With the booming sharing economy and travellers often preferring to forgo traditional hotel stays, the notion of renting out a room in your home (or the entire house itself) could seem appealing. But before you jump into peer-to-peer short-term rentals, there are some things you should consider:
Costs of hosting: starting up, cleaning, higher utility bills and more
Becoming an Airbnb host requires some startup cash along with ongoing expenses. These include the costs to set up and furnish the space, ongoing utility and cleaning fees which is usually not more than $30 per room.
You'll want to make sure each guest space is attractive and has all the amenities that a weary traveller needs such as fresh backup sheets and plenty of towels. A savvy host can reasonably furnish an empty room for about $1,000. However, $500 can do the trick if you already have an extra bed. Big box stores can help supply furniture for a range of pricing.
The upside of being a host is that if you work hard, possess excellent customer service skills and treat the platform like your own personal business, the revenue generated from the listing can surpass the initial startup costs and provide a nice monthly return.
Have you read: Is Buying a Home and Renting It Out a Good Investment?
If your property is controlled by a homeowners' association or co-op, check its rules to make sure you're allowed to host; some may restrict Airbnb activity, while others may have no issue. If you rent, you'll want to get your landlord's blessing.
A proportion of Airbnb hosts could very well be renters, who may or may not be telling their landlord. It is recommended to get your landlord's approval through a signed agreement. In most Canadian provinces, tenants cannot rent out their apartments without the approval of their landlords.
Airbnb Canada details here how tenants should go about this process.
Taxes and business licenses
Depending on where you live, you might require a business license and you might owe local taxes on any income you earn.
Quebec law requires short-term rentals of less than 31 days to obtain a licence from Tourism Quebec. Vancouver has proposed regulations that only allow the issuing of short-term rental licences for a primary residence — meaning the host, whether owner or tenant, must live in the dwelling. This rule targets hosts with multiple investment properties who operate as commercial hosts and eat into the housing stock.
Toronto has proposed a two-pronged approach to licensing, requiring both companies such as Airbnb and hosts to register and pay an annual fee. Hosts of short-term rentals in Toronto would be required to pay an annual fee ranging from $40 – $150.
As tax is a relatively complex topic, Airbnb has provided some information about local regulations in different Canadian markets. Above all, it's good to consult a tax professional to get more specific information.
Clean + Declutter
You'll want to tidy your space, present it in the best possible light and hide your valuables before you photograph it.
Like the listings you love to peruse here on REALTOR.ca, the photos and listing title are the first thing a potential guest will see on Airbnb. This is your opportunity to catch their attention.
You can either take your own photographs or contract out a professional photographer. Many hosts opt for professional shots, given how important eye-catching photos are for your space's profile.
Before photographing, ensure that you prep by arranging suitable lighting conditions and use a quality camera (now available on most smartphones).
Insurance and liability
Airbnb's Host Guarantee provides up to $1 million in insurance coverage for property damage in 29 countries, including Canada, the United States and the United Kingdom. Airbnb's insurance is not a substitute for homeowner's or renter's insurance and it doesn't protect against theft or personal liability.
Airbnb states that damage to a host's property (home, unit, rooms, possessions) in every listing is covered up to $1 million USD. However, hosts must provide documentation as part of the resolution process. Payments made through the Host Guarantee are “subject to Host Guarantee Terms and Conditions,” meaning there are exclusions, limitations and conditions. As well, it's common for Airbnb hosts to receive emails from Airbnb, at random, informing them that various terms and conditions have changed.
Call your insurance company to see what is covered, as some home insurance policies cover short-term rentals. But if there are multiple short-term visits, the insurance company might require you to buy a business policy that would cover a hotel or a bed and breakfast.
Airbnb's host guarantee doesn't protect against wear and tear to your place, but you can charge a security deposit to cover possible damage.
Installing a reasonable security deposit is a no-brainer move for new hosts. Airbnb allows hosts to set up a security deposit to cover minor damages that would not be covered under the Host Guarantee. For example, if a guest breaks a door handle while staying at your property, you'll want to replace that before the next guest comes.
However, Airbnb won't consider this damage to be major and won't cover it under the Host Guarantee. As a result, this becomes an out of pocket expense for you, unless you charge the guest a security deposit. When guests make a reservation, they are not immediately charged for the deposit – only if a host makes a claim.
Even if a host is only renting a single room, a security deposit is a safe move just in case anything gets damaged.
Airbnb could require you to refund a guest's payment if you cancel a reservation at the last minute, forget to leave the key, misrepresent your listing, don't clean your home or otherwise fail to meet Airbnb's hospitality standards. Airbnb suggests making sure you're available during the guests' scheduled check-in to address any concerns.
Airbnb's payment system is quick and efficient. Payments are sent through direct deposit after the guest completes their first night (regardless of the length of stay).
When a guest books a host's space, they also agree to the host's cancellation policy, which dictates the percentage of the booking costs (minus Airbnb's cut), if any, they will get back. Most moderate policies allow a guest to cancel within two days of the first night to get their money back. Less moderate policies allow the host to collect more of the booking money.
Host cancellations also happen from time to time. One study found host cancellations are the top complaint on Airbnb, representing about 20% of all complaints.
Depending on when a host cancels a stay, they'll be deducted either $50 or $100. If a host cancels three or more reservations within a year, Airbnb may deactivate the listing.
To Airbnb or not to Airbnb
If you talk to enough long-time Airbnb hosts, they'll be able to tell you an endless number of stories about inspiring and interesting guests who shared their home. Others might have bad experiences. There are clear potential advantages and disadvantages to becoming an Airbnb host.
However, if all the regulatory checks are taken care of, the space is up to par and you're taking your hosting responsibilities seriously, the platform can serve as a nice way to earn extra cash and meet interesting travellers from around the world.
The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.
Original Article from: Realtor