Airbnb has gained immense popularity since it first became an option for homeowners. Nor does it offer unique accommodations for travelers, but it also allows homeowners flexible ways to generate revenue.

Over 2.5 million people currently have properties listed on the site and make an average of $20,000 a year depending on the location. (For example, vacation rentals in Florida, with its year-round warm weather, typically make more than this.) These numbers may have you wondering if you should utilize space you’re not using to generate some extra income. While it can be an attractive option, there are many considerations to make. Here are five things to consider before putting your house on Airbnb.

1. Legal Considerations

As a homeowner, you are responsible for ensuring you are not in breach of local laws through offering short term rentals. It is important to research local laws and speak to your homeowner’s association as well as your homeowner’s insurance agency to ensure you are not violating their policies. This is important because hosting short term rentals can often be seen as a liability.

2. Consider Long Term Expenses

Before you list your property as a short term rental, sit down and estimate what your long term expenses might be. Examples are rising utility bills, toiletries and cleaning supplies. You will go through these items quickly and will need to stay stocked up for incoming guests. Some homeowners charge a cleaning fee to offset these costs. The better idea you have of what running an Airbnb will cost, the more prepared you will be.

3. Do you have the time?

Operating an Airbnb requires more of a time commitment than many people initially think. For example, if an issue arises with a utility in the home, you will have to fix it before your next guest arrives. It is also important to stay close to your phone. You will need to be readily available to answer incoming inquiries and answer any questions that current guests have.

4. Evaluate your financial situation

Have you thought about refinancing your home in the future? If so, choosing to operate an Airbnb out of your home may have an impact on that. For example, a property that is rented out, even short term, can be classified as an investment property.

This often means a higher interest rate. It is also important to note that not all mortgage lenders will accept income that is generated by short term rentals on an application. This could mean that the money you have made through Airbnb may not count toward your total annual income.

5. What is your rental market like?

It is important to consider what the rental market is like in your area before using your home for short term rentals. By doing some research online, you can gather information about what comparable places are renting for. Looking at existing listings on Airbnb in your area is also a great way to gather information. This will help you decide if it is practical to host short term rentals in your area.

There are many factors to consider before putting your home on Airbnb. As a homeowner, it is your responsibility to ensure that you are following laws and regulations. When done correctly, Airbnb can be a great source of income for homeowners.

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