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What to Know Before Renting your Home on Airbnb

What to Know Before Renting your Home on Airbnb

Would you like to consider renting out your home on Airbnb? Feeling indecisive? You are not alone if you are thinking about renting your property on Airbnb but aren't sure whether you should do it just yet. When deciding whether to list your home on Airbnb, there are several factors to consider. Let’s walk through some of the strategic approaches to look at prior to signing up your home on Airbnb.

Top Ten Things to Know before Renting your Home on Airbnb

  1. Familiarize yourself with your Local Laws and Regulations
  2. Keeping the Neighborhood Peace
  3. Know your Taxes!
  4. Get Insured
  5. Set Up a Business Plan
  6. Understand the Mechanism behind Airbnb
  7. Cleaning and Upkeep of your Property
  8. Have an Emergency Support System in Place
  9. Be Organized
  10. Get Ready to be a Hands on Host

Why choose to list your home on Airbnb?

Airbnb is one of the largest and most popular online peer-to-peer marketplaces in the short term rental industry. Its rapid growth is evident in its range of lodging options, competitive rates, and easy-to-use platform. According to Airbnb, there are more than 100,000 cities and 220 countries with active listings. As a result of the need to work from home and the number of people becoming "digital nomads", short-term rentals and home-sharing increased in 2020.

Hosting with Airbnb: An Opportunity

According to data from Airbnb, hosts have earned a total of more than $110 billion through the platform, as of October 2020. The company estimates average annual earnings for a host to be $7,900.

Market data reveals the average monthly income for an Airbnb host at $924, and the median monthly income at $440. Airbnb reported a broad range of host earnings, with some bringing in more than $10,000 a month, and others less than $200.

Get an estimate of how much you could earn with Airbnb’s earnings potential calculator.

Let’s look at a few things you need to consider prior to setting out that welcome sign to your Airbnb home.

1. Familiarize yourself with your Local Laws and Regulations

Depending on where you live and what kind of property you own, find out what the local laws and regulations apply to your home. When deciding whether to become an Airbnb host, it's important for you to understand how the laws work in your city. Some cities have laws that restrict your ability to host paying guests for short periods. These laws are often part of a city's zoning or administrative codes.

In order to list your property or accept guests, here are some of the first things you must follow:

  1. Register your property as a business
  2. Obtain a permit or a license
  3. Find out HOA requirements and regulations
  4. City Ordinance compliance

In some cases, short-term bookings may be prohibited from listing altogether. The enforcement of these laws varies greatly from locality to locality. Penalties can range from fines to other forms of enforcement, which could sometimes mean the prohibition of renting out your home altogether for a set period of time. If you wish to list your space on Airbnb, please check your local laws first. Find more information about your city's laws and regulations on the Airbnb website on the Responsible Hosting page in the city regulations section. It is always best to use the formal route to avoid any unpleasant legal interruptions.

2. Keeping the Neighborhood Peace

Despite the fact that it is a means of income and a stepping stone to becoming a host, your neighbours may not appreciate it, and they may not share your enthusiasm for welcoming strangers into your neighbourhood. This would also be influenced by the city laws and regulations and the regulations set by the Homeowners Association (HOA). Be mindful - If your city already has residents who want the city to ban or restrict Airbnb, be extra cautious before listing your property or you may face heavy fines.

As it all comes down to reviews, your neighbourhood plays a vital role if down the line you plan on applying to become a Superhost. There is nothing nice about having an unpleasant neighbourhood or an angry mob of residents. Especially if something should occur whilst you are hosting guests!


3. Know your Taxes!

When you list your property, you may be provided with a tax form depending on the amount you earned by renting out all or part of your home. You are still responsible for reporting earnings, even if you do not receive any documents. This should be taken into account when comparing your potential earnings with your costs. In some locations, Airbnb hosts may have a collect and remit feature available to handle occupancy tax. Tax types and how they are collected vary by location. The listing description should contain details about any required guest taxes.

A plus point would be that you may be able to deduct your mortgage interest from your taxes if you rent your place on Airbnb. However, you must calculate the fraction for which you can deduct the expense based on your occupancy versus your guests' occupancy. Remember to include this when filing your annual taxes.

Tip: Consult a tax professional to determine which deductions you are eligible for.

4. Get Insured

When you are planning to open your doors to strangers, the first thing that comes to mind is the safety of your property and your belongings. Moreover, when you opt to use your home for short-term rental use, what you must understand is that you are running a business. If someone gets injured while staying at your home or if your guest injures others, you can be held liable, since you vetted them and permitted them to stay there. You should have the appropriate homeowner's insurance. In addition to being an income-generating asset, your property needs to be protected as well.

Airbnb offers a Host Guarantee that may provide up to $1 million in property damage protection. There is also Host Protection Insurance—a liability insurance program that may provide up to $1 million in liability coverage. Though in some instances, countries are exempted from this coverage. Whilst this offering stands when you list on Airbnb, it is still a good idea to purchase vacation rental insurance for your own safety.

5. Set Up a Business Plan

A clear plan is essential when you are starting out on a business venture. However small you are planning to start, draw up a plan, as it will help you map out the specifics of your business and discover some unknowns along the way too.

Here are some of the questions you can put down to get you started:

  • What are the startup and ongoing costs? Eg : Furniture, