With the booming sharing economy and travellers often preferring to forgo traditional hotel stays, the notion of renting out a room in your home (or the entire house itself) could seem appealing. But before you jump into peer-to-peer short-term rentals, there are some things you should consider:
Becoming an Airbnb host requires some startup cash along with ongoing expenses. These include the costs to set up and furnish the space, ongoing utility and cleaning fees which is usually not more than $30 per room.
You’ll want to make sure each guest space is attractive and has all the amenities that a weary traveller needs such as fresh backup sheets and plenty of towels. A savvy host can reasonably furnish an empty room for about $1,000. However, $500 can do the trick if you already have an extra bed. Big box stores can help supply furniture for a range of pricing.
The upside of being a host is that if you work hard, possess excellent customer service skills and treat the platform like your own personal business, the revenue generated from the listing can surpass the initial startup costs and provide a nice monthly return.
If your property is controlled by a homeowners’ association or co-op, check its rules to make sure you’re allowed to host; some may restrict Airbnb activity, while others may have no issue. If you rent, you’ll want to get your landlord’s blessing.
A proportion of Airbnb hosts could very well be renters, who may or may not be telling their landlord. It is recommended to get your landlord’s approval through a signed agreement. In most Canadian provinces, tenants cannot rent out their apartments without the approval of their landlords.
Airbnb Canada details here how tenants should go about this process.
Depending on where you live, you might require a business license and you might owe local taxes on any income you earn.
Quebec law requires short-term rentals of less than 31 days to obtain a licence from Tourism Quebec. Vancouver has proposed regulations that only allow the issuing of short-term rental licences for a primary residence — meaning the host, whether owner or tenant, must live in the dwelling. This rule targets hosts with multiple investment properties who operate as commercial hosts and eat into the housing stock.
Toronto has proposed a two-pronged approach to licensing, requiring both companies such as Airbnb and hosts to register and pay an annual fee. Hosts of short-term rentals in Toronto would be required to pay an annual fee ranging from $40 – $150.
As tax is a relatively complex topic, Airbnb has provided some information about local regulations in different Canadian markets. Above all, it’s good to consult a tax professional to get more specific information.
You’ll want to tidy your space, present it in the best possible light and hide your valuables before you photograph it.
Like the listings you love to peruse here on REALTOR.ca, the photos and listing title are the first thing a potential guest will see on Airbnb. This is your opportunity to catch their attention.
You can either take your own photographs or contract out a professional photographer. Many hosts opt for professional shots, given how important eye-catching photos are for your space’s profile.
Before photographing, ensure that you prep by arranging suitable lighting conditions and use a quality camera (now available on most smartphones).
Airbnb’s Host Guarantee provides up to $1 million in insurance coverage for property damage in 29 countries, including Canada, the United States and the United Kingdom. Airbnb’s insurance is not a substitute for homeowner’s or renter’s insurance and it doesn’t protect against theft or personal liability.
Airbnb states that damage to a host’s property (home, unit, rooms, possessions) in every listing is covered up to $1 million USD. However, hosts must provide documentation as part of the resolution process. Payments made through the Host Guarantee are “subject to Host Guarantee Terms and Conditions,” meaning there are exclusions, limitations and conditions. As well, it’s common for Airbnb hosts to receive emails from Airbnb, at random, informing them that various terms and conditions have changed.
Call your insurance company to see what is covered, as some home insurance policies cover short-term rentals. But if there are multiple short-term visits, the insurance company might require you to buy a business policy that would cover a hotel or a bed and breakfast.
Airbnb’s host guarantee doesn’t protect against wear and tear to your place, but you can charge a security deposit to cover possible damage.
Installing a reasonable security deposit is a no-brainer move for new hosts. Airbnb allows hosts to set up a security deposit to cover minor damages that would not be covered under the Host Guarantee. For example, if a guest breaks a door handle while staying at your property, you’ll want to replace that before the next guest comes.
However, Airbnb won’t consider this damage to be major and won’t cover it under the Host Guarantee. As a result, this becomes an out of pocket expense for you, unless you charge the guest a security deposit. When guests make a reservation, they are not immediately charged for the deposit – only if a host makes a claim.
Even if a host is only renting a single room, a security deposit is a safe move just in case anything gets damaged.
Airbnb could require you to refund a guest’s payment if you cancel a reservation at the last minute, forget to leave the key, misrepresent your listing, don’t clean your home or otherwise fail to meet Airbnb’s hospitality standards. Airbnb suggests making sure you’re available during the guests’ scheduled check-in to address any concerns.
