I‘m always looking for more ways to make money on the side in order to pad my family's bottom line.
I was recently talking with my brother and his fiance, and they told me how they've been renting out the extra room in their home via Airbnb.
They have been doing well enough with renting out their spare room that they've come to the point where they've made enough money that they were asking me whether or not they needed to claim the income for tax purposes. The answer was of course, “yes”, but it was interesting to hear just how much you can make by renting out your spare space. I was intrigued.
I decided to look a bit deeper into how to make money as an Airbnb host. What does it take to make a nice side income from the spare space in your home, or a rental property you might already own?
Becoming An Airbnb Host
So who can create a listing on Airbnb? Just about anyone who has some extra space.
Almost anyone can be a host! It's free to sign up and list your space. The listings available on the site are as diverse as the hosts who list them, so you can post airbeds in apartments, entire houses, rooms in bed-and-breakfasts, tree houses in the woods, boats on the water, or enchanted castles.
Becoming an Airbnb host is pretty easy, you just have to have a bit of extra space that you can share with a guest. It's free to sign up and create a listing, and the only fee you'll typically pay is a 3% host service fee when someone books and pays for a rental.
The first step is to sign up. Do that through the link below:
Renting Extra Space Vs. An Entire House Or Apartment
When listing your space/apartment/home on Airbnb, they have three types of listings that you can create. From the Airbnb FAQ:
- Shared rooms: Guests share the entire space with you or others and don't have a private room to themselves.
- Private rooms: Guests share some common areas with you, like the kitchen, living room, or bathroom, but they have their own private room for sleeping.
- Entire homes/apartments: Guests rent the entire unit and don't have to share the space with you or with anyone else.
If you live in a studio apartment and you're willing to share an airbed in the space, you could created a “shared room” listing, and guests will know not to expect a whole lot of privacy, just a place to sleep and hang out.
If you have a home where you have an extra spare bedroom, you could list it as a “private room” and guests will know that they will have a private bedroom available where they can have some privacy.
If you have a rental property, you can list the entire apartment or home on Airbnb and the guests will know that they have the entire unit to themselves, and they won't have to share the space.
Creating Your Listing
Creating your first listing with Airbnb is a piece of cake, you just start with the basics.
Create Your Profile
The first thing you'll want to do before listing your home is making sure that your Airbnb profile is completely filled out and detailed. Guests will be skeptical of hosts who haven't completely filled out their profile, and having a good one can help to give any prospective guests a feel for what you're like. Make them feel more comfortable coming into your home.
Airbnb will give you prompts on what kinds of things to include when signing up, so pay attention to their queues.
Another important thing to do is to get verified and make sure to have good photos of yourself on your profile. Having a good photo will convince people that you're a real person and not some faceless online avatar or axe murderer. Getting verified by Airbnb will give the guest peace of mind that you've been checked out and confirmed to be who you say you are.
To get verified by Airbnb you typically have to provide a government issued photo ID of some kind, an online ID of some sort (Facebook, Google, Linkedin), link your mobile number, and answer some questions that only you would know the answers to. You may also be asked to take a selfie during the process and your photo will be compared/matched to your ID photo to confirm who you are.
For me getting verified was pretty simple. I just linked my social accounts, added my cell number and then uploaded my driver's license – and I was good to go.
Getting verified as a host is important not only because it gives your guests some peace of mind, but it also means down the road you can choose to only accept guests who are also verified (which many highly recommend).
Set Up Your Listing
Airbnb will walk you through the process of setting up your listing. It should be relatively easy.
- What type of property? First, choose what type of property you're offering for rent. Is it an apartment, a house, a cabin? A bed and breakfast? A treehouse getaway or a yurt? Choose the type of property that is closest to what yours is.
- Shared space or entire place? Next you choose what type of room your guests will have, whether it's a shared room, a private room or an entire place.
- What to charge? Figuring out what you should charge per night shouldn't be too hard as Airbnb will give you a suggested nightly rate based on the number of rooms you have, amenities, location, season and prices of listings near you. Often you can charge more than you'd think, and if you want, you can change your price at any time if you find you've under (or over) charged. Some will recommend using a dynamic pricing service that will set your rates dynamically based on demand, other listings in your area, etc.
- Listing dates: Airbnb will allow you to setup specific dates for your rental, and modify your open dates at any time. You can even rent your house just one time if you want to – for example, if the super bowl is coming to town.
- List your amenities: Does your rental have a kitchen, WiFi internet, air conditioning, washer/dryer and is family friendly? Make sure to list everything that a guest might find helpful in making their decision.
- Provide accurate descriptions: Accuracy in your listing is key. Don't be deceptive or tricky in how you describe the amenities available, or describe the property. Make sure to be upfront about any potential turn offs in your space (In a busy neighborhood, no laundry). Providing an inaccurate description can lead to a bad review, and good reviews will make or break you.
- Provide good photos: Make sure to take nice photos of your property, you might even want to consider hiring a professional with a wide angle lens.
- Address any downsides to your property: In a noisy area? Say so, but describe why it's noisy – describe how close to the action it is, with a bustling local community. Have pets? Make sure to let people know as some may be allergic.
- Mention any perks you provide: There are little extras that some hosts may provide like coffee, free internet access, toiletries, etc. Make sure to mention those things.
- List nearby attractions, restaurants and activities: If your home is close to area attractions, restaurants, etc it may be helpful to list those attractions and how far they are from your space.
Good Photos Are Important
I mentioned it above that good photos are important to getting top dollar for your listing. If you know someone who has a nice wide angle lens, or can hire a professional to take some nice photos, it will be worth it. At the very least you can spring for a clip-on wide angle lens for your smartphone. Good photos show you're serious about your listing, and not just throwing up some blurry smartphone photos that don't really do your listing justice.
Here are some example photos that I took of our home with a nice camera and a wide angle lens to give you an idea.
Make sure your photos give an accurate representation of the space you have available, and highlight features that guests may be looking for.
Get shots that show both details and wider angle views of your space.
Depending on what type of listing you have, take photos to target your type of guest. If your place is best for couples, take pictures that enhance the sense of luxury, maybe showing complimentary champagne and flutes on table, big pillows on nice big soft bed, luxurious bath. A big home best suited for groups? Highlight large congregation areas, big yard for hanging out, big kitchen. Target your guest.
When taking photos make sure the space is clean, uncluttered and well lit.
And of course, make sure your photos give an honest representation of your space, you don't want people to show up and find that your space is much different than what was represented. If it is, they may leave poor reviews.
Good photos can be one of your best sales tools on your listing, so take advantage of them. Most people won't look past 15-20 good photos, so choose your best 15-20 and add them to your listing.
Things To Keep In Mind When Hosting Via Airbnb
There are some things to keep in mind when hosting via Airbnb.
- This isn't hands off like real estate. It's the hospitality industry: When you have a home that you're renting out via a yearly lease, you are renting the house and giving a bare-bones level of service – fixing urgent repairs, or things that are spelled out in the lease. With Airbnb you're working in the service industry, becoming a hotel concierge of sorts. You're answering guest questions, giving suggestions for local attractions and more. If you think it's going to be hands off, you're probably wrong.
- It's all about customer service: Remember that since you're in the hospitality industry now, and you're relying on good reviews, it's important to provide good customer service to your guests. You're competing with others in your area, and if your service is top notch, your guests will be more likely to leave a postive review. Make sure your place is clean and supplies replenished. Respond promptly to any emails or calls. Go above and beyond providing extras and local guides, and anything else you think your guests might want or need.
- Be ready for people trying to negotiate: Be ready for people to try and negotiate your rate. Others have suggested to just have a templated email ready to go that can nicely tell them that you understand that their budget is tight, and that here are some other options they might be happy with. Shared rooms will be cheaper, along with homes further out in the suburbs. Or if all else fails you can recommend a low cost motel nearby. More often than not they'll relent (because they like your place) and end up paying your rate. Be helpful but firm.
- It's important to set expectations up front: Different people have different expectations for an Airbnb rental, some expecting the same as if you were crashing at a friend's place, while others expect 5 star hotel quality. Some suggest supplying everything you'd typically find in a nice hotel room (ironing board, coffee maker, hairdryer, mirrors, towels, shampoo and soap), and then adding whatever extras you feel are helpful. Then set expectations in your listing for what is and isn't allowed (no smoking, no pets) in the unit, and make sure people know what they're getting into.
