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Generating AirBnb Income

I’ve been watching the AirBnb scene for some time. It is a touch sordid but it is also a fantastic concept. I’ve toyed with the idea of creating a little income through short-term rentals by buying a unit specifically for this purpose. And for a long time I’ve considered renting my own place out on AirBnb when away on a vacation.

I decided against the short-term rental idea because I don’t think the 3rd party rental scene has seen its wave of regulations yet and I don’t have the kind of net worth where I can just dabble at will. I don’t think AirBnb will disappear, but I am seeing more and more cities trying to curb the reach of such companies.

Most HOA’s have some sort of clause limiting you from renting out your place on sites such as AirBnb. Most of their arguments are logical but some are just the typical, overly conservative stance that such companies take in order to limit liability.

I suppose I needed time to warm up to the idea. Finally, after reading my CC&R and partnering up with my friend V. (my co-host), I decided to give AirBnb a shot. Since I will be overseas for the foreseeable future I don’t have any need for my condo in Portland. So why not rent it out?

 

Short-term Rental & The Law

My thoughts on 3rd party property rental sites are that they give the primary lessee or owner the opportunity to profit from their property. The real estate scene has always been tightly regulated in order to deepen the pockets of many interest-holding parties. It’s now time for us to enjoy the same.

The same laws and practices enacted by large corporations have been exploited by companies such as AirBnb to out the lessee or owner in the driving seat. Of course, all of a sudden, HOA’s and lessors have come up with clauses to not allow you to rent your place out on such sites.

HOA Requirements

Read your CC&R’s, it will likely have something addended to indicate whether you are or aren’t allowed to offer short-term rentals. Next, it will define what short-term means – 30 days, 3 months, 6 months, etc.

My HOA says nothing less than 30 days and I’m going to respect that and have adjusted my AirBnb ad accordingly. However, I don’t care much for my HOA’s opinion and the worst thing they can do is fine me and I don’t have to pay those fines because they can’t kick me out of my unit unless I don’t pay the main HOA dues.

I’m not trying to be a pain in the ass but it’s absurd how the HOA’s are structured in the US and they definitely have the upper hand with very little recourse on our part as the owners.

If you’re wise, you can rent your place out on different websites short-term without anyone ever finding out. Meaning, you do it professionally and you respect the other tenants and owners in your building.

Subleasing

Most leases that I have signed have said that I am either not allowed to sublease or must have the person who I am subleasing to contact the property management company for them to do their own background checking.

My friend lives in a shitty part of town in California and he told me about a recent incident of one his neighbors leaving for a week and letting some friends stay there while he was gone. The worst possible thing happened and those 2 individuals decided to do some drug dealing, some argument happened and they were both shot in the apartment of my buddy’s neighbor.

So, maybe don’t let your drug-dealing friends stay at your place while you’re away. If you’re going to do it then read the contracts. Consider using AirBnb for when you’re away for longer periods of time and submit the name of the potential lessee to the property management company.

City Rules

AirBnb is doing most of the leg work for you when it comes to determining the legality and the specific laws surrounding your short-term rental. Of course, you should always check with your city’s website, ask the community online, and maybe even check out a few listings online before committing – but here is a link to the rules/taxes for my city.

 

Rent Proofing My Condo

I took away all sharp objects and left behind just a dull kitchen knife. There are almost no glass products that could shatter. I addressed some wood splinters in the flooring because the condo is old as shit. I had 2 window sliding mechanisms repaired to avoid complaints.

I disconnected the dishwasher because nobody needs to use a fucking dishwasher in a studio – one less thing that can go wrong. I left instructions for how to use and troubleshoot the washer/dryer. This will help prevent unnecessary emails for me to address.

House Rules

I don’t want to piss off my neighbors and I don’t want the tenant thinking they own the place. So, I wrote up some basic house rules, separate from what you can write on AirBnb. This is something I will email to the client and they can choose to read it or ignore it but they will forfeit their money and get booted if they don’t adhere to it.

The common things are:

  • controlling noise (slamming doors, music, arguments)
  • house guests
  • pets
  • smoking
  • illegal activities (child porn, drugs)
  • water damage
  • trash (where it goes/where it doesn’t)
  • returning the condo in the same condition
  • their payment responsibility for anything they damage

 

Who To Contact

I will be managing this rental from far away, from another time zone. I have my friend V. who can handle the day-to-day but it’s important to have a few phone numbers handy. I recommend the following:

  • HOA contact person
  • building engineer
  • handyman
  • local sheriff’s office

 

How To Manual

Your tenant may not know where the trash bins are. They may not know how to work the washer/dryer. If your front door has a trick to opening/closing it, mention it.

Don’t be afraid to get overly detailed. Your tenant can review whatever is relevant to them. It will show them how much you care about your place.

 

Putting Up The Ad On AirBnb

For less than $100 you can hire a professional photographer to take pictures of your place. Then you can order the pictures so that you put the nicest one up first and include pics of amenities or nearby places.

Location

Write a little blurb about:

  • street/city parking
  • public transportation
  • Uber/Lyft access
  • taxis (some don’t trust Uber)
  • locations accessible on foot

It’s Portland, so I include a little about how to get around by bike as well.

