Airbnb is a continuously growing platform that has seen exponential expansion since its launch in 2008. The bed and breakfast platform reported having upwards of 7 million listings worldwide. These listings usually include single-family homes and investment properties. There are several pros and cons of Airbnb hosting.
Airbnb essentially made bed and breakfast much more popular with its platform. Several people with an extra room or an extra house list their properties on the platform for additional income.
You may have a property that is sitting ideal or plan to invest in a buy-to-let and get into short-term rentals. If you are here, you probably want to weigh the pros and cons of listing yourself on Airbnb. I am here to show you a short trailer of what your life could look like as an Airbnb host.
Pros of Hosting on Airbnb
Let’s first look at the positives of being an Airbnb host.
1. Additional Income
The first point when talking about the pros and cons of Airbnb has to be the additional income you can get by listing an otherwise unused property on Airbnb. When we compare the earnings made with short-term renting and long-term lending, we observe that short-term rentals are more profitable. This is because you can price your listing each night and increase the nightly rates when the demand is higher due to local events or holidays.
You can have your own Airbnb pricing strategy according to your market knowledge and demand for rentals. Airbnb also gives you a tool known as ”Smart Pricing” that analyzes the local demand during a given period and helps you settle on the right price.
You can also use various tools for Airbnb dynamic pricing like PriceLabs, which analyzes a more extensive set of data and gives more accurate pricing recommendations. You can also automate your pricing, set a base price and maximum price for your listing, and use various customizations to manage your bookings.
2. Listing your property on Airbnb is Completely Free
Airbnb doesn’t charge you for listing on their site. So if you want to try out what it would be like to host on Airbnb, there are no added costs. You need to list your property on the platform, set a nightly rate, respond to queries, and host the guests that you choose.
Although there are no sign-up costs, Airbnb does charge a 3% service fee for every booking that is made on the platform. So you may want to consider that when setting your rates.
3. Dedicated Host Page on Airbnb to get all the help you might need
Airbnb realizes that hosting for the first time can be confusing, and not everyone can be a perfect host on their first attempt. So it has established a dedicated host page that has the whole community of hosts. There are blogs, articles, and discussions related to becoming a better host.
It is safe to say that you won’t be left clueless once you list yourself on the platform. You can also go through Airbnb hosting tips to get started with your journey.
4. Simple Booking Process
The booking process on Airbnb is like a cakewalk. You list your property and all the amenities you’d be providing, and if a guest likes it, they message you, you revert, and they book. There is no complicated technology and processes that you need to understand to use the platform.
Although the booking process is simple, you should spend some time optimizing and promoting your listing. You can do this by adding visually appealing property photographs highlighting all the aesthetic corners. It would be best if you also wrote a complete description of the property. This included the neighborhood it is situated in and its connectivity with all the major attractions in the area. Also, list all the amenities that you’ll be providing your guests.
5. Complete Control Over Your Property’s Bookable Calendar/Dates
Airbnb gives you complete control and flexibility to rent your property according to your convenience. For example, you can block the calendar when you want to keep the place to yourself during certain times of the year if you want to take a break from hosting, or travel, etc.
6. Hiring a Property Manager can help Handle Your Property efficiently
Some hosts choose to manage their properties on their own. They take care of the cleaning, washing, receiving guests, setting the nightly rates, etc., on their own. However, not everyone can or wants to host guests full-time.
In that case, you can hire a property manager who provides end-to-end property management services for your Airbnb for a percentage of your overall earnings. They will take care of bookings, cleaning, preparing the property for the guests, receiving them, handing the keys, maintaining the property, and pricing. This is a big advantage when talking about the pros and cons of Airbnb.
7. You can Accept Bookings Based on Guests’ Ratings
Airbnb offers a two-way reviewing process. This means that both the guest and the host review each other after the end of a visit. The reviews help the guests choose the right property for them and help you select the right guests for your property, and spare yourself the hassle of dealing with unpleasant guests.
You can browse through potential guests when you receive an inquiry and have your pick (if your instant booking is turned off).
8. You Meet Interesting People
You will have guests from different cultures, ethnicities, geographies, and backgrounds. If you love to listen to other people’s adventures, then this will be your most significant benefit.
9. Growing Market
According to the existing trends in the market, the demand for vacation rental is bound to grow exponentially. The pandemic has made people more conscious about their accommodation options. Most of them choose Airbnbs to limit their peer-to-peer contact and use their kitchen for cooking food instead of eating out.
Also, the work-from-home setup has given many people the flexibility to travel while working. Many of them choose to stay in Airbnbs where they can get a good wifi connection, a dedicated workspace, a home-like environment, and the advantage of being in a new city. Travelers too weigh the pros and cons of Airbnb. They just have a separate list.