- Keep your calendar up to date, and accept bookings to get a good acceptance rate: Always make sure that your calendar is up to date and actually reflects when your unit is available. While it's OK to decline a booking every once in a while, if you're constantly declining bookings, it may become an issue as it will show a low acceptance rate on your profile – and a low acceptance rate may give guests pause when considering your unit.
- Be sure to respond to all messages: Many guests want a host that is reachable and available in case they have concerns. Your response rate will show on the site, and it's important to always respond to all messages, even if it's just to say “thank you” or “have a nice stay”.
- Not all cities allow Airbnb rentals: Not all cities are friendly to services like Airbnb. In doing research for this article I found out that the city I live in, Savage, MN has effectively banned Airbnb rentals. The city council passed an ordinance barring anyone from renting their home for fewer than 15 days at a time, which means earning side income from Airbnb is a non-starter for me unfortunately, unless we wanted to do it for a long term rental.
Create Systems To Make Hosting Easier
One tip I've seen in several places is to put in place systems to make the process of renting out your property easier, not just for you, but for your guest. This is especially helpful if you're going to be renting out your unit on a regular basis.
- Make checklists of things to do between guests: If you have one guest leaving and another arriving in the same day, you will likely have limited time to clean and re-stock the unit. Make a checklist of all the things you need to do to get the unit ready to go.
- Create templated emails to send to guests: Create templated emails that will inform potential guests about your unit, set expectations for check-in and check-out procedures, give details about things to do in your area, etc. Create one for potential guests, one for guests who have booked (one when they book, one for a day or two before they arrive, etc), and even one for guests after they have left requesting a good review. Include directions on how to get to your home from the airport, from north, south, east and west.
- Create a welcome guide that you can leave at the unit: Put together a welcome guide/folder that you can leave on the coffee table that details things the guest might need to know about the unit (how to operate the thermostat, where the light switches are), local restaurant menus, pamphlets for area attractions, etc. Call it an rental unit FAQ.
- Use technology & tools that can make your life easier: Use technology and tools that can make your life easier, from a smart lock for your doors (where you can give each new renter a new limited use code, or app access to get in), a lockbox for keys, noise meters to alert you when a party might get too loud, to a Roomba vacuuming robot, to clean up after your guests.
How Much Can You Make Hosting On Airbnb?
How much can you make on Airbnb?
It really varies. Factors include:
- What type of space you're listing.
- Where your home is located and how in demand it is.
- How much space you're offering (whole home vs. room vs. shared room).
- How professional your listing is.
- Extras included.
If we rented the entire home for 5 guests, it would come closer to $1,261/week.
One study on SmartAsset.com found that on average, in the cities they looked at, an Airbnb host could expect to pay 81% of their rent by listing one room in a two bedroom home on Airbnb.
The average expected annual profit from Airbnb hosts renting out a full two bedroom apartment or house in 15 cities studied by SmartAsset was $20,619. It's not a small amount, but it's not going to be a full time job renting one unit.
Traditional Rent Vs Airbnb
One example, Paula Pant of AffordAnything.com talks about how she decided to use her rental home as an Airbnb vacation home for a year, versus just leasing it to one tenant. In her breakdown she found that in one year she earned $7,185.11 more as an Airbnb host vs. leasing the home traditionally to one tenant. That comes out to an extra $598.76 per month for her rental. Not too bad!
It should be noted that renting your home via Airbnb is going to typically have more expenses than just leasing the house to one owner, and it's also going to be more work intensive. You'll have to email and talk with potential renters, clean out the units after a rental is complete, replace extras that are depleted and more. Basically you're running a vacation rental company, versus with a rental where you're just providing them with the home and that's it.
Hosting on Airbnb Can Provide A Nice Side Income
Being an Airbnb host is a nice way to bring in some nice income on the side. Whether you're renting out an extra bedroom in your basement, or renting out an entire vacation home, it can bring in enough money to help pay part of your mortgage, or to help fund your retirement.
While being a host isn't always easy, and it will likely be a lot of work if you do it on a regular basis, it can definitely be financially rewarding, as well as being a fun way to meet interesting people.
Interested in checking out the income possibilities for your family, or just looking to travel? Sign up to become an Airbnb host today!