Airbnb’s payment system is quick and efficient. Payments are sent through direct deposit after the guest completes their first night (regardless of the length of stay).
When a guest books a host’s space, they also agree to the host’s cancellation policy, which dictates the percentage of the booking costs (minus Airbnb’s cut), if any, they will get back. Most moderate policies allow a guest to cancel within two days of the first night to get their money back. Less moderate policies allow the host to collect more of the booking money.
Host cancellations also happen from time to time. One study found host cancellations are the top complaint on Airbnb, representing about 20% of all complaints.
Depending on when a host cancels a stay, they’ll be deducted either $50 or $100. If a host cancels three or more reservations within a year, Airbnb may deactivate the listing.
If you talk to enough long-time Airbnb hosts, they’ll be able to tell you an endless number of stories about inspiring and interesting guests who shared their home. Others might have bad experiences. There are clear potential advantages and disadvantages to becoming an Airbnb host.
However, if all the regulatory checks are taken care of, the space is up to par and you’re taking your hosting responsibilities seriously, the platform can serve as a nice way to earn extra cash and meet interesting travellers from around the world.
The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.
Source: Realtor.ca – Joseph Czikk – Joseph Czikk is a Canadian freelance journalist. His work includes topics like homeownership, business, tech and personal finance.
Have you dreamed of designing and renting out a country retreat through a popular site like Airbnb.com? One family shares how they made their rural Airbnb home a success.
The Hartman family live on a small piece of acreage just outside the Asheville, NorthCarolina city limits.
Despite their proximity to one of the South’s most popular tourist destination cities, their land is rural in every sense.
Walk outside at the right time of day in the right season, and you may catch a glimpse of a black bear, wild turkeys, deer, a bobcat, some turtles or any number of birds. They’re less than a mile from several world-class hiking trails and the winding road to their home is surrounded by pasture and nature.
It’s the ideal blend of mountain-country-living with hip-city convenience.
So, when their neighbor’s home burned down about four years ago, the Hartmans leapt at the chance to buy up the 2.5 acres that abuts their current home.
Their plans for the land were vague, but after much planning, discussion, decision-making and brainstorming, they decided to build an Airbnb-style minifarm retreat: Blue Turtle Farm.
The only thing was, neither of them had any experience running a microfarm OR a hospitality business…nor did they have much spare time to learn. Meggan is a psychologist, sleep consultant and faculty member at Meridian University and Brody is an executive at a leading branding agency, as well as a Purpose Guide, mentor and a meditation teacher.
Yet they forged ahead and have managed to exceed their Airbnb business financial goals in just one year.
How did they do it (and could you do the same)? Read on to find out.
Brody and Meggan knew they had something special in their new property (it’s not every day 2.5 acres with an existing house foundation and driveway go up for sale in your backyard). The trick was discovering the best use of that wild 2.5 acres.
“We sat on it for two years because we knew we had to get the overgrown land in order first,” Brody says. “So we got some chickens, got out there on weekends with the weed wacker and just dreamed about what we could do.”
Meggan adds, “We also had to set a clear intention for the property—do we want to have someone come in and do flowers, do we want to grow herbs or create a market garden? So we had to look at what we could feasibly do and manage with our limited time, andwhat made the most sense for income. We also knew we wanted continued access to the land.”
While they knew they wanted to care for the land by starting a sustainable “pocket farm,” they also knew the existing homesite would be perfect for an investment home.
“We always knew we’d build on that land someday and possibly move there,” Brody says, “the question was: just what type of structure to build and when?
“And if you’ve never managed or developed even a small piece of land, it’s a HUGE learning curve. So we had a ton of people come out to assess the soil, the water situation and where to place the home visually for functionality, off-grid capability and aesthetics.”
The Hartmans also talked to their neighbors about their plans and studied the local zoning laws.
Once the land was in order, they’d chosen the best homesite and decided on a short-term rental business, the next big choice was: what type of house to build?
The Hartmans originally thought they’d build something small and simple to keep costs low, but after talking to two real estate experts, they changed their minds.
“We consulted two of our friends in real estate and they both recommended we build-like we-needed-to-sell,” Brody says.
With that in mind, they began researching comps and found most buyers in the area were looking for a 3 bed, 2 ½ – 3 bath home with “X” amenities.
Brody says 3 other factors weighed heavily on their decision:
“#1: If we flip it one day, how do we get the most out of it for resale? #2: If we were to move over there, what would we want in a home? And #3: what would an ideal Airbnb experience be for our guests?”
In the end, the Hartmans hired a reputable local high-end builder to construct a modern 3-story, 3 bedroom/3 bath home with a separate basement suite on the existing foundation.