Cons of Hosting on Airbnb
Now that you know what perks you will enjoy as an Airbnb host let’s talk about the things that might not be as pleasing. These are some of the things that you should take care of when deciding whether or not to host on Airbnb.
1. You might need additional Insurance for your vacation rental
You may want to get additional insurance for your home. The insurance will help you protect your property from potential damage or theft (by your Airbnb guests). In some cases, your homeowner may mandate insurance if you don’t own the property yourself.
The extra insurance can add up your costs in the form of premiums. Also, you will have to inform your insurer that you intend to use the property for short-term renting. They may choose to charge a higher premium because of the added risks of opening your house to strangers.
But remember, this is an important thing to have to safeguard yourself and prevent larger losses later on.
2. Local Laws May Not Allow Short-Term Renting
Some local municipalities and homeowners association bylaws prohibit or limit the use of houses for short-term rental—many HOAs levy restrictions on using housing properties for commercial purposes like short-term rentals.
Cities like New York have enacted bans or strict restrictions on short-term rentals. Other cities like Las Vegas mandate the use of licenses before you start using your home in the capacity of short-term rental.
You may want first to check the local laws and HOA restrictions before you list your property on Airbnb.
3. Consider the Additional Costs of Hosting
Although listing on Airbnb is free, there are additional costs that you may want to consider before opening your house to guests. Let’s talk about the most apparent costs first; cleaning and maintenance. Although your cleaning costs will be covered mainly by the Airbnb cleaning fee, there are still some additional expenses that you may incur. For example, repairs around the house, replacing broken items, restocking toiletries and kitchen supplies, etc.
Secondly, you will have to pay a service fee of 3% to Airbnb for each guest you book. Next comes the cost of hiring a property manager if you choose to go for that option. After that, they usually charge a mutually decided percentage of every booking you get.
There is also a service fee of 13% (it may vary depending on multiple factors) that your guests have to pay when they book on Airbnb. Although you are not paying it from your pocket, it may discourage your guests from bookings if this fee added to the overall booking costs them too much. You would have to eventually adjust your rental prices to accommodate this fee.
4. Inconsistent Income
Although you get more nightly rates for short-term bookings, it is not guaranteed that you’ll get them every day. There is no guarantee of continuous income on Airbnb. You can increase your odds of getting booked every night by using the proper marketing and pricing strategies. PriceLabs Market Dashboard is one tool that helps you analyze your listing’s performance and the market’s overall performance.
It would help if you also considered other factors that affect your occupancy, like the property’s location, how well the property is presented to the guests, whether you are providing all the basic amenities or not, etc. It is advisable to invest in a professional photographer to click professional photos of the listing and hire a copywriter to look over your description.
5. Maintaining a Short-Term Rental is a full-time job
If you have decided to manage your property on your own, you are looking at spending many hours doing so. It includes responding to inquiries, managing bookings, dynamic pricing, cleaning, maintenance, and receiving guests. Many guests message you multiple times before finalizing their bookings. Following the Airbnb cleaning checklist might help make this a bit easier to manage.
This can prove to be a major con when weighing the pros and cons of Airbnb if you are not prepared for it. You should go for this option only if you have a lot of time on your hands. Otherwise, hiring a property management company will be your best option.
6. You’ll Sometimes Get Bad Reviews.
No matter how hard you try to be the perfect host or how perfect, your property is, sometimes things will go wrong. There are things that you just can’t control. For example, your guests may have a problem with noisy neighbors or a broken appliance, or a power cut.
Unfortunately, this bad review will stick to your listing and will be seen by all potential guests. You can avoid this by establishing good communication with all those who come to live at your property and taking immediate action as soon as a problem arises.
7. Some Guests Can Be a Nuisance
Due to its two-way reviewing feature, most guests through Airbnb are polite, considerate, and clean. However, this isn’t guaranteed. Some guests who show up can be reckless and cause damage. To prevent paying for damages from your pocket, you can choose to take a deposit amount from guests. Also, Airbnb has excellent liability insurance.
Conclusion to Pros and Cons of Airbnb
Like everything, hosting on Airbnb also has its advantages and disadvantages. You will surely earn added income for an otherwise ideal property or space. On the other hand, if you hire a property manager, you are practically doing nothing to make money.
However, you would have to be careful about the additional maintenance costs and the nuisance caused by unpleasant guests. On the other hand, nothing can’t be resolved with a few safety measures, like reviewing your guests.
Becoming a host can be more fun than you imagined, and you’ll make money while doing it.