As I write this article, a stranger lounges in my guest bedroom. Don’t worry — he’s supposed to be there. In fact, he’s paying me for the privilege of sleeping in our guest bed.
This guy, a college student traveling through town, is our fourth Airbnb renter. My husband and I decided to give Airbnb a shot shortly after we moved back into our newly-renovated home. We’d heard one of our neighbors in the area was making $900 a month renting out a room. So, we decided to get in on that action!
Though I doubt we’ll be able to cover our house payment with Airbnb income every month, we’ll probably come close. If you’re looking for some extra income on the side, here are my tips for paying your mortgage with Airbnb.
Get to know your local market
Before you list a room, couch, or your whole home on Airbnb, take some time to scope out other properties in your area. Around us, for example, most people are renting out bedrooms with shared bathrooms. Closer to downtown, there are whole-house rentals available, but these are much more expensive.
Our primary advantage is that our rental bedroom has an ensuite bathroom. This makes things more convenient for guests. It even entices them to stay at our property, which is further out of downtown than many would prefer.
Once you get to know your market, including pricing, you can see what amenities you should offer. Pay attention to details, like how many people can sleep in a room, whether most nearby listings include a private bathroom, etc. Then, do what you can to meet or exceed your local standards.
Make your space comfortable for your guests and your family
Inviting strangers into our home with our two small children felt uncomfortable when we first talked the situation over. But we decided on a workaround: our Airbnb room has its own exterior entrance, and the shared doors between that room/bathroom and the rest of our home can be locked from our side.
Our house rules state that the home is available to guests when we are home and awake. After all, part of the fun of being an Airbnb host is getting to know people from all over. But when we’re out or go to bed, our guests simply use the exterior entrance to get out and about.
A solution like this could work well for other families like ours. You may not even need to take such precautions, depending on your situation. Either way, think through what will make your space comfortable for both you and your guests.
Spend a little money at the outset
To get your Airbnb space in order, you may have to invest some money off the bat. In fact, we have spent about $350 on our Airbnb room. That money went toward a microwave oven, snacks and drinks for our guests, two sets of sheets, and nice bathroom linens.
At minimum, you’ll need to provide guests with clean linens and towels. We decided to up the ante with hotel-quality linens (white, so we can easily bleach them, if needed), and we provide our guests with a variety of snacks and K-cups for the Keurig we already owned.
You may not need to spend as much to get a room ready for Airbnb, but I will say it’s been worth the investment for us. We’ve gotten great reviews on the quality of our room… especially the snacks!
Take advantage of smart pricing
Airbnb has a feature called smart pricing, where it will change your listing price according to market supply and demand. It’ll suggest a low and high price for your listing, but you can set your own parameters.
I’ve found that the suggested low pricing is too low for us. Airbnb suggests $17 a night as a minimum price for our room, but we’ve had no problem booking our calendar for $25+. To determine your pricing, get to know what others are asking in your local area. We started out at about 25% below most comparable listings, and booked the room for several nights right away.
Smart pricing has automatically increased our price for weekends, on a couple of occasions. You can, however, log into your calendar to individually price different nights, overriding the smart pricing for that period. If you know of popular local events coming up, consider upping your rate accordingly.
Here’s a hint: for an upcoming holiday or event weekend, switch your Airbnb account to Traveler mode. Search for a room with similar amenities to yours over that weekend, and adjust your price according to what you find there.
Decide how you’ll manage your calendar
Managing your calendar is an essential part of being a good Airbnb host. You can black out as many or as few dates as you prefer. But be sure you black out dates well ahead of time. You don’t want to risk cancelling someone’s stay because you forgot to update your calendar.
You’ll also want to look at Airbnb’s calendar settings options. For instance, you can require advance notice before guests can book, so that they can’t book the day they plan to arrive. You can set the calendar to automatically black out either one or two nights both before and after a reservation, so that you can prepare your space. You can also limit how far in advance guests can book, and set a minimum and maximum stay for your guests.
The less restrictive you make your calendar settings, the more bookings you’ll get. For instance, we require one day’s notice of bookings, but don’t add any preparation time. We can turn our one room around in about half an hour, so we don’t need the additional prep time. This means we have gotten several back-to-back bookings, increasing our total income.
Make your listing clear
You don’t have to provide Airbnb guests any fancy amenities. A clean bed and bathroom, some granola bars, and shampoo for emergencies is enough for many guests. But you do need to make sure your listing is completely clear about what you do and do not offer.
This is especially true if you have any particular house rules. For instance, in our listing, we say that we have children, so we can’t guarantee a noise-free environment. But we also list quiet hours from 8PM to 8AM, so that guests don’t disturb the children at bedtime.
We list all the amenities included in our room, but don’t overplay things. It’s pretty simple, so we keep things straightforward. Someday we’ll likely outfit the room with a television and additional amenities. But for now, that’s not the case. And guests don’t mind, as long as they know what to expect.
Consider a whole-house listing
If you really want to pay your mortgage with Airbnb, your best bet is to consider a whole-home listing for certain big events.
For instance, we live in Indianapolis, the city of the Indy 500. Things get insane around here on 500 weekend, and we don’t like to be in town, anyway. So, we’re planning to rent out our whole home, which can easily sleep 10+ people. For the weekend, we expect to make anywhere from $3,000 to $5,000! A couple of weekends like this could pay our mortgage payments for most of the year.
You can list both a single room and your whole house, as long as you’re careful to maintain their separate calendars. We’ll be listing our whole house, but only making it available for a few select weekends through the year. When the whole house is available, we’ll black out the calendar on the single room so that it can’t be booked.
Again, if you opt for a whole-house listing, check the local market to get familiar with pricing and amenities. And consider tacking on a cleaning fee and deposit to protect yourself (and possibly hire professional cleaners!) when your whole home is rented out.
Be sure to take taxes into account
The process of claiming Airbnb income on your taxes is so complicated that H&R Block put out a whole Airbnb Host Reporting Guide in 2015, complete with several flowcharts. The guide includes information about where to report your rental activity, which depends on the services your provided to guests and how often you rented the property. It also includes a flowchart to determine whether your rental is a passive income activity.
The bottom line is that if you rent out your home, or a portion of your home, for more than 14 days over the year, you’ll probably have to pay taxes on that income. But if you pay taxes on the income, you can deduct expenses related to your Airbnb rentals. Deductions include any “ordinary and necessary” expenses, such as advertising, repairs, maintenance, utilities, and more. Items you provide for your guests, such as new towels that are used just for Airbnb renters, can also be deducted.
Keeping good records of income and expenses will be hugely helpful at tax time. You may need help preparing your taxes for Airbnb, especially if you do make enough to pay your mortgage!
Related: 15 Ways to Supercharge Your Finances This Year
So, can you pay your mortgage with Airbnb? It’s totally possible! I’ve been amazed at how quickly and consistently our room has rented out. We’re set to make over $500 within six weeks of listing our spare room. Whether or not Airbnb pays our mortgage, it’s set to become a big portion of our monthly income… and that’s well worth a few granola bars to me.
Topics: Earn Extra Income • Make Money • MortgagesThe post Could Airbnb Pay Your Mortgage? appeared first on The Dough Roller.
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