“Having a good architect or good house plans and finding a reputable builder is key. You also need to think about parking when designing your space,” Meggan says.
With a reputable builder in place and home design underway, the Hartmans re-focused on learning the local short-term rental market.
“We researched local Airbnbs and VRBOs for going rates, we read the reviews and drew on our personal experience as guests of Airbnbs,” says Brody. “We also talked to a lot of people who had Airbnbs. Knowing the market in your community is essential.”
How they determine competitive pricing:
While there are Airbnb-centric consultants, articles and content available, Meggan offered this advice on pricing:
“We knew we had to cover our costs and make a profit, and at the end of the day you’re working backwards from your mortgage—and it’s a bit of a moving target in the beginning because you know that number will change once you’re finished building.
“The Airbnb suggested rate for our area is lower than we decided to charge. But, we had a clear intention: we wanted to create the best experience in the best environment, and we knew people would pay for that.”
And they have. To-date, the Hartmans’ Airbnb earnings have already exceeded their monthly mortgage…and it’s been open for short-term rentals for less than one year.
“Pricing also depends on how you want to run your rental. For example, will it be a year-round rental or do you really want to crank it for just 4 months out of the year? So again, your intention and goals are everything.”
When it comes to creating an optimal guest experience, attention to detail is everything.
However, when you’re floating a mortgage and a construction loan you can’t typically do everything high-end. Here’s how the Hartmans furnished and decorated their Airbnb without breaking the bank:
“In addition to getting the professional photography and branding/descriptions done, furniture had to be moved in and put together, detailed cleaning had to be done, window treatments installed, etc.,” Brody says. “It’s important you build in extra time to complete those details.”
When the house was finally done, the Hartmans invited friends and family to stay and critique the home.
“We told them to bring it! And thanks to their feedback we wound up replacing the downstairs bed and making some further improvements,” Meggan says.
To buy some time (and secure some more feedback) the Hartmans also rented the home to a local family of four for the first 3 months.
“That gave us a buffer and their feedback was extremely helpful.”
The Hartmans listed their home on Airbnb and VRBO and paid special attention to branding.
“Professional photography is very important,” says Brody, a branding expert, “as is getting the descriptions and owner’s manual just right.
“I’ll never forget when I got that first notification from Airbnb, then the first booking. It was so thrilling to see. I still get excited when I see them come in!”
Since Airbnb is all about recommendations and ratings, the Hartmans are vigilant about responding to guest requests, addressing any concerns and rating their guests promptly.
This attention to detail earned them “superhost” status in October. “It’s really important to get those milestones met, and it’s a high bar—no cancellations, at least 4.5 stars every time—but if you deliver, then superhost status will come,” Brody says.
While they are listed on both Airbnb and VRBO, they’ve found each application has its own distinctive audience and find Airbnb’s interface more intuitive and easy to manage.
To avoid double-bookings, they use an integrated managing calendar.
For day-to-day, the Hartmans highly recommend hiring an exceptional cleaning service that specializes in short-term rentals/hospitality.
“Our first service was good, not great,” Brody recalls. “They didn’t get all the details or what it meant to be a superhost. I spend a lot of time in hotels for my job, so I know what those details are!”
One day, their cleaning service didn’t show up and Brody and Meggan had to run over to clean the house themselves. After that, they found a better service.
“We wound up hiring a husband and wife team who also does basic maintenance, which has been a game-changer,” Brody says. “They know what it means to care for a short-term rental, for example, she brings local magazines and keeps them up-to-date, and keeps the house impeccable.”
They’ve also given the cleaning service access to their booking calendars, which automates the entire process.
“Now we could leave the country for a month and would not worry.”
With the cleaning and maintenance dialed in, there’s very little other day-to-day work.
“The only other thing we do regularly is bring over wine, crackers, cheese and a custom welcome note,” Meggan says.
Technology also helps keep the day-to-day tasks at a minimum.
The Hartmans have set up their online booking so guests can book automatically—provided they meet certain requirements. Then they send a personal reply.
They also use an app that tells them if the doors are locked or unlocked, and they are out on the farm regularly should the guests need them (which they usually don’t).
Negative reviews are the plight of any modern short-term rental business, here’s how the Hartmans have maintained a nearly unblemished review profile:
“Airbnb lets you communicate with the guests before your mutual reviews are published. So we always take that opportunity to ask the guest if there’s anything we can do to improve hospitality. says Brody.
“With that approach, we’ve only had one 4-star review on one attribute saying we weren’t truly 12 minutes from downtown, so we changed the listing to 15 minutes.”
They also recommend being clear about the role you will play as host.
