. There are a growing number of hosts who are leasing properties from landlords for the sole purpose of letting them out on Airbnb. You could do this, too.

 

As you can see, these are some ways to test the Airbnb waters without exposing yourself to too much risk in the process.

Do your research

The good news is that there are several resources on the web where other Airbnb hosts share helpful insights like Airbnb hosting tips and Airbnb checklists so you don't have to reinvent the wheel. There are Facebook groups for Airbnb hosts and short-term rental landlords that you can take advantage of as well. Don't forget useful real estate forums and websites like Realty Times, too.

 

Becoming an Airbnb host is more than a notion.  Even though the barriers to entry are pretty low, the hosts that do well will treat their listing as a real business and aim to deliver a superior hosting experience every time. Happy hosting!

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Aja McClanahan

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