The internet is creating more money-making opportunities than ever before – in even simpler ways. Almost any person can become a taskmaster. Almost any car can become a taxi. And almost any home can become a hotel.
In fact, according to Muchneeded, Airbnb has now hosted 400 million guests in almost 200 countries since its launch 10 years ago.
As with any type of investment opportunity, there are upfront costs and risks to assess, but these are almost certainly outweighed by the rewards. For South Yarra resident Kate, it meant helping fund six months (and counting) of travel and chasing the great Australian dream – not working.
We asked Kate everything you should consider if you were thinking of (or didn’t even know about) making an extra buck with Airbnb.
Stranger danger?
It’s likely the first red flag to any prospective host – and a fair question to ask yourself – would you trust strangers in your home?
If you’ve stayed in an Airbnb in the past, it might be worth asking another one – would you trust yourself?
When Uber and Airbnb burst onto the scene, there was a lot of scepticism and apprehension from the public regarding safety, and while it hasn’t been without its issues, the percentage of incidents is extremely low – mainly due to Airbnb’s rigorous policies, “Airbnb are very strict with guest identity verification and have open reviews, so the transparency made me feel more relaxed. They also have insurance, so if a guest does break something you can claim this back,” Kate observed. The heavy majority of Airbnb guests are simply budget-conscious travellers, just like yourself, seeking alternatives to overpriced hotels.
In saying that, Kate has noticed some guests still adopt a hotel mentality of keeping unexpected mementos from their trip, and she recommended the following, “Guests have taken things from my apartment such as guide books and even cutlery! My advice is to get cutlery from Kmart or Target and label things, or set up a check-out checklist, so items don’t go walking and lock your valuables away – especially booze.”
Nothing like your first time
Once you’ve made peace with the idea of guests in your home, think about what you’d like to achieve from Airbnb to help with your strategy. Is it to cover some rent while you’re travelling? Are you looking for the financial benefits of housemates without the long-term commitment? Or is this to finally step off the wheel of the 9–5 rat race?
For Kate, it started as a handy little earner while she took an extended trip, but she wanted to dip her toe in the water before she attempted a triathlon, “I took my first hosting experience as a trial run and I really wanted to get a five-star review because that’s what guests look for. I stayed with my family, so I could be nearby just in case there were any teething issues with the internet, keys or lock boxes. I felt a bit weird that someone was in my place, but the review was good and so was the money – so I kept going,” Kate reflected.
Trial runs are hugely advantageous because even though Airbnb enables you total control – you can choose prices, availability, minimum stays, cleaning fees, deposit – it can take a guest or two to get things humming (and not over/undersell yourself).
When in doubt – outsource
If these decisions sound overwhelming, there’s always help. Airbnb Smart Pricing can assist first-timers as it takes information about your property into account and then automatically adjusts the price based on demand.
Better yet, outsource everything.
There are property management services that do the work for you, taking a percentage of the earnings in return.
Knowing she could be spending months at a time overseas, this was ideal for Kate, “When I started Airbnb-ing I was travelling in different time zones without Wi-Fi at times. I wanted to be able to relax and switch off, but also needed to accept guests quickly. The property management company also took care of the whole set up from start to finish, including professional photos, writing the listing, setting the prices, managing all enquiries, installing lockboxes and managing the cleaning of the apartment from guest-to-guest.”
Hometime provides a personalised property management service specifically for Airbnb properties, assessing your place for potential value, keeping occupancy levels higher, managing all housekeeping, ensuring guests are happy – and can even increase your Airbnb income significantly.
You will pay an upfront fee of around $200 for photography and set up, and then an ongoing rate of about 20% of the earnings – so it’s a great option if you are happy to take a step back for a fee (or you’re travelling).
Ultimately, this depends on your situation and what kind of role you’d like to play. If you do go down the self-management route, the Airbnb app helps to make instant bookings and price adjustments.
