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When Erin and I first short-term rented our place on Airbnb years ago, we didn’t know what to expect. Airbnb’s biggest proponents spun tales of easy money falling like leaves from an autumn tree, while its biggest opponents wove dire stories of raging parties that ruined their homes and left them questioning humanity.
More than 150 guests later, I can say we’ve experienced more of the former than the latter. Still, one of the most common questions buyers ask me is, “What are the pros and cons of renting your place on Airbnb?”
I’ll lay out the biggest ups and downs below. (Hint: Neither the disciples nor the detractors got it completely right.)
In our experience, a short-term rental in a good location, well furnished, well photographed, and attended to with great care and customer service can pull in two-to-three times the revenue of an unfurnished, long-term rental. So yes, the money is very good.
Look at the hotels in your area. How much are they charging per night? Do the math, and you’ll quickly see that financially, a well-run Airbnb can far exceed a traditional rental model.
It sure did for us. With Airbnb revenue, we paid down debt, bought a car, and put a down payment on our first primary residence. (And we’ve subsequently used equity from that house to buy two more properties.)
For those of you who are interested in more than just the money, the cultural exchanges brought about by using Airbnb can be rewarding. Millions of travelers from all walks of life and from every corner of the the earth now use the short-term rental platform. (And many others use its competitor VRBO as well.)
If you’re open to it, you can find yourself learning about vodka from a Russian, or hearing stories of the road from a seasoned traveler. I once had a few too many Colorado IPAs with the nicest South Korean couple. Their English was only slightly better than my Korean, which is to say we couldn’t verbally communicate with each other at all. But I’ll never forget speaking the common language of ping pong over a few pints.
This might sound counter-intuitive, but running an Airbnb can result in a cleaner house. If you’re renting on Airbnb often, then you’re also cleaning often. And leave it to guests to find the weak links in your home’s armor. A faulty light switch? You’ll be fixing that soon. Peeling paint in the bathroom? One less-than-stellar review, and you’ll smooth that over real quick.
In our experience, a well-run Airbnb requires a clean and in-tune home. So whether you host in your own home or in an investment property, you’ll be required to maintain your residence.
Time and Work
While running a profitable Airbnb is not rocket science, it’s also not a walk in the park. You will work, and work hard. I’ve never scrubbed so many toilets as I did that first year. Laundry, cleaning, stocking, key handoffs, pre-stay communication, in-stay responses, calendar management, and the occasional repairs are all part and parcel of this venture.
Can you outsource these duties? You sure can, but there’s a good chance you’ll need to learn firsthand how to operate a successful Airbnb before you can coach someone else to do it for you.
There is no way around it. Inviting numerous guests into your place day after day, week after week, does open you up to some risk. There are the thoughtless guests who party hard and leave you the mess, and there are the well-intentioned guests who simply have accidents that result in a broken chair or table.
But here’s something to know: Those incidents are so far and few between that I would not let them deter you from pursuing this model. Those horror stories you hear on the local news? They happen, but Airbnb hosts 500,000 stays every night of the year, and one or two of those stays are bound to turn sour.
Take steps to prevent such incidents and to protect yourself from the inevitable accidents. First off, you should actively screen potential guests. Ask them questions about their trip and their intentions. Secondly, be sure to purchase insurance tailored to short-term rentals. (No, neither your homeowner’s policy nor a traditional landlord policy will cover you in this case.)
Don’t get me wrong, Airbnb is not for everyone. Inviting guests into your home requires a certain level of comfort with the unknown. I’d encourage skeptics to give it a try, but if the idea makes you squirm, then traditional rentals are probably a better path for you.
For us, the pros far outweighed the cons. Airbnb spring boarded us into the world of real-estate investing. It helped us hone our skills at operating a business, and it changed the course of our financial future.