6 questions you should ask yourself before offering your home up as a host
In this economy, everyone is looking to make a little extra. A generation ago, we would have been picking up part-time jobs and cutting back on expenses, but the shared economy has given people a new option to bring in more money.
Airbnb is to hotels what Uber is to taxi companies. Homeowners rent out rooms or their entire home through an online network. The renters save money versus the cost of a hotel room, while the homeowners can make enough in just a few days per month to help with their bills. There is little regulation (at this time) of the sharing economy and for every success story you read about an Airbnb host, there are matching stories about multiple property owners taking advantage of the system.
Eventually, communities will get their regulations straightened out, but until that happens there are risks you run with using your home as an Airbnb lodging. Those risks are, of course, offset by the money that you can make.
What you should be asking yourself
If you are willing to explore the options of using rooms or your house to make some extra money, you should be asking yourself the following questions:
- Does my homeowner’s insurance cover this? Not all policies are created equal and although you would hope that your guests never cause any damage, it is better to have a plan for the worst, even if you never need it. Check with your insurance company and find out their policies on using your home as a “vacation rental.” Although there are slight differences, the coverage should be sufficient for normal wear and tear.
- What am I liable for? Answering this question is a little more difficult because the answers may not be easily found. Depending on your local ordinances, your liability may be much higher than you expect. By the same token, it might be less, but the important thing is to have the information available. Trying to find out what you are liable for in an emergency is the absolute worst time.
- How much money can I make? The answer for this question depends on what you are willing to rent out. If you are limited to one or two rooms, you will make less money than if you were renting an entire house. Your level of commitment will make the difference here.
- Is this legal? Although there are several legal actions being taken against Airbnb, in most cities and states, renting your house out is legal. It never hurts to check with your local Better Business Bureau, though.
- How are you taxed when offering an Airbnb rental? In addition to state and local taxes, host may be responsible for rental income taxes. Airbnb collects tax information from its hosts so they can track the amount owed at the end of the year.
- Can a person with multiple properties rent them on Airbnb? This is a tricky question. Although many hosts on Airbnb own the house that they are renting out, there are people who take advantage of the laws and the community to offer rental properties and apartments as Airbnb lodging. For obvious reasons, this happens most often in larger cities and is being cracked down on.
Airbnb is a terrific way for homeowners to make some extra money. As long as local laws are followed, taxes are paid and nothing gets damaged, everyone will be happy with the outcome. It has also created a secondary market protecting property owners from Airbnb excesses. Signing up at SubletAlert.com get notified when tenants sublet on Airbnb tool will protect you against people trying to rent out your property as their own.