AirBnB a good thing (side income)

Long story short, the girlfriend found her perfect house and her offer was accepted. My address is 4603, hers will be 4601. Yup. Next door to me.

We had toyed with the idea of buying together, but we've only been dating since December, and despite it being an amazing relationship, its just a bit early to enter into such a quagmire of financial sharing at this point. We've decided to each own separately on paper for now.

The original long-term goal was that when we did decide to move in together we would just rent or sell the other house. Just didn't think it was going to be next door OR one week after I moved into my house.

Selling is an option if the market is favorable. Renting could very easily net me double what I pay to the bank so that is an option. It could probably rent for $800-950, but I really don't like the idea of renting it out. The law doesn't really let me choose who I rent to other than weeding out financially capable applicants, and once they're in the house I have few rights for eviction if things don't go well.

So what if I list it on AirBnB? I figure $100 a night means I only have to find 8 nights a month to equal what I would be getting (and only 4 nights a month to cover my mortgage), but without the potential headache of bad tenants and wear and tear on the house.

My house is not really near to anything with a big draw. I'm 15 minutes from Hershey and 10 minutes from downtown Harrisburg (although there really is zero tourism draw in Harrisburg). 30 minutes to Lancaster which has a modest tourism draw. I'm not looking to get rich, just cover some costs. I figure there must be 6 or 8 people per month who use AirBnB who are coming to Harrisburg for something.

Thoughts?
Other self-rent sites to consider?

15 minutes from Hershey?

Do you belong to the racepa.com forum? Or the Susquehanna region Facebook page?

I'd be willing be to bet a lot of guys that travel there for autocross would rather rent from a gear head than a hotel when they come to town for events. That could be an easy place to start

In reply to curtis73:

Curtis, I was looking into this recently (my thread). First thought is: buy the market report for your local area from AirDNA. I did this, and its well worth the $50.

Remember, your $100/night also has to cover all utilities and upkeep, something that would likely be at least partially shared with a typical tenant.

Also, RevRico's point regarding race events is a good one. Esp. if you offer a group rate.

VRBO

Don't discount longer term rentals via AirBNB either. That's how I tend to stay out of boring hotels for longer-term consulting assignments.

ProDarwin wrote: In reply to curtis73: Curtis, I was looking into this recently (my thread). First thought is: buy the market report for your local area from AirDNA. I did this, and its well worth the $50. Remember, your $100/night also has to cover all utilities and upkeep, something that would likely be at least partially shared with a typical tenant. Also, RevRico's point regarding race events is a good one. Esp. if you offer a group rate.

Thanks for the link.

I do see the logic behind upkeep/utilities, but I think I would likely keep it as my space primarily. So I could airbnb as renting "private bedroom" or also have the option of "whole house" and I crash next door with the lady person.

So my logic is that I'm already paying $380/mo to the bank and airbnb would just be a way to defer some of those costs. I guess I'm saying that I'm already paying my own utilities by living there most of the time. I'm not looking at it as a business/profit-and-loss/how much utilities kinda thing.

We'll call it racing money. Or beer money.

Don't forget that you also need to furnish it and clean and restock it between guests. It's not as hands off as a regular rental so you need to make more money from it. Otherwise I think your plan is sound.

Ditto that, it's a really important distinction:

When renting a property, you provide a shell with some core appliances - the tenant is responsible for all furnishings and for basic upkeep. This is passive income, and the profit margin is often quite thin until the property is paid off.

With ABB you are providing both a clean, stocked and furnished space as well as a hospitality service. Profit margin can be much higher but maintaining your rental is a job, not passive income. It requires real up-front investment and work between every guest. Understand this going in and you're much more likely to be successful.

Here's what I posted in the other same thread.

Pays our mortgage on our vacation home and then some in 3 months, we enjoy it the other 9. We rent for $250 a night with a 2 night minimum. We go camping and travel during the peak tourist season. You have to HUSTLE and either clean your self or budget paying someone in the mean time but it can still be worth it depending on your property and location. We spend a LOT of time cleaning up after other people or if we are out of town (more often than not in the summer) we pay a small fee for the local lady to turn the house.($75)

Here's what I'll add:

We live in a tourist area so we go hard in the summer and then restrict the other seasons pretty heavily. Do a 2 night minimum to make it worth your time for cleaning. Getting 4 people doing 1 night only but 4 nights in a row is decent money but LOTS of cleaning and laundry if you have a real job.

