Having someone else pay your mortgage sounds really enticing, and for many Airbnb hosts, this is what appeals to them when beginning their hosting journey. In fact, there are over 650,000 hosts across the globe. From renting out spare bedrooms to multi-family properties, Airbnb offers homeowners and investors an alternative to supplemental income, and each year, new hosts jump on board to experiment with this phenomenon.
Is it really that easy to rent out my spare bedroom to cover my mortgage? In the spring of 2018, I set out on my own Airbnb experiment. As many seasoned Airbnb hosts will attest: no, it’s not that easy. Being a host is a trial-by-fire experience, where regardless of the preparation or homework done, some things are learned on the fly through the experience. Over the course of 10 months, I learned how hosting differs from investing, and why it wasn’t the best model for me. And I’m not alone.
Hosting Is Not Passive Income
Among other things, I greatly underestimated the amount of time involved in hosting. While some hosts are full-time, hosting was a side-hustle for me. In addition to hosting, I work as a full-time real estate broker and part-time house flipper. I naively assumed hosting would be an additional source of passive income. As a self-host, I was committed to marketing, cleaning, and stocking the rental, along with communicating to potential guests. The side hustle quickly dominated my schedule with the preparation before a guest’s arrival and the maintenance after their departure.
Hosting Isn’t Always Lucrative
There are stories of people making more money hosting than at their previous job, and those stories entice others to begin their hosting journey as well. For some Airbnbs, that potential exists, but as many hosts discover, like me, bringing in significant money doesn’t always happen. One thing I discovered while hosting was that some markets are seasonal. For six months out of the year, my market has significant demand; however, after those six months, the demand virtually disappears which means the profit does too. On average, Airbnb hosts earn $924/month or a median of $440/month. While those figures aren’t anything to laugh at, they aren’t quite “quit your job” worthy either. After supplies, taxes, and off-season holding costs, that profit quickly diminishes.
Hosting Isn’t For The Faint Of Heart
Every host has a horror story. While many guests are enjoyable and pleasant, there are always guests that abuse the system and have a total disregard of your property, or believe the host is their servant. I once had college students throwing parties and ended up spending an entire day trying to get red daiquiri out of the new carpet, picking up beer cans, and patching holes in the sheetrock. One of the most important lessons I learned through that experience was always charge a damage deposit!
Surprisingly, I’m Not Done With Airbnb
I purchased an investment property for the sole purpose of using it as an Airbnb. For me, that model didn’t work well with my market. With an investment property, there are a lot of overhead costs: insurance, utilities, furnishings, mortgage, taxes, etc. After the overhead, the profit wasn’t worth it for me but I plan on utilizing Airbnb hosting for future spare bedrooms or detached units with much lower overhead.
If hosting appeals to you, it’s wise to do your homework. Talk to local hosts. Listen to their horror stories, tips, and advice. Crunch the numbers before you start because, in the age of side-hustles and the sharing economy, hosting can offer some financial freedom…but it doesn’t come without a cost!