Over the last two weekends, my husband Thom and I rented our personal home out on Airbnb. We’ve used Airbnb when traveling and have stayed in over ten different properties ourselves during the last couple of years. This, however, was the first time we have ever “hosted” strangers in our home. And while doing it twice certainly doesn’t make me an expert, I came up with some advice for anyone who might want to consider it in the future.
Homes as vacation rentals are popular in our community because the Palm Springs area is a world-famous travel destination. It also features several large annual events. As I mentioned last week, mega concerts like The Coachella and Stagecoach are held here every April and draw over 100,000 people each weekend. Hotels can’t accommodate everyone, so homes rented through sites like Airbnb and VRBO do very well. Rumors are rampant that some owners in luxury homes near the site generate up to $30,000 for the weekend. How could anyone not be tempted by that?
So last May when I was unable to get tickets to the concert named Desert Trip for myself, we decided to cash in on some of that income. Based upon what other homes were renting for during that time, and my experience as a renter, I listed my home on Airbnb on May 8th with some attractive photos. Within a week both weekends were booked. Not bad for a beginner. And now, five months later, my income is in the bank, and my Airbnb guests have come and gone.
What we’ve learned is that like most life experiences—there are good things and some less than positive things. Here are the benefits:
1) The income. For the two weekends, we grossed over $2,500. We purposely priced our nightly rate at what one of the nicest hotels in the area was charging for rooms. While our home is clean, well-located, and extremely comfortable, we realized it is not a luxury home. We also didn’t want people using as a party property, so we limited it to four people. We also didn’t want our guests feeling so entitled they could do anything they wanted because they were paying so much. At the same time, we asked a price that made us feel good about renting in the first place. After all, why bother if it isn’t a win-win for both parties?
2) Motivation. One of the best things besides the income was the excuse and incentive to do home repairs and maintenance on our house that we’d been putting off for a while. Things like touch up painting, cleaning the grout on our floor tile, having the trees trimmed, as well as cleaning out and decluttering cupboards and drawers suddenly became a priority. Nothing like a deadline to motivate a person! Now that the guests are gone we have an upgraded and well-maintained home to ourselves.
3) Testing our levels of trust and non-attachment. Something that came up repeatedly when we explained to friends and family about our decision to rent our home was the issue of trust. People asked, “Aren’t you afraid people will trash your house?” Or, “what about your stuff? Aren’t you afraid people will steal or abuse it?” First off, Airbnb allows you to request a deposit. To make a reservation people must use a credit card and that card, along with your “deposit request,” is on file. You designate the amount. Should your guest damage or trash something in your home you can contact Airbnb, and they will deduct it from the credit card on file.
But even with that level of protection from damage and loss is the idea of walking away from your home and letting complete strangers sleep in your bed. If the property is a second home and you’ve had lots of people moving in and out, it is likely much easier. But it does make you ask how attached you are to the things you own. We did put a lock on my office door, which contains my computer, my books, my journals and a few other personal things. That helped. Other than that, I packed up all my underwear and vitamins and stored them in the office as well. That’s it. The rest of the home was fully accessible. Thom had other issues like concerns about locking doors and the garage being kept closed. Overall, it helped once we met the people in person. But if you ever want to see what you are most attached to in your home, and your level of trust in other people, this is an interesting way to do it.
4) Learning. In case you haven’t noticed before, I tend to believe it is SMART to continue the learning process no matter what your age. I learned a lot about the experience of renting through Airbnb. That’s why I’m sharing them with you.
5) The 14-Day Tax Rule. Something I just learned today is a rule by the I.R.S. stating that homeowners who rent out their home for 14 days or less within one year do not have to pay income tax on that income. Our 7-day rental qualifies and is tax-free. Be sure and check this with your accountant but it helps make the income even better. Plus, making things easier was the fact that our city recently negotiated with Airbnb and TOT (occupancy taxes) were charged to the guests and paid directly to the city.
Okay, so that is a short list of the benefits that we received from renting out our house. Here are the downsides.
1) Where do you go when you rent out your house? The vast majority of Airbnb properties are either second homes or guest homes on a host’s property. For our rental to work, we had to vacate our primary home. Sure we could have asked some of our friends and family if we could use their spare room. But that didn’t feel comfortable to us, especially with our dog Kloe. To make the most of it, we needed to find somewhere else we wanted to be that didn’t use up all the income we planned to receive.
For the first weekend, we attended another music festival several hours from our home that we had attended in previous years. We found an Airbnb rental at ½ the price we were receiving and had a great weekend. The 2nd weekend turned out to be more of a problem because the home we planned to stay in was a 2nd home belonging to friends that ended up rented as well. Fortunately, we contacted the owners of the mountain home we rent every summer, and they were happy to let us stay there for a reasonable fee for the area. It turned out well for us, but the process caused some concern. If you don’t have a place to stay when you rent your home, it might not be worth it for you to do.
2) Damages. Both sets of guests on both weekends were wonderful people. Unfortunately, once our first weekend renters checked out, I got a text saying, “Sorry. We broke a wine glass and my sister’s makeup stained the sheets in the 2nd bedroom.” What do you do? Yes, we could claim the damage on the deposit. The wine glass was no big issue—Thom breaks them all the time! But the sheets? Do I have to replace the entire set? What’s a fair charge? Am I being picky? In the end, we decided to let it go to the cost of doing business. Things happen. Fortunately, the sheet could be turned upside down, and the stain was white, so it hardly showed. Lesson learned.
If you research it, there are some horror stories about people who rented their homes out only to return to a disaster. I would be lying to say we had no thoughts about the potential damage to our furniture. But other than the wine glass and the sheet, everything looked as good when we returned as when we left. I’m happy to say that both of our sets of guests left the house spotless and in excellent condition. And from what I’ve also read, that is actually the experience of most hosts. But again, things can happen.
3) The Hassle. Let’s face it, doing anything out of the ordinary can be a hassle. It’s far easier to do the same things we always do. As creatures of comfort and routine, most of us drag our feet even if we think something is a good idea. Although our guests were very clean and left everything tidy, it still shook up our habits. Not only did we prepare in advance to make sure our house was in perfect condition, but we also scheduled the house cleaner to make sure everything was extra clean, packed up what we needed to take with us while away, did laundry, changed sheets and put away all our personal items. Then, after the first guests left, we came home and did it all over again.
So, with those benefits and downsides, will we do it again? Probably not. Sure the income was great, but that was only possible because of the large-scale event held in our area. Normally the income would be about half that—and the trade-off for vacating our home would not make sense. However, if a person or couple is in need of extra income and has a place to stay while renting, it might be worth the trouble.
The best advice I can give anyone who is contemplating the possibility is to be flexible and non-attached. If you can manage both of those qualities, and the money sounds intriguing, you might want to try it out. What is always SMART is knowing our options and then making the right choices for each of us.
What about you? Have you ever rented your home on Airbnb or VRBO? Please share your advice in the comments below.