Airbnb Hosting 101
Regardless of which end of the renting relationship you’re on, you’ve most likely heard of Airbnb. If you haven’t, Airbnb is a platform that allows people to rent out their spare space, whether it’s a single room or the whole property, acting as a kind of hotelier (but not quite). Founded in 2006, Airbnb has disrupted the accommodation industry across the world by enabling people to monetise their spare rooms and empty/investment properties.
Unfortunately, not everything is perfect for property owners in the world of Airbnb. While many people have a hassle-free experience with the platform, plenty have had some toe-curling ones. Is Airbnb right for you? We can’t say, but what we can do is give you some tips on what you need to think about before you sign up.
Keep your expectations realistic
This advice works for every venture, but it’s important to manage your expectations. Airbnb has allowed people the globe over to monetise their properties. But while it might seem more fashionable than a timeshare, there are still some potential downsides to be considered.
One of these is that Airbnb requires relatively active management. You can’t just spend five minutes setting up your listing and then wait for the money roll in. If you’ve ever sold on eBay, you know that sometimes the small things take up the most time. With Airbnb, you’ll not only need to actively watch for applications so that you can review and approve potential guests (more on this shortly), but there is a process involved for each guest as well.
For example, after each guest checks out, you’ll need to have your property cleaned before the next guest can come along. If you’re renting out a room in the house you live in, this is probably fine, but if it’s a different property in another town, you’ll need to engage cleaners for the task. While the cost of that is usually covered in the listing price, you’ll need to find a reliable cleaner where the property is, and make sure that they’re doing a good job. If you’d rather go and clean it up yourself, you may need to rent your property less often so that you can be sure you’ll have time to clean it.
Knowing what’s required of you as an Airbnb host is crucial to managing your expectations, and also knowing what’s expected of you.
Give it the time it deserves
So you’ve decided that Airbnb can meet your needs, and you can do what you need to in order to manage guests. Wonderful!
You now need to list your property on the platform. You might think that it’s as simple as a Gumtree listing, but unfortunately it’s more involved. See, Airbnb isn’t just a directory of available places that are listed in a fixed order, like a pamphlet—listing order is determined by a complex algorithm. If you just take some photos and put up a description, it will gladly work out where your property will be displayed and suggest a price for you. But be warned: Airbnb aren’t looking to maximise your profits, which means you may not be getting the best (i.e. highest) price suggested to you. There may be things that you know that it doesn’t, for example how the local karaoke scene on Thursday night is so amazing that people come down and stay for the night, and your place is just around the corner.
If you really want to optimise your income, you’ll need to check how similar properties in your area (and maybe those farther afield) are selling themselves and test out/change your strategy. As every tenant brings with them some degree of risk, it makes sense to try and maximise your gains against that risk!
Also, there’s more to managing Airbnb listings on a functional level (including putting together a welcome pack for guests with ground rules). It’s imperative that you see what posting and maintaining a listing involves before just jumping in.
So you’ve thought about it and made sure that Airbnb will work for you. Your listing is up, and hopefully the applications have started to roll in. This is where the risk becomes apparent. All of property management is about inviting strangers to use your assets, but in this way, Airbnb is riskier than the typical rental agreement. While Airbnb has their own process for vetting potential guests, ultimately a higher turnover will result in a chance of running into a bad guest. For example, if a property manager has a one in one hundred risk of a bad tenant, if you have two tenants in every week over a year, you’re likely to have one ‘bad tenant’ a year, whereas in the life of a typical investment property you may not have a single one.
And, of course, if your Airbnb property is something closer to your primary home (or is indeed a room in the house you live in), you run the risk of complete strangers infiltrating your personal space. While Airbnb has their own screening process for potential tenants, it may not be as robust as you might like. As a host, it falls to you to review and accept/decline potential guests. Fortunately there’s a lot of discussion about Airbnb, so you can find out what’s an acceptable amount of information to require from a potential guest (especially if they’re a new user). While Airbnb do offer the Airbnb Host Guarantee, whether or not it covers the damages caused by your guests is another question. So be cautious, and make sure that your insurance policy covers Airbnb-style arrangements as well.
Airbnb is part of the new tech movement, and as such the legislation that protects, allows or disallows it is usually being written on the fly, or in response to particular incidents. You are responsible for keeping on top of the regulations governing Airbnb and your property. These rules vary state by state, and also sometimes by property title. For example, in 2020 strata and tenancy laws in NSW changed, allowing managing bodies to create by-laws that limit short-term rentals (including those not facilitated by Airbnb) in their properties.
As with all things, these laws are prone to change. And while they might do so slowly, it’s worth watching to see which way the wind is blowing in relation to short-term rentals, and Airbnb in particular, so that you don’t get caught out.
Shared spaces and best behaviour
If you’ve ever stayed in a hotel or motel, you know that people don’t go away on holiday to stay quiet. People are often returning late and leaving early and can be quite noisy. If you’re listing your property on Airbnb, it might not make you too popular with your neighbours. This might just annoy them, but could also result in the police being called. It falls to you to outline your needs with your guests, and if your property is in the kind of neighbourhood that won’t take kindly to a mid-week party, then you need to lay some ground rules with your guests. You need to let them know when they should look to start winding down for the night, and when they should try and keep the noise to a minimum. It’s worth communicating this with your neighbours as well. This is exactly the kind of information that you need to include in your welcome pack. Not only will this keep your neighbours happy, but it’ll also minimise the chances of you seeing your property on the news for a house party that got out of control!
Airbnb has created a fantastic opportunity for property owners to maximise gains and flexibility with their portfolio. However, like any new opportunity, there are advantages and disadvantages to moving ahead, and it’s important that you make sure that it’s a good fit for you. It’s not a decision to be made on a whim—surely we’ve all seen enough examples on the news of what can go wrong with unchecked house guests. The extra income from Airbnb needs to be carefully weighed against the administrative and upkeep time that you’ll need to spend to make sure you’re getting the best bang for your buck. And you’ll need to make sure that the gains in one area aren’t being outweighed by negatives in another area (like annoying your neighbours or opening your retirement plan to strangers!). However, if you do your homework and think that Airbnb is a good fit for you, then the sky’s the limit.