The internet has completely revolutionized the travel and hospitality industry. Once people were guided to hotels and resorts by a travel agent, but now people are making their own arrangements for everything from a car to home rentals online. One of the leading sites that property owners are looking into is Airbnb, but is it right for you? Here is all you need to know to make your decision from our Airbnb property management group!
Listing on Airbnb
There are several online rental forums where a rental property owner can list. Each comes with pros and cons and unique features. Airbnb tends to be a rental site that specializes in a more “homey”-feeling type of rental. One of the pros to listing on Airbnb is that the service is free and you get to verify and approve each renter on a case-by-case basis.
Although there is not much guidance about how to price your rental, if you look over the going rate of rentals within a specific area, you can gauge a price point that is both realistic and competitive. Airbnb does not include the cost of hosting, utility bills, cleaning taxes, and what Airbnb calls “host fees,” which include a 3% payment processing fee. Renters are responsible for paying anywhere from 6-14% in booking fees. This “service fee” is the fee you are paying Airbnb to use their platform for your stay.
Always Read the Fine Print!
One of the main things that you want to pay attention to are the specific rules and regulations regarding the accuracy of your listing, how to communicate with guests, what your rental commitments are once a reservation is made, the cleaning procedures, and what amenities are required, like toilet paper and trash bags. The listing images are going to be your most important marketing tool, so make sure to clean out and declutter before you post images of your rental online.
Airbnb does have a service that will send a professional photographer at no cost if you sign up as an active host. The description is also critical, so you will want to consider things that people from out of town would both need and want to know. Things like providing wi-fi, transportation offerings, restaurants in the area, and key points like having a patio or firepit for use will make your listing look more attractive. People want to know what to expect when they arrive, so create the best and most accurate description possible.
Taxes and Legalities
You have to get permission before you can post your listing on Airbnb. Rental properties that are guided by HOAs or co-ops will want to look through the rules to ensure that guests are allowed. If you are renting from someone else and want to sublet, then you will need your landlord’s written consent. For some locales, a business license might also be required, and you may have to pay local taxes for all earnings. As a rental owner, you will also have to pay federal taxes on all income by filing a Form 1099 with the IRS. The good news is that often those fees are overridden by write-offs like insurance and cleaning costs.
Personal Protection is a MUST
When renting your property, you will want to make sure that all valuables are safely locked away. Also, ensure you don’t leave any personal information lying around in order to prevent identity theft. For property owners who will remain on-premises, it might behoove you to run a background check on your guests before you approve them, for your physical safety. Airbnb does allow you the ability to deny rentals to guests or cancel bookings, but they can impose fees and penalties for doing so. Airbnb also offers an ID verification service, which is a great first place to gauge the trustworthiness of anyone you have staying at your rental property.
Liability and Insurance
Airbnb does provide as much as $1 million of insurance coverage for 29 countries that it services, but it is not a good substitute for renters’ or homeowner’s insurance, and it will not protect you against personal litigation. Always check with your insurance company to see if an umbrella policy is necessary to keep you fully covered. If you rely on the Airbnb policy, read the fine print to know what is included so you know exactly what your responsibilities are.
The host guarantee will not cover things like normal wear and tear, but you can ask for a security deposit to cover any accidental damage. You must have someone inspect the rental before guests and immediately after they depart, to check for incidental damage. If your claim exceeds $300, you will have to file a police report within 14 days of the guest checkout.
Payment Guarantees
Your renters pay you automatically through the Airbnb site. If there are no problems, the site will release your funds within 24 hours of the guest’s arrival, so you will get your money typically within one business day. Guests who request a refund will need to apply within the first 24 hours of arrival. If you do not respond, they might be entitled to receive either a complete or partial refund.
If you misrepresent your property, do not uphold the hospitality standards, or cancel a reservation at the last minute, then you may be liable to refund the guest’s money. Also, do not make arrangements outside of Airbnb for payment, or you will have no way of recouping the rental money if something goes wrong. And if you do try to avoid the 3% by going outside of Airbnb, they can penalize you or ban you!
The Bottom Line
Airbnb is one of the travel industry’s leading rental sites. If you are going to list your rental on the site, it is critical to hire an Airbnb property management group that understands the rules and regulations and strictly follows them. If you aren’t paying meticulous attention, it can lead to a poor review, the need to refund rental income, or even being banned from the site.
At CVP, we constantly monitor the major Online Travel Agencies (OTAs) and the way their algorithms work to ensure that your rental receives the best ratings and reviews, to keep you in good standing with vacation rental websites, and watch for damage upon arrival and departure. Make sure that you have someone watching out for your vacation rental, or things can go terribly and expensively wrong very quickly! Contact us today to get started!