“Some hosts live off-property, some hosts live next door and personally greet every guest,” Meggan says. “We let people know we’ll be on the property and will be as available, or not, as they want. Most of our guests want to be self-sufficient and just say hello if they happen to see us, and we’re fine either way.”
“Our profit goal for year one was to exceed our mortgage costs, and we managed to do that within the first month of full-time short-term rentals,” says Brody. “There are months now that we’re more than doubling our mortgage.”
The Hartmans believe their location plays a role in this, as does the quality of the home and the natural beauty of the land.
When asked their biggest startup challenges, the Hartmans offered these lessons learned:
Based on their success and excellent reviews, the Hartmans’ property is now being considered for “Airbnb Plus” status.
This means they have to meet a 100-point inspection list and have a certain level of aesthetic value which caters to a higher-level guest. Airbnb pays to have the home re-photographed, and if they pass inspection, the property gets a special badge.
They also plan to add a hot tub and possibly a wood stove to increase winter rentals, and will use the property for purpose-building workshops.
Source: Rethink Rural – Posted by Kristen Boye on April 15, 2019
Florida is an intriguing state when it comes to buying and owning rental property. On one hand, demand for homes — especially single-family homes — has been consistently on the rise in Florida. Yet despite the demand, it doesn’t necessarily convert to more homebuyers. Instead, even though Florida boasts fairly low housing prices statewide, many people are still opting to rent instead of buy. As a result, rental rates are skyrocketing.
Now add into the mix low property taxes and insurance, as well as no state income tax. Great climate and top-of-the-line healthcare are bonuses that help make Florida one of, if not the best, states for America’s retiring Baby Boomer masses.
Here’s a look at the best places in Florida to own rental property and turn a solid profit.
Although Tampa home prices have risen in recent years, the city still has plenty of neighborhoods and zip codes where investors can find properties at affordable prices, and rent them out for $1,405 to $1,527 a month on average.
Tampa’s economic prospects really boost the city’s appeal to rental property owners. Tampa’s year-over-year employment growth beat the U.S. average. According to Bureau of Labor Statistics data, U.S. nonfarm employment increased approximately 1.6% from 2017 to 2018, while Tampa managed a 2.3% increase.
Healthcare and social assistance is the dominant employment sector in Tampa. This isn’t a bad thing considering jobs such as home health aides, personal care aides, physician assistants and nurse practitioners all rank among the top-10 fastest growing occupations in the country, according to BLS Employment Projections.
Here’s a breakdown of some important figures to consider before buying property in Tampa:
The trajectory of Tampa’s population growth is very conducive to potential future property owners. Since 2013, Tampa’s population has risen by an impressive 12%, one of the highest rates in the country. With a local economy worth well over $130 billion, Tampa is easily one of Florida’s best markets to buy and own rental property. For a more in-depth look, or just to explore, take a look at this interactive map of the Tampa real estate market.
Robust job and population growth as well as great affordability greet prospective investment property owners in Jacksonville. Florida’s largest city is also home to a first-rate healthcare system, and burgeoning biological sciences sector. The population in Jacksonville has grown about 8% from 2013 to 2018, and 24% since the year 2000. Plus, the median home price is $210,000 in Jacksonville, which is 33% cheaper than the national average, $278,900.
Jacksonville’s average rental yield is among the highest in the U.S. Rent growth is also healthy. The city’s 2.6% increase is better than the national year-over-year average of 0.5%. Specific markets within the Jacksonville metro area, such as Butler Beach, are displaying rent growth rates in excess of 10%.
Here’s a breakdown of some important figures to note before buying property in Jacksonville:
The reasons for all this growth and development are manifold. Jacksonville’s cost of living is below the national average. And to this is we can add the usual Florida amenities, like warm weather, conducive business climate and no state income tax.
In terms of both employment and population growth, Orlando really outshines. From summer 2017 to 2018, employment increased 4.3%, which is almost three times the U.S. average growth rate. Its population surged by 14% from 2013 to 2018.
The most common employment sectors for those who live in Orlando are accommodation and food service (12.3%), which includes workers of Orlando’s world-class resorts like Disney World and Universal Studios Orlando. Second most common sector is healthcare and social assistance (11.9%), followed by retail trade (11%).
Here’s a breakdown of some important figures to consider before you buy property in Orlando. Also, here’s an interactive map of Orlando’s real estate market to help out.
Rents grew 2.3% in the last year, which is well ahead of the U.S. overall growth rate. Rent yield in Orlando is markedly higher than in most other cities. Comparatively low home prices combine with relatively higher rent prices to create a city that is especially suitable to owning rental property.