We are onAirBNB, VRBO, and HomeAway. Why limit yourself to just one if you are trying to make money? Get a bigger audience.

Good luck!

nderwater wrote: Ditto that, it's a really important distinction: When renting a property, you provide a shell with some core appliances - the tenant is responsible for all furnishings and for basic upkeep. This is passive income, and the profit margin is often quite thin until the property is paid off. With ABB you are providing both a clean, stocked and furnished space as well as a hospitality service. Profit margin can be much higher but maintaining your rental is a *job*, not passive income. It requires real up-front investment and work between every guest. Understand this going in and you're much more likely to be successful.

Very important distinctions, thank you. I'm thinking of it this way: I list it, someone books it, so I prep it and sleep a couple nights next door. Do that 5 nights a month and I've made more than my mortgage and escrow. I'm not looking to make it a large effort, otherwise I would have bought property with that in mind. This was more of a pop-in-my-head idea.

I am realizing though that ABB is a sorta "culture" and you have to maintain some funky Yurt or treehouse and offer a breakfast buffet to get ratings or no one will ever book your place. I'm more for the "hey you need a place to stay and I'll be your friend for $80... beer is in the fridge and I'm making spaghetti later if you want to join."

curtis73 wrote: I'm more for the "hey you need a place to stay and I'll be your friend for $80... beer is in the fridge and I'm making spaghetti later if you want to join."

AB&B was more like that during its inception but today it's a publicly traded company with formalized standards and processes for properties. That reassures their guests and their shareholders, but it sets a high bar for hosts.

Has anyone here ever rented space via Craigslist?

curtis73 wrote: I am realizing though that ABB is a sorta "culture" and you have to maintain some funky Yurt or treehouse and offer a breakfast buffet to get ratings or no one will ever book your place. I'm more for the "hey you need a place to stay and I'll be your friend for $80... beer is in the fridge and I'm making spaghetti later if you want to join."

I'm not so sure.

The reason I became interested in it is I stopped by a friend's place to pick up some car parts. He rents the smaller house on this property (~400sqft) His landlord (another friend) was in the main house cleaning. He came out and we got to talking. He shared some numbers (possibly exaggerated) and I was blown away.

I can't imagine ever wanting to rent this house. Certainly not in its location. Literally nothing about it is appealing to me. Its booked like 60% of the time and he makes a very good chunk of change off it.

ProDarwin wrote: I can't imagine ever wanting to rent this house. Certainly not in its location. Literally nothing about it is appealing to me. Its booked like 60% of the time and he makes a very good chunk of change off it.

You've given me enough motivation to at least check in with the powers that be about business/tax/zoning stuff to see if its feasible. After that it doesn't really cost anything to list them on some sites. The worst that could happen is that its not viable.

Well the worst that could happen is my house burns down, but let's not panic yet.

The nice thing, too (if she gets this house) is that it has THIS MAPLE TREE that is just begging for a treehouse. That might also be a nice AB&B thing.

curtis73 wrote: The nice thing, too (if she gets this house) is that it has THIS MAPLE TREE that is just begging for a treehouse. That might also be a nice AB&B thing.

I'm not so sure AirBNB would cover a homebuilt treehouse without some kind of paperwork from the state showing it's a structure that people can be in safely.

You need a business license and depending on your local laws, pay a bed tax usually quarterly.

While I would agree that location does play a part, I've rented places in not-so-desirable areas just because somebodies guest house was far cheaper than the local hotel.

One area where AirBNB blows the traditional hotel out of the water is in multi-room, multi-bed rentals. When you're bringing the whole family plus grandparents it's nice to have everyone under the same roof.

There are two ways you can maximize profit while minimizing effort: high cleaning fees and required longer stays. I've made the mistake of booking some AirBNBs that were like...$60 a night...only they had $100 cleaning fees. Last time I do that. Worth it for 2-3 night stays, but nothing less.

I rented an apartment from a guy in ABQ who was charging $80/night for a two bedroom apt. Not great, but not bad. Thing is, he had a woman from LA who was renting it while working on a movie set in New Mexico and she had it for 3 months. That's $4800!

