This post appeared first on InvestmentZen
You hear a lot about people making money by renting out rooms on AirBnB, but what really goes into being a great host? Here is how I run a small AirBnB guest house in Guatemala.
I have never been very attached to material things, including my house, so when Airbnb launched, naturally I was one of the early adopters.
When I relocated to Guatemala, I bought a little house that I turned into a guest house.
I only have four rooms, but can host up to 8 people, the private beach, is a great selling point.
Airbnb's calculator estimates how much you can earn if you put your place up for rent. According to their calculation, I could make between $250 and $500 a week, so I thought it would be pretty easy to turn the place into a cash machine. However, for the first few months, those weekly estimates looked more like my gross income.
CAN YOUR HOUSE BE AN ACCIDENTAL INCOME STREAM?
The good thing was, I didn't buy the place for the sole purpose of becoming an AirBnB host, nor did I owe the bank money, so I could afford to just live there and have a few bookings here and there. You learn as you go, the important thing is to constantly improve. I learned it was a bit complicated for people to come with public transportation, so I looked for a driver to offer guests.
I learned some people freak out when they are that far away from civilization. I updated my listing to make sure they'd have bullet points about how remote we are, if they were too lazy to read the whole listing.
Many came without food in spite of my warnings, so I started cooking for them.
MY BIGGEST CHALLENGE AS AN AIRBNB HOST
My main problem was being competitive with other guest houses.
You see, in Guatemala, many people have a housekeeper anyway, so they don't factor her cost if she is going to wash one extra set of sheets. They have fully paid-for houses (unlike the US where most people have mortgages), so the rent they set is not necessarily a factor of the property's value.
Most of my neighbors rent their double rooms for $20, my housekeeper would charge $8 to come prepare the room and $8 to wash the sheets. After electricity and water rates, I'm in the red already.
So my basic double rooms are priced at $30, with a minimum of 3 nights. The marginal cost of the following nights is low, people know the house by day one, and less work is involved. I think I am worth the extra 50% since they get a private beach all to themselves.
Then I have two luxury rooms, with a comfy queen bed, A/C and their private bath. They're priced around $70, with seasonal fluctuations, and you can stay just one night, but since it is remote, most people book two nights.
My main source of income is renting the full property. For $150-200 a night, you can book my whole house for your party of up to 8 people. $25pp is reasonable, and few properties around cater for that big a group.
This is what I rent the most. Win-win for everyone, since my fixed costs are pretty much the same, and people are grateful to find a place where they can be together as a group.
DON'T BE AFRAID TO DIVE IN AND FIGURE IT OUT AS YOU GO ALONG
It took me a while to figure that out, and now things are much better. My income has doubled, and while not huge, it pays for all house related expenses, two staff, taxes and so on.
Having tried VRBO, Homeaway and Booking, Airbnb is by far my preferred platform.
While I could rent my place long term for around $500 a month, I generate around $1,000 a month with short term rentals, and get to use it when it is not booked.
At $150 a night for the full property, I can make more in 4 nights than I could renting out long term. My house costs around $100k, so I am getting close to a 12% return while still getting to enjoy the property most of the time.
SOME OF THE PROS OF USING AIRBNB
- They get paid and keep the money until the guest arrives, in case your place is terrible. But you are guaranteed to get paid.
HOW TO GET STARTED ON AIRBNB
First, you need to register and create a listing for each room or property that you wish to rent. Make it attractive and engaging, giving as much info as possible.
In order to get bookings, you should:
- Be reactive and answer emails in a timely manner.
To increase your income, you can also offer additional services. I offer food and a driver, I don't make much but it helps people book my place.
AIRBNB HOSTS COME IN ALL FLAVORS
The great thing about Airbnb is you can make money with a wide range of properties. Of course, the city center of a major metro area will get you the best occupancy rate, as Airbnb users are mainly millenials looking for a city break.
But Airbnb is also known for offering great experiences off of the beaten paths. Tree houses, boats, castles...you can rent out pretty much anything. Give it a go for a short period, three to six months, then see if you make more or less than the long term rent.
It is important to be honest about your listing (rustic, remote, bad internet..). Better have a handful of happy customers to start with than a lot of angry ones.
The sharing economy is booming, and if you want your share of it, it is not too late. Price yourself competitively, build a solid profile with stellar references, and soon you'll have a nice side income flowing through.