Thanks to the website Airbnb, more home owners are earning extra cash by taking in guests. This site has over one million listings worldwide, allowing property owners to earn money by renting out a second home…spare rooms in their primary residence…or their entire primary residence when they are out of town.
But many home owners worry that inviting strangers into their homes could be an invitation to disaster. A guest could steal or damage their property or even do them physical harm.
Bottom Line/Personal asked Scott Shatford, an expert on Airbnb, what you need to know to successfully rent out your home or a room on Airbnb…
Airbnb (Airbnb.com) is not the only short-term property rental website—competitors include HomeAway.com and VRBO.com—but it is the best choice. It can market rental properties to literally millions of potential guests…it’s the easiest home-rental site to use…it does not impose any upfront or annual fees (hosts pay 3% of their rental income)…and it offers the strongest safety features, including free insurance (see below) and “Verified ID”—most guests must provide Airbnb a copy of a passport or driver’s license or verify personal information in other ways.
To rent out your place…
Advertise yourself, not just your property. Include a smiling, friendly picture of yourself in your listing and personal details, such as your hobbies and how long you have lived in the area. Potential guests are much more likely to rent from you if they form a positive first impression of you.
Set a low initial rate. When you’re starting out, price your property around 25% below the rates charged by the most comparable Airbnb properties in your area. This gives guests a reason to take a chance on your unproven property rather than rent a nearby property that already has numerous glowing reviews. A low price also increases the odds that guests will feel they got their money’s worth and post positive reviews of your property. Those positive reviews will attract future guests…even after you have raised your price.
Target peak-demand weeks. If your plan is to rent out your primary residence when you’re away on vacation, take your vacations when lodging in your area is in greatest demand. To identify these weeks, consider…
• Do other Airbnb properties and hotels in your area charge higher rates during particular weeks?
• Is there a festival, marathon, bowl game, golf tournament or other event that annually draws large numbers of visitors to your area?
• When do area colleges have their homecoming, graduation and parents’ weekends?
Don’t oversell your home. Giving an overly rosy picture of your property will lead to disappointed guests. Disappointed guests are likely to post negative reviews.
Examples: Don’t say your home is on the beach if it is really two blocks away…don’t call the property tranquil if it is on a busy road.
Use the listings of highly rated Airbnb properties in your area as a template for what to mention in your listing.
The photos you include should tell an honest story as well. Don’t take a picture of the beautiful view from your rooftop if the view from the inside of your home is far less impressive.
Clean, then clean again. Some guests have very high standards for cleanliness. Better to spend extra time cleaning than receive a negative review—particularly when you’re new to Airbnb and have not yet received the numerous positive reviews needed to balance a bad one.
Form a personal connection. Greet your guests in person when they arrive, if possible. Check in with them during their visit to see if there’s anything they need. Send a note thanking them for their visit shortly after they depart. These connections will help guests see you as a person, not just a property owner, which increases the odds that they will take good care of your property and give you a good review.
Airbnb does not disclose statistics about how often rentals go wrong, but theft and serious property damage appear to be rare. There were more than 10 million Airbnb rentals last year, yet mentions of major problems are uncommon on social media and in the press. I’ve never had a single problem in more than 50 rentals at my private home and 500 rentals at my full-time rental properties—not so much as a broken dish.
Still, it is prudent to be cautious…
Install digital door locks. With these you can give guests a code that they can use to enter, then you can change the code after their visit. That’s safer than handing over a key, which a guest could have copied in order to sneak in later. Digital locks cost $100 to $300 in home centers and from online retailers.
Rent only to guests who have excellent reviews and “verified IDs.” A guest who has received uniformly glowing feedback after five or more rentals is unlikely to cause problems. Guests with “Verified ID” badges on their profiles almost certainly are who they claim.
Also: Read what the guest has written about himself/herself in his profile…what he has written about Airbnb properties he previously has visited…and what the owners of those prior Airbnb properties have written about this guest. Does this seem like someone you want in your home?
Exchange e-mails with a potential guest. Try to get a feel for this person and anyone he will be traveling with. Families and retirees tend to be especially low-risk guests.
Lock up portable valuables, or store them off-site. Buy a safe…rent a bank security-deposit box…or store items of particular value with a friend or relative.
Many cities and some towns have laws that restrict property owners’ right to rent out their homes on a short-term basis or require them to pay hotel taxes if they do so. Call your town’s or city’s zoning or development office to ask about applicable laws in your area. Or enter the terms “Airbnb,” “legal” and the name of your town into a search engine to see if a local newspaper or other reliable source has written anything on the subject.
In practice, however, these laws are almost never enforced even when they exist…unless neighbors complain.
Also worth noting…
• Even if local laws restrict your right to rent out your property on a short-term basis, you probably still have the right to rent out a room in your property while you are on hand.
• Homeowner’s associations (and condo or co-op boards) often have rules blocking short-term rentals. These groups may enforce rules strictly.
• Tenants often are prohibited by the terms of their rental contracts from subletting their dwellings without the property owner’s permission.
Homeowner’s insurance often does not cover claims related to paying guests. Airbnb recently addressed this concern—starting January 2015, the company began providing $1 million in liability insurance at no extra charge to protect property owners should a guest be injured or killed. That’s in addition to the $1 million in coverage it already supplies for property theft and/or damage stemming from rentals.
Airbnb’s million-dollar liability and theft/damage coverage greatly reduces insurance concerns, but…
The liability component of Airbnb’s coverage is new and untested. If you want to be certain that you are well-covered—or if you rent out your home through a service other than Airbnb—consider purchasing coverage designed specifically for properties that are rented out on a short-term basis. Providers include CBIZ Insurance Services (CBIZ.com) and Peers Marketplace (Peers.org).
Cash and securities are not covered by Airbnb’s million-dollar theft insurance. Coverage for jewelry, collectibles, artwork and certain other high-end items is limited. Airbnb’s coverage also does not protect property owners from losses due to identity theft if a guest gets hold of, say, credit card account information, Social
Security numbers or other sensitive information.
There have been reports of homeowner’s insurance companies threatening to cancel the coverage of homes that are rented out. Ask your insurer if renting out your property through Airbnb will affect your coverage—and get the answer in writing.