The one big benefit to AirBNB is the time table. You and the "tenant" or "renter" know exactly how they'll stay. Very rarely do people extend those timelines. You can see feedback about a renter prior to accepting those terms. These are things that rental regulations need to learn from. I personally feel that while AirBNB can be extremely damaging to long-term rental markets, it's a far better means of evaluating potential renters and/or landlords.

My daughter has done it for a long time. I have been a tenant several times, and am considering being a host.

It's not an income- it's a culture. ABnB hosts also stay in them when they travel. Extras are expected. It's much more like hosting a bed and breakfast than renting a room.

$100 sounds high. Have you checked AirBnB's website for listings in your area? I know I can rent really nice places with terrific hosts often for about $40.

You will need a business license, bed tax, pay income taxes, etc.

I think he was planning on renting the whole house for $100. A bit different then a room in a host-occupied property.

I personally hate sharing places with the hosts, but it usually is much cheaper.

crankwalk wrote: Pays our mortgage on our vacation home and then some in 3 months, we enjoy it the other 9.

That is outside the IRS limits.

You can't claim the costs as business expenses if you stay in it more than 14 days per year.

Curtis:

In your scenario, I'm pretty sure the IRS would consider it your private residence. You'd have to declare the revenues, but could not deduct the expenses (although you'd still get a mortgage interest deduction as your personal residence)

Check with an accountant on that.

SVreX wrote:

crankwalk wrote: Pays our mortgage on our vacation home and then some in 3 months, we enjoy it the other 9.

That is outside the IRS limits. You can't claim the costs as business expenses if you stay in it more than 14 days per year.

We don't stay in it more than 14 days a year. We go up holidays and to ski a couple times a year. We enjoy it the other 9 months when we are able to go up. Regardless, our borough requires that we have a business license. We pay borough and federal taxes on it.

Thanks though

crankwalk wrote:

curtis73 wrote: The nice thing, too (if she gets this house) is that it has THIS MAPLE TREE that is just begging for a treehouse. That might also be a nice AB&B thing.

I'm not so sure AirBNB would cover a homebuilt treehouse without some kind of paperwork from the state showing it's a structure that people can be in safely. You need a business license and depending on your local laws, pay a bed tax usually quarterly.

Man, I don't know about that. It doesn't seem like they have any means of verifying anything. Two months ago we were needing a place to stay in Portland and I was on Airbnb seeing things like a tent with an air mattress for $75 a night, a love seat on an open porch for $35 and my favorite, it was just a picture of a 10X10 patch of grass that said great place to pitch a tent or just sleep under the stars $30 a night with a $25 cleaning fee.

I know I saw a few tree houses listed.

Luckily a friend of a friend just finished a tiny house for Airbnb purposes and let us be the inaugural guests.

I use airB&B when:

1. Hotel market where I want to stay is either crazy expensive or extremely limited
2. For a getaway, hotels in the price point I'm looking for are boring (Such as a standard Hampton or Marriott). I had 100 nights in that level of hotel last week for work and don't want to stay in them for leisure unless I'm redeeming a free stay.
3. I want a place to myself.

Compared to staying in a hotel, I look for an AirB&B to give me a better value and/or a more interesting experience. I have stayed in amazing places in CA - Such as a waterfront view room in Malibu, MIL suite in a multimillion dollar home in the hills north of San Diego, and a cottage near Lake Arrowhead, all between $100-$150/ night.

Don't discount the value of people visiting family, who either don't want to sleep under the same roof or are tired of always sleeping on the floor when the bedding fills up.

Jumper K. Balls wrote:

Man, I don't know about that. It doesn't seem like they have any means of verifying anything. Two months ago we were needing a place to stay in Portland and I was on Airbnb seeing things like a tent with an air mattress for $75 a night, a love seat on an open porch for $35 and my favorite, it was just a picture of a 10X10 patch of grass that said great place to pitch a tent or just sleep under the stars $30 a night with a $25 cleaning fee.

I know I saw a few tree houses listed.

Luckily a friend of a friend just finished a tiny house for Airbnb purposes and let us be the inaugural guests.

I know they required us to have a fire extinguisher and a check list of basic stuff before our account was verified. So I guess if people who rent the tent in the woods with an air mattress never say anything then they could keep it going.

Invest in mattress covers, and other bedbug proofing before you start.

I would want to skirt local redtape unless you are making $30k+ on it or advertising. Are there any known crackdowns on individuals with Airbnb yet?