Each city has a few tricks when it comes to using public transportation. So it’s incredibly helpful if you can assist your guests how to effectively navigate it. Specifically what tickets are needed for what services. Whether a bus ticket can be used for metro or vice versa.

Sharing Services

If you have car sharing services (Car2go) or bike sharing services (Biketown), then include those in this listing. I still list nearby auto rental companies such as Hertz or Enterprise, but it’s nice for people to know that they have options.

Mention The Negatives

Mention the negatives, it will save you a lot of headaches. Sure, if you are desperate for money then you won’t do this but you’re not that person. Mention that sometimes the street can get noisy on Fri/Sat nights. Mention that the sink in the bathroom and kitchen are quite dated and though they appear as if something got slaughtered in it, they are in fact perfectly clean and functional.

Mentioning the negatives works weirdly in your favor. Especially for those who might have a large family or staying for a longer period of time, they are worried about the unknown. They would rather book the place with the negatives out in the open rather than finding out something they cannot live with upon arrival.

Discuss traffic problems if you are renting your place out to mainly business people. Tell them what cafe’s are terrible to work out of and which ones are good.

Private Space

Mention where you “private” space is. This would be where you keep your personal belongings. I realize this is an issue for many because they have important documents and personal things but that’s what a good quality safe is there for (not one from Costco).

I have moved all my stuff under the bed so that the tenant has all other storage areas available to them.

 

Responding To Ads

The sooner you respond the easier it is to make the sale. I have responded within minutes and feel that for that reason I have gotten some very favorable responses.

High Maintenance Individuals

There are those who are excessively scrupulous and then there are those who just complicate everything. Recognizing the high maintenance individuals will save you trouble down the road. You’re not a hotel. If you want to operate like a hotel I suggest building a business plan and you probably shouldn’t take advice from me. This post is for those who want to share their home with another person who is in need of a place to stay and has chosen to not got to a hotel/motel/hostel.

One person wanted me to contact his brother who is his business partner who will be flying into town in a couple of days and so I can’t reach him until then. Oh and here is his number… oh wait, AirBnb doesn’t allow emails and phone numbers to be displayed… hmm, is there another way… oh and his name is DOCTOR xyz… right, like I’m gonna call him doctor… fucking idiot.

So, I was respectful but sharp enough in my replies that I think this individual realized that I wasn’t going to be overly accommodating.

Address Issues

I had one person ask me a few questions but I wasn’t sure what she really was trying to figure out. So, instead of getting lost with 300 emails, I asked her specifically what her concerns and hesitations were and it turned out that she was trying to place her business employee who needed to commute daily to a location which had no AirBnb spaces available. Great, with that information I was able to make some suggestions and she booked my place for a little over a month, successfully.

 

Have A Co-host

AirBnb allows you to add a co-host to your account. I added my friend V. and we decided to split the money 50/50. Your co-host would ideally be someone who needs a little side income and is detail oriented. V. is just that person.

Your AirBnb co-host will be the contact person for the tenant, hand over keys, walk the person through, discuss any house rules, and turn your place over (cleaning/trash).

I am in charge of putting up the ad and dealing with AirBnb and locking in the sale with the client. V. is in charge of the tenant from the minute they book all the way through their departure. That’s why 50/50 makes sense to me.

 

Set Your Availabilities

This feature can save you a lot of time. Write down exactly when your unit will and when it won’t be available. You can even make notes such as it must be empty by this time, etc.

Not only will this decrease the amount of emails you get but will prevent confusion.

 

Flex Pricing – Or whatever it’s called

If you allow AirBnb to decide on the price for you (you can still set a minimum/maximum), then they will offer your place at a higher price when the demand is high and so forth.

I think this is a terrible idea. First, you are gouging people. Why should the price be higher if the demand is higher? Your local cafe doesn’t charge more for coffee at 7:50 am and neither should you. It’s a terrible and antiquated business model.

Furthermore, when the demand is higher and you charge a higher price, people will expect a different service – a higher quality service. Do you want to put in more effort just because it’s summer time in San Diego? “Ethel, we paid $200/night for this place and the ceiling fan remote doesn’t work?! I’m gonna give them a piece of my mind!”

 

Make Counter Offers

Once you start wheeling and dealing, you can make offers to the tenant to make it more suitable for them. Maybe offer them a few more days or a discount or tell them you’ll throw in some spending cash, etc.

This is the part where you can really practice your selling techniques. You can use the information the tenant gives you, their concerns, or their hesitations to book and offer them something to make it seem fair.

 

My Experience With AirBnb

I offered my place for rent on AirBnb 3 days ago. I got 2 interested parties. 1 was a pain in the ass and the other hesitant because of some commuting concerns.

I was able to address the commuting concern and she booked for a little over $2,000 for 35 days. Great deal for me. I split this money with V. 50/50 which means I pocket $1,000.

I had a few emails to respond to with the potential tenants. Always courteous, brief, and to the point. I felt the process was quite seamless. After the tenant’s stay, I’ll get feedback from V. (my co-host) as well, to see how she felt about the process.

Putting the place up on AirBnb was very simple. Answer a few questions, post some pictures, and you’re done. I recommend going back to the ad daily and touching it up. Add more information. More is better, much better.

I started out at around $80/night with a minimum of 30 days (to satisfy my HOA and avoid a short-term Portland penalty tax) and dropped it down to $60-ish/night.

 

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