7 Things to Know About Airbnb Hosting

For homeowners, listing a property on Airbnb can seem like an easy way to earn extra income. You might rent out your whole home, a spare room or a seasonal property you’re not using. For some people, becoming an Airbnb host can turn into a steady income stream, especially if their property is in an area that many people travel through. 

Who isn’t tempted to make a few extra dollars, especially on an investment that’s just sitting there? The truth is, it may be more complicated than it looks and come with more things to consider than you originally thought. There are fees for the host, for instance, and a variety of important things to know about the arrangement. Before you decide to take the plunge, read these seven tips on how to be an Airbnb host.

And remember, an Airbnb comes with specific insurance needs, too. Reach out to Farm Bureau to talk about the right policy for your needs.

Tip 1: Expect Upfront Costs

When you’re thinking about becoming an Airbnb host, it’s easy to daydream about the future income stream headed your way. But don’t forget that there are many initial startup costs to any short-term rental.

An Airbnb has to be fully furnished, and if you want it to get good ratings, it should be nicely decorated and comfortable, too. That means that before hosting, you’ll need to supply all the rooms with new or items that are in near perfect condition, including furniture, kitchen items, curtains, electronics and even linens — all which can get pricey quickly. Take an inventory of what you already have and what you may need to purchase for each room. 

Startup costs also include:

• Fast Wi-Fi
• Subscriptions to streaming services like Netflix and HBO Max
• Consumables such as toilet paper, soap and paper towels
• Kitchen and pantry basics, like spatulas, a wine opener and a coffee maker
• Keyless entry system

The better your setup, the more your guests will love it, and the more highly they’ll rate it, which means you’ll get more visitors. So, higher startup costs are often worth it — but you’ll need to balance those with what you can afford.

Tip 2: Understand the Laws

Before you host on Airbnb, make sure you’re up to speed with local laws and regulations. Many cities require specific licenses or regulations in order to operate a short-term lease. These might include registering as a bed and breakfast or filling out paperwork to inform your city government you’re renting out your space.

Also, if you live in a community with a homeowners association or co-op, be sure that peer-to-peer rentals aren’t in violation of the association’s policies. And make sure you check out all of these regulations before you spend all that money on setup!

Tip 3: Know the Etiquette

Airbnb has standards that they encourage all hosts to adhere to. While these aren’t enforceable nor subject to penalties, they can — and will — impact your success as an Airbnb host. These cover everything from cleanliness to how fast you respond to reservation inquiries. If you don’t adhere to these standards, it’s likely that travelers will rate you lower, and that will result in fewer bookings.

Tip 4: Report Rental Income

If you’re earning a profit from renting out your home, you should be aware that the income is subject to income tax. But here’s the good news: You can take deductions on many expenses. Any costs that go to the rental property can be written off on your taxes — just make sure to document all costs and keep receipts.

Deductible expenditures include:

• Hosting fees 
• Home depreciation
• Repairs
• Coffee and snacks for guests
• Extra linens for guests

Tip 5: Consider the Future of Your Home

As a homeowner, you might wish to refinance your mortgage loan at some point, a move that offers big benefits in terms of reducing the interest rate or providing cash for renovations or upgrades.

While hosting on Airbnb wouldn’t stop you from pursuing this option, it could impact the interest rate for which you can qualify. For example, not all lenders accept Airbnb-generated income. This means that your additional revenue wouldn’t count toward your total annual income, resulting in a higher mortgage rate. 

Tip 6: Manage Your Time

It may seem like an Airbnb is totally passive income, but that’s just not true. Being an Airbnb host requires you to effectively manage both your space and your time. Between bookings, you’ll need to make sure that the property is cleaned to professional standards — and that process can take hours.

You should also consider how much time you’ll need to answer phone and email inquiries, manage reservations, schedule repairs and handle questions from current guests. Airbnb hosts might spend 8-10 hours per week just handling all of this administration. 

There are also Airbnb management services that will handle everything from booking, cleaning and maintenance for an additional fee. Having someone manage your Airbnb for you might be worth it if you live in a different state, but you’ll have to consider the additional expenses and how that impacts your revenue. 

Tip 7: Protect Your Investment

While Airbnb offers liability insurance that covers up to $1 million, there are restrictions to the coverage, and that can pose a challenge when submitting claims. It’s wise to protect your home with insurance coverage that manages the level of risk you’re comfortable with.

Make Sure You Are Covered

Reach out to Farm Bureau to discuss your coverage needs. If your existing coverage doesn’t include short-term rentals, consider getting additional coverage to your policy that will keep you and your home protected should you choose to host on Airbnb.