Hosting An AirBNB Property – Is It The Right Investment?

Last Updated: May 27, 2019
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This is a short guide on how to get started and what things to consider if you are to become an Airbnb host. Enjoy reading!

The Smart Investor content is intended to be used and must be used for informational purposes only. We are not an investment advisor and you should NOT rely on this information to make investment decisions .

According to Airbnb website, this is a marketplace which connects people who rent their apartments, rooms, even houses to globetrotters, called travelers or guests. It offers all types of accommodation, places, countries and promises unforgettable moments.

Perhaps, recently you have been thinking of putting your money into a property (one of the safest options to invest in) and use the platform. This is a short guide on how to get started and what things to consider if you are to become an Airbnb host. Enjoy reading!

What Are The Things You Need To Consider Before Becoming A Host?

Get It Started

This is an online platform and of course, all participants should set up an account in the first place. As a host, you have to create a hosting account and get approved. The site will then list your property and you will be expecting your first reservations.

As a host, you have three options:

  • Rent your property. This is the most typical one. Make use of every single square meter you possess. Do you have a spare room? Or a cottage somewhere? Rent it and supplement your income.
  • Become a co-host.  That’s really cool. For example, you don’t have free space to share or rooms to rent. That’s not a problem. You can manage and host your friends’ or neighbor’s spaces and real estate. Invest in your community.
  • Create and share experiences. This one is really intriguing. If you are a local enthusiast and you are good at showing and explaining things about the place where you live, why not do it and earn some money? Rent your knowledge and passion.

Hosting An AirBNB property - Is It The Right Investment?

What’s Your Goal

If you want to set up an account, it means you’ve already made a choice – to join the community.

What is your goal and what do you want to achieve?

Do you want to make some money on the side or, perhaps, you want to make this your primary business operating and renting multiple real estates? (see 2017 top trends  in US real estate market)

Look carefully at the three options you have as a host, which one suits you best? Or maybe all of them? Should you consider a mortgage or other personal loan?Another thing to mull over is whether you have enough time.

Remember:

Though it’s relatively easy to manage, definitely you have to dedicate some of your time. Be aware of the common mistakes made by investors and don’t repeat other people mistakes.

Safety Issues

This is a serious aspect to consider before starting your Airbnb business. You give your property to complete strangers. You don’t know them, you haven’t seen them, you might not even speak the same language.

This is particularly distressing if you rent part of your own home. Logically, this means that you will spend a night or a fortnight with these people. What if they are noisy?

On the bright side, each and every user of the platform is ID identified. At least you can rest assured about your guests’  real identity.

Unpredictable Expenses

Don’t tremble with excitement when thinking how you can make double your monthly income by giving your free room to tourists for a week.

Don’t forget:

These people are going to use this property. They might damage it or even steal something valuable, which the charge won’t cover. What’s worse, they might cause some problem to your neighbors and their property.

Well, this one is not that unpredictable but can easily be missed at first. Airbnb imposes a 3% tax on each reservation. Because of that, Airbnb offers their hosts a Host Protection Insurance.

According to their website, “the Host Protection Insurance program provides primary liability coverage for up to $1 million per occurrence in the event of third-party claims of bodily injury or property damage.”

Competition

At first, when the site was launched not many people used it and there was a limited number of accommodations. Ever since it became really popular and successful, thousands of people decided to become hosts.

The competition, especially in some areas, is fierce. Just listing your place won’t suffice in this competitive environment.

What can you do?

Make your offer attractive and special. Why would people come and visit your country, city, place? Do you offer a quiet and peaceful house near a green forest? Or a little apartment in the city center within walking distance of bars and clubs? Beat your opponents by offering something unique at a great price.

Marketability

This one is related to the previous aspect. Do you think that there will be demand for your listing? How many others are there in your vicinity?

Research the market before you put your money

There is no financial logic in investing in something which is not marketable – you lose both money and time. You shouldn’t wait weeks or months to find out that the set price is much higher than what others offer. Keep up with the pace of the market and adjust yourself to the new realities.

Bottom Line

All in all, Airbnb offers a new palette of experiences for both tourists and their hosts, and can be a great alternative investment. Regarding this platform as a business opportunity, you have to be completely aware what your goal is and how to achieve it:

Research the area and the demand for such accommodations. Compare with others offering similar listings and decide how to beat them. Read all the information regarding possible expenses, taxes, fees and insurance cover for any damages on your property.