In 2008, Airbnb was founded by Brian Chesky, Nathan Blecharczyk, and Joe Gebbia. Airbnb is an online marketplace were members can offer their homes/apartments for lodging, primarily for short-term or vacation rentals. Over the past few years Airbnb has grown in popularity and is now used internationally. Airbnb offers users a much more unique and affordable experience than the average hotel. It also gives homeowners a great opportunity to make some extra income. As with everything there are pros and cons to choosing an Airbnb over a hotel and renting on Airbnb.
Staying at an Airbnb
Pros: If you are traveling somewhere for vacation I would highly recommend looking into local Airbnb’s. They tend to be much cheaper than hotels and depending on the type of rental you select you will have an entire home/apartment to yourself. Airbnb’s offer amenities that you wouldn’t find in a hotel, such as a kitchen, and laundry room. Certain Airbnb’s offer special features such as pools, hot tubs, and stocked fridges. With an Airbnb you definitely get the “at home” experience.
Cons: Unlike a hotel, which provides even more customer service to make your stay as best as possible, with Airbnb you most likely won’t find a continental breakfast, room service, or room cleaning services. When renting through Airbnb you may incur extra charges for cleaning fees and pet fees.
Leasing on Airbnb
Pros: Putting your property for rent on Airbnb can sometimes bring in more income than a long-term rental. When you lease through Airbnb you are covered by Airbnb’s insurance policy. This will reduce your worries of having anything stolen or damaged. When you set up your listing you can choose to accept all booking or review it before accepting. If you choose the review option you will be able to check the potential renters’ profile and see if they have any negative reviews from prior landlords.
Cons: Airbnb is not legal everywhere so be sure to check your city laws before starting. Since the nature of the business is short-term stays you will have a lot of turnover. The rooms will have to be cleaned and prepared for the next guest after each stay. Doing the cleaning your self can become tedious and it may be hard to find a reliable cleaner.
Overall running an Airbnb is much more hands on than a long-term rental however you have the potential to earn much more.
For those of you who do not have a property of your own to rent out, don’t fret there is another way to make this possible. Airbnb arbitrage is the answer.
The idea is to rent a property and then sublet the property to your Airbnb guests. Now there is a right way and a wrong way to do this. The wrong way would be doing utilizing this method without talking to your landlord. Most rental leases that you will find have a clause that states that subletting is not allowed or must be cleared by the landlord. If you decide to go this route without telling your landlord(s), he has the right to evict you’re from the property.
If you talk to your land lord prior to signing the lease you can have that clause removed and you would be good to go. Now you might be asking yourself, “why would a landlord be okay with this?”. Truthfully, they most likely will not be okay with this if you don’t frame it the right way.
Everyone wants to know what’s in it for them, right? So, when talking with the landlord explain to them the benefits of short-term rentals. Tell them that their appliances will receive less wear, their property is going to be professionally cleaned multiple times per month, and if everything works out you may be their last tenant ever (the last one is a big one, landlords hate searching for a qualified tenant)! Explain that Airbnb has an insurance policy that covers theft or damage. Finally, if they are still hesitant offer to pay more for rent or a percent of your rental earnings.
Pro tip: Make sure you don’t play this card right away paying higher rents cuts into your bottom line.
If you want to learn more about Airbnb Arbitrage click here.
With the continuous growth of the gig economy Airbnb popularity is sure to grow. There are currently a lot of legal battles surrounding Airbnb going on in major cities. Many hotel lobbyists are fighting to prevent or minimize the impact that Airbnb will have on the industry. If you decide to enter the Airbnb world it would be wise to follow any meetings or court hearings going on in your area, as it may impact the legality of your business.
Airbnb is a powerful tool that can bring in some serious cash. If you don’t have your own property to rent out you can try the arbitrage method, or consider renting out a spare bedroom in your house, some users even rent out tents in their backyards to travelers. As always be sure to do your research before jumping into any kind of investment.
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