Cha-ching
For Kate, Airbnb has been a dream result, resulting in double to three times her mortgage per month, “There have been times during special events and holidays (Australian Open, Grand Prix, Easter and school holidays) where the demand enables me to earn a rate four times my mortgage,” Kate explained. And if she’s not travelling, Kate will often stay with friends or family, or even house or pet sit, just to top up the Airbnb earnings.
While it’s important to be optimistic, you should always manage your financial expectations with bookings, not potential income.
Taxxy!
Airbnb’s financial opportunities are huge, but all earnings are reportable come tax time. This means you’ll have to add your Airbnb earnings to your work income – and etax recommends setting aside around 30% of your Airbnb earnings in case.
The government is also reportedly cracking down this year on Airbnb-ers – due to a combination of exponential hosting and under-the-rug earnings on previous tax returns. Airbnb recently responded to this by announcing they will provide yearly earnings statements with useful tax tips.
Fancy a few ways to maximise the earnings come tax time? Kate recommends the following, “There are deductions you can make while your property is being used as an Airbnb, such as utilities, repairs and maintenance, professional photos, professional cleaning, depreciation of furniture and food you’ve provided for guests.”
If you’re looking to purchase a property solely to lease on Airbnb, there may be other tax implications you should look into with an advisor, especially when it comes to sell your property. And if you have any other questions, it’s worth touching base with an accountant or financial consultant.
Play by the rules
For a company known for keeping things simple, there are a lot of grey areas with Airbnb. Legal requirements can vary country-to-country, even state-to-state – and if you’re subletting, you’ll need to review your lease and check if you need to obtain any prior consents.
For apartment owners some states in Australia have supported the right of an owner to Airbnb a property even in the face of prohibitions contained in strata rules. To avoid running foul of any requirements check the rules relevant to your property including state and council laws and zoning restrictions to make sure there are no issues you need to consider first. If you have an apartment, review the rules and understand what your body corporate is entitled to insist upon in your state.
Also check your existing insurance policy and understand what, if anything, that policy will cover you for if the property is used as an Airbnb. If your policy doesn’t cover you, consider additional insurance options including the options offered via Airbnb.
Retire-ease
Because of its ease and flexibility, Airbnb is proving to be an amazing money-making opportunity for those transitioning into retirement.
In fact, “The fastest-growing Airbnb hosts are seniors, and senior women over 60 years are rated as the best hosts on Airbnb,” according to Muchneeded.
Put all those life-skills to good use and make some decent coin while you’re at it.
A whole host of tips
Suss out the competition. Keep an eye on similar properties in your neighbourhood to gauge the right pricing. Ultimately it’s better to manage your own pricing than get a nasty surprise when someone books way under (but it could be way over)!
Be the host with the most. Little touches go a long way – leave some food or drinks etc.
“Sure, lock away things that are precious, but provide things that travellers might need like unlimited Wi–Fi, tips and local knowledge for your guest in a booklet, refreshments (tea, coffee pods for your coffee machine if you have one and a pack of biscuits) and have the place professionally cleaned, made up with good quality sheets and towels (there is a cleaning fee that guests pay so use this fee to sign up a cleaning provider who also provides rentable linen and towels),” Kate recommends.
Great expectations. Let guests know about unique features and amenities of your home, access to public transport, local interests and directions from airport. Read guest profiles and reviews – and get to know them in advance.
At the end of the stay.
Every property is different, just like every host’s situation is different.
Kate reflected, “For me, Airbnb seemed like something that could have been ‘too hard’ but it’s not. Once you get your listing up and running, get some good reviews and find a reliable cleaning company to help you out then it should really take most of the hassle out of it. Of course there is a risk that your place won’t get booked, but if you take the time to play with pricing, offer extra special touches (like food, coffee and good tips) and give good service (prompt replies, late checkout, etc.) then guests will see that they can rely on you to provide an inviting home for them while they are away from their home.”
If you are thinking of making extra coin from Airbnb, it’s worth remembering that in the event of an issue, Airbnb are available 24/7 for help with booking, refunds, reimbursements and insurance pay outs.
Think you’ve got what it takes to be a superhost? Check out the Airbnb host page to find out more
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.