Having a spare bedroom comes in handy whenever your in-laws come to town, old college friends visit, or your bachelor brother passes through on his way to a music festival.
But what are you supposed to do with that empty room during the other 350 days of the year? You could rent it out and make a stash of cash by becoming an Airbnb host.
What is Airbnb?
Airbnb is a vacation rental website where people looking to rent out their home or spare bedroom can connect with those who are looking for a place to stay. It’s an affordable alternative to staying in a hotel plus a way for you to make extra cash!
Think of it as running your own bed and breakfast, except you’re only dealing with one set of guests at a time. Those looking to rent out their spaces are called “hosts,” and those needing places to stay are “guests” (shocking, we know).
How does Airbnb work?
Step 1: Create your listing
Describe your space and give details about what you have to offer. Is it a quiet bungalow away from it all? Maybe a studio apartment in the heart of the city? Think about what sets your place apart and makes it the place to crash at while in town. Be sure to add photos that bring your listing to life! How else will they know about that great breakfast nook you have?
Dave's easiest money-saving tip: See if you're over paying for car insurance.
Creating a listing with Airbnb is free, which means you won’t be out of anything if your rental stays empty for two months.
Step 2: Get your space ready
Look around the room and make a list of items you need to make it functional and homey. Do you need extra towels and washcloths for your guests? How about a local guide of popular restaurants in the area? Before you get too fancy, don’t forget about the most important thing: clean bedsheets!
Step 3: Welcome your guests
When your guests arrive, it’s best to be there in person and give them a lay of the land. But you could also do this through an email or a printed-out welcome packet if you won’t be there. Let them know where they can find things they might need like dishes, towels and the TV.
This is also a good time to go over house rules. Are there areas of your home that are off-limits? Can they use the top shelf of your refrigerator? What are they supposed to do with wet towels? Can they use your washing machine? Know the answers to all these questions before your guests even show up (and maybe even include them in that welcome packet).
Step 4: Collect your money
Luckily, Airbnb handles this for you, so you don’t have to worry about any money changing hands. They’ll send you payment through PayPal or direct deposit—but not before they collect a 3% service fee first.
Here’s another thing to remember: although your guests are charged when they make the reservation, you won’t be paid until 24 hours after they actually check into your place. You’ll want to keep that in mind when you’re planning out your monthly budget.
Step 5: Clean up and reset for the next guest
This should go without saying, but be sure you clean out the room before the next person arrives. Would you want to stay in a room with damp towels and used sheets? Treat others how you’d want to be treated in the same situation.
How do I set my Airbnb rates?
Airbnb lets you set the price of your listing. So, you can adjust it throughout the year based on travel peaks in your area like sporting events, concerts, and in-demand weather seasons. And don’t worry about coming up with a price out of thin air. Airbnb will make pricing suggestions for you based on your location and type of property.
What are the rules for Airbnb hosts and guests?
There’s a list of basic requirements that every Airbnb host must follow. Hosts have to provide basic toiletries and bedding, be responsive toward booking inquiries, accept reservation requests, and try to maintain a high rating.(1) Don’t forget about the slew of safety precautions you need to take into account!(2)
Of course, you actually need to know the rules of your city and state when it comes to Airbnb hosting. Many zoning laws require you to register or get a permit before you can have an Airbnb guest stay on your property. And if you don’t own your space, it can get even trickier since your landlord may or may not give you the green light.
Airbnb has its own suggestions of how to be a considerate guest.(3) But don’t forget: since you’re the one doing the Airbnb hosting, you get to come up with a set of guidelines for your guests to follow. This is a great way to make expectations clear from the get-go. And ideally, your guests will be kind enough to abide by them.
How much does it cost to host an Airbnb?
Listing your room on Airbnb is free, but there are plenty of other costs to weigh.
Maintenance and Cleaning
The more your guest bathroom tub is used, the more likely it will leak, stop draining properly, or have a tile chipped off. Be prepared for maintenance and cleaning costs to eat up a large part of your budget.
To save money, consider doing the maintenance, repairs and cleaning yourself. Just be sure you take into account the cost of supplies and your time!
Is your spare room/guest space already decorated and furnished? Or maybe the bigger question: is it appropriately decorated for guests who aren’t your family? If your idea of guest décor includes your son’s soccer team photo and Grandma Lucy’s quilt—you might want to rethink the scheme a little.
Spruce up the place with a few affordable, classic pieces. Keep it simple and try not to overcrowd the space. Don’t forget to include functional items like clothing hangers, a night stand, and shelving to help your guests store their belongings.
If you’re going to host people in your home, make sure you have the basics covered. Don’t leave one lone washcloth for your guests when they really need a stack of clean towels. If you don’t have extra sets of towels, bedsheets and pillows on hand already, then you’re going to have to take those up-front costs into consideration.
Oh, and pro tip: always keep ample amounts of toilet paper readily available. Running out of that precious commodity is a sure way to score a negative review from your guests.
Airbnb offers accidental damage coverage on your home (up to a million dollars of coverage, to be exact).(4) They also offer Host Protection Insurance in case a guest gets hurt while staying on your property.(5) Just make sure you read their terms and conditions to fully understand what’s covered.
If having strangers in your home gives you a creepy-crawly feeling in the pit of your stomach, here’s something to ease your mind. While Airbnb doesn’t screen each individual guest, they do let hosts and guests rate each other. That way you can feel more at ease about who you’re letting into your house.
Is hosting an Airbnb right for your budget?
It’s true, having an extra revenue stream like this can help you reach your money goals faster. Whether you make an extra $200 a month or an extra $1,000, having that cash-flow can make a big difference! Just make sure the trade-offs are worth it. Do you really have room in your budget to tackle all the furniture, upkeep, and clean-up costs that come along with it?
If you can generate enough of a profit to keep up with the space while still meeting your financial goals, that’s great! But if you find that you’re shelling out all your time, energy and money getting your space ready, then maybe you need to rethink being an Airbnb host. It all boils down to what’s best for your budget and your financial goals.
Before you Airbnb, make sure you’ve got the right protection for your home. Work with one of the independent insurance agents Dave recommends to find out how you can save even more on your insurance!