The dream (and business) of adding flexible rental income or becoming a bed and breakfast host is more attainable than ever. Thanks to the revolutionary Internet “gig economy”, the investment, commitment and risks of finding and hosting short-term guests at your property have shrunk dramatically. With popular online short-term rental services like Airbnb, you can be earning a side income while meeting people from across the country and world in no time. Even if it’s easier than ever, opening up your property to unfamiliar guests is a big step with a number of potential pitfalls. Here are some dos and don’ts to consider before you join the gig economy as a host.
Do be sure hosting is right for you
It may be tempting to turn on the income spigot for your room, home or portfolio of properties, but hosting is not for everyone. The demands of taking bookings, screening guests, checking people in and out, housekeeping and responding to other guest needs can be more than some people bargain for. It’s also easy to overestimate your expected income without taking into full account market rates, expenses (fees, taxes, supplies, maintenance, housekeeping/management services, etc.) and your own time investment. Be sure you thoroughly research and consider everything you’ll have to put in and what you can reasonably expect to get out of hosting.
Do research and compare your options
Airbnb is the largest and best-known of the gig economy’s short-term rental services, but it’s hardly the only option for listing your home. VRBO, HomeAway and FlipKey are three popular alternatives, and there are other smaller, niche offerings as well. You can typically list your home through multiple services to maximize its visibility. Be sure you understand the rules, fee structures and insurance coverage of each service before you sign up.
Don’t violate laws or HOA rules
Before you list your property and begin taking bookings, be sure that your local government and your homeowner association (if any) allow the practice. Don’t rely on the specific service you use to inform you of the laws or rules that may impact your situation. Your city may require a registration, permit, license and/or tax if you use services like Airbnb as a host. If you’re part of a homeowner association, condo association or co-op board, ensure that their rules allow you to use your property in this manner. Also, rental income is taxable income, so don’t forget to pay any relevant taxes, regardless of whether your service of choice provides you with any tax forms.*
Do respect your neighbors’ interests
It’s usually a good idea and always a good courtesy to keep your neighbors’ interests in mind when renting out your home. A stream of unfamiliar guests through a neighborhood or building can be concerning to some, and even well-behaved visitors can create extra traffic, noise and inconveniences. Especially since some services allow neighbors to lodge complaints against hosts, it’s in your favor to be considerate to all parties. You should inform your neighbors of your plans – if not ask for their permission – before you begin accepting guests. Screen guests by rating, group size and intended use of your home (e.g. family vacation versus spring break party) and set ground rules for how they should conduct themselves respectfully while using your home.
Don’t accept just any guest
Hotels will generally take in any paying guest, but this is rarely a wise idea when it comes to welcoming strangers into your own property. Thankfully, most services offer ratings systems for both guests and properties/hosts, allowing you to review other hosts’ feedback on your potential guests. You can establish your own standards when it comes to the number and quality of feedback for guests you accept and employ other screening methods such as communicating with them before deciding whether or not to approve their booking. Don’t be shy about declining guests you’re not comfortable hosting. Though it’s a legal gray area, most services ask that you abide by anti-discrimination policies.
Do be a prepared and thoughtful host
Being a host means far more than handing over a pair of keys and accepting payment. You need to be prepared to roll up your sleeves – or at least hire someone else to do so on your behalf. Start by posting high-quality photos and a comprehensive description of your home as well as a welcoming biography about yourself. Create a binder with the house rules, your contact number, the Wi-Fi password, emergency service numbers (important for foreign guests), local attractions and other useful info. Make an initial investment in new sheets and linens, and stock up in bulk on consumables such as soap, toilet paper and cleaning supplies. If you’re unable or unwilling to handle all the demands of hosting, consider hiring a cleaning service or a management company to aid with the process. Respond to guest complaints graciously and do your best to address their demands within reason.
*1st Advantage Mortgage does not provide tax advice. Please consult your tax advisor for any tax-related questions.