Real estate studies show that traditionally, a home could be rented out for any period, but most landlords would opt for a six-month lease agreement or longer with a potential tenant, also referred to as long-term rentals. However, one of the great ways of maximizing rental returns on a residential property of late is through Airbnb. Many landlords who traditionally would have opted for a long-term rental have done the math and realized that in a good month using Airbnb, they could actually make more money.
A home that "ticks all the boxes" is easier to find quality tenants because there will be competition between potential renters. This will allow the landlord to choose the best possible tenant who is "house-proud" and will do their best to look after the property.
Airbnb means meeting new and different people.
Getting to know people from different parts of the world and country can be so exciting and enlightening. You can meet people from all over the world at your very doorstep or coffee table.
Traditional renting says:
You don’t interact with tenants as much. In fact, you might avoid each other. They may be fascinating tenants but you shouldn’t be getting new tenants every month, depending on the lease and number of properties you own.
Airbnb means fun.
It’s not a boring job. You come to understand the fundamentals of customer service and hospitality. The customer is happy and you get rewarded through their reviews which generate bookings. You stay interactive with your property and make constant improvements.
Traditional renting says:
Landlords don’t benefit from titles like “Superhost” from having great reviews and a high response rate. Landlords don’t get to stay in touch with their properties. They also don’t have the opportunity to build a reputation for themselves as easily as Airbnb hosts do.
Airbnb means making money!
Ding, ding, ding! For some, this pro might trump all other pros and cons. Airbnb hosts who rent out their room have reported their income helping them with over 50% of their rent and paying their mortgage. Many Airbnb hosts have expressed making more money though their rental than through traditional leasing. That might make you wonder, “they make more money, but how much extra work do they do?” Well, it doesn’t have to be all that much. A lot of things can be simplified using technology.
We, at Hello, Suburbia, help the landlord avoid this extra work by installing and maintaining apps for locking and unlocking your door or creating house guides/manuals that should be adequate for guests to make themselves comfortable. Finally, the Airbnb platform takes some part in answering potential renter inquiries for you.
Airbnb means playing with your prices.
As an Airbnb host, you can take advantage of the weekends and high seasons by raising your price due to high demand and limited options.
Traditional renting says:
Can’t raise your rent randomly on weekends or high season.
Is Airbnb safe?
Nothing in life is 100% safe, of course--there is a risk in anything we do in life.
Here’s how you can make your Airbnb business as safe as possible:
Do your due diligence on the potential guest
After you get a booking request, check out the user’s profile page. There are a number of factors that hosts should look for:
Positive reviews: Does this person have any positive reviews from former stays? Some hosts choose to only allow guests with positive reviews to book their place. Some hosts like to offer people who are new to Airbnb a chance to get their first experience.
Verifications: Airbnb users can add several verifications to their profile. The most important ones to look for are government ID, email and phone number. In addition, guests can also connect social media accounts such as Facebook, Google Plus and Linkedin.
About me section: Here you can find a little more information about your guests--such as the language they speak, their educational background and their outside interests and hobbies.
Ask your guest additional questions
Questions that some hosts like to ask are:
– What is the purpose of the visit?
– Who else will be staying at my place?
– Is the visit part of a larger trip or an extended stay?
Hosts can set a security deposit to protect against small damages. After the guest(s) check-out, you have 48 hours to make a claim on this deposit. Airbnb will mitigate and charge the guest if necessary.
If you’re not comfortable, decline the request
Hosts always have the option to decline the request. Airbnb does not penalize hosts who decline bookings.
What if things do go wrong?
Airbnb has a $1,000,000 host guarantee in place that protects hosts against damages that couldn’t be resolved in another way--i.e. by using the security deposit or the hosts’ own home insurance policy.
Let us, at Hello Suburbia, protect your Airbnb business with integrated safeguards that give you peace of mind!
Landlords Aren’t Normal Hosts
The platform was originally intended to help people share their personal homes, not for landlords to lease their rentals. The typical Airbnb host can use the service as a way to help them pay their personal bills. So a “profitable hobby” works for them.
On the other hand, an Airbnb landlord needs to clear a higher hurdle to be considered profitable.
An Airbnb landlord is a rental owner that focuses on short-term rental engagements. For an Airbnb landlord to be profitable, they need to make more than a traditional landlord would. Otherwise they’re doing extra work without getting paid for it.
So even though an Airbnb landlord might enjoy hosting, if their net income doesn’t exceed that of a traditional rental, then their additional efforts aren’t fruitful.
3 Ways You’ll Increase Profits
Airbnb can be a very profitable tool. However, if you go that route, you should avoid these common pitfalls.
1. Updating Your Listing Regularly
Since you, as an Airbnb landlord, need to exceed a traditional landlord’s net income to be profitable, you want your listing displayed as much as possible. You want to minimize vacancies. That’s why you can’t just set-it and forget-it.
In addition to striving to collect 5-Star reviews and uploading compelling photos, you need to routinely update your listing’s description. Airbnb is always adding categories to better describe amenities and neighborhoods.
If you don’t routinely update your listing description, you risk losing money by getting filtered out.
2. Attracting Longer Term Guests
Airbnb landlords don’t share rooms in their primary homes. This means preparing for a guest’s arrival requires both time and money. While you do have the option to pass along the full cost of cleaning to your guest, it isn’t a good idea. You’ll end up making your listing look unattractive.
So what do you do? Turnaround costs really stack up when you book several one and two night guests in per week. Under this scenario, your cleaning cost may devour your income and leave very little left. Hosting frequent short stays is a niche where on-site hosts can find success. They can discount their time while working on their hobby.
Your time has value, and you will certainly be spending more of it managing turnovers. You, as an Airbnb landlord, should at least “pay” yourself minimum wage. If you do, you will quickly find that short stays are not worth your time.
3. Track the Long-Term Rental Potential
The rental market is always changing, especially these days. As Baby Boomers and Millennials seem to prefer renting over owning, long-term housing rents are climbing. If you don’t routinely check your net income against the changing long-term market standard, then you won’t know if your short-term rental business is your most profitable option.
If your local long-term rates catch fire, you need to reevaluate. Chances are good you could simply require a 1 month minimum on Airbnb, lower your rate slightly, and still make a huge profit.
Calculate Your Potential
We encourage all landlords to experiment with Airbnb. The company has a pricing calculator that estimates how much you can earn, based on occupancy and location. If you do try your hand as an Airbnb landlord, be sure to compare your net income to that of a traditional rental.
In summary, to give yourself an edge, you should:
At Hello, Suburbia, we know there are a growing number of ways you can use your rental in the collaborative economy. Play to your strengths and you can find success with us as your partner!