Founded in 2008, Airbnb has amassed over 3 million listings worldwide in more than 65,000 cities in 191 countries. Long gone are the days when you found yourself sleeping on a friend of a friend’s couch just to save some money while travelling; Airbnb has modernized couch surfing and created a new way for homeowners to generate some extra income.
Airbnb is a digital platform that allows homeowners to temporarily rent out their space to travellers from around the world. Similar to Uber, everyday people can generate income using an asset they already possess. However, before deciding to open your doors, it’s important to consider the benefits and risks of this opportunity.
Anyone who owns a space (a room, apartment, house, or even a castle!) can become a “host” and create a free listing. The listing can include photos, a description of the space and amenities, however there’s also an interactive rating feature and reviews from previous guests. Airbnb allows you to determine the value of your space and set your own price.
So when you create a listing, it’s important to consider qualities that might attract travellers, such as the property’s location and it’s location relative to transit or local spots (4th street, 17th avenue or the Calgary Stampede). According to Airbnb’s own economic impact studies, 91 per cent of travellers want to “live like a local” and 79 per cent of travellers want to explore a specific neighbourhood.
Let’s discuss the benefits of becoming a host. Besides benefiting local economies and local businesses, there are benefits to you, personally.
- Meeting new people: Airbnb provides a unique opportunity for hosts to meet people from all over the world and engage in a culture exchange. Without leaving the comfort of your own home, you can learn all about different cultures and languages through a primary source.
- Making extra income: maybe you’ve got some renovations planned or want to save up for a dream vacation, hosting travellers is an excellent source of additional income to any household. In fact, 48 per cent of current Airbnb hosts use the income to pay for house expenses like groceries.
- You have control: When creating listings on Airbnb, you’re able to charge what you want, when you want and to whom you’d like. As previously mentioned, you determine the value of your space when offering it to guests (If you’re unsure of how much to charge, Airbnb does offer a quick estimate based on your area, however there are other tools to estimate your income, like the Airbnb host calculator (http://learnairbnb.com/airbnb-host-calculator/)). Unlike traditional rental agreements, there’s no binding contract between yourself and a renter for months or a year. Hosts are able to rent out spaces for a varying lengths of time, such as a single night or months. Then after travellers have submitted requests, it’s your decision if you want to accept or decline each request.
What are some risks or concerns for a host?
The most obvious concern homeowners have is property damage.
Allowing strangers to stay in your home sounds like you’re asking for trouble, however Airbnb protects their hosts with it’s Host Guarantee (https://www.airbnb.ca/guarantee) and Host Protection Insurance (https://www.airbnb.ca/host-protection-insurance). These two policies are meant to shelter homeowners from property damage and liability, however it’s important to read the terms and conditions carefully (a few things that are not covered include: cash, artwork, jewelry and pets). Homeowners should talk to an insurance agent and discuss additional insurance coverage such as homeowners, renters and umbrella.
Along with these two policies, Airbnb further mitigates risk with profile verification (connecting an account to social media, phone numbers, emails and government-issued ID), as well as secure payments platforms.
Additional fees and costs
- It’s important to note that Airbnb takes a 3 per cent service fee for each transaction between a host and guest. Depending on location, there may be addition taxes such as VAT (Value Added Tax), JCT (Japanese Consumption Tax),GST (Goods and Service Tax) or Occupancy Tax. To determine which taxes apply to you, contact your local tax services office.
- Depending on the space you want to rent out, there might be certain laws and limitations that could prohibit you and not following these laws can result in fines.
Overall, Airbnb is a great idea if you’re interested in making extra income with your home and meeting new people! However, before decided to post a listing it’s crucial to do some research about insurance, additional fees or taxes and local rules and regulations related to rental properties. For more insight on the Airbnb process, check out their help page. (https://www.airbnb.ca/help)
Bailie Richards is 4th year student at the University of Calgary, studying Italian Studies and Business, with a concentration in Operations Management. Richards is also a co-founder for the Calgary-based start-up company, The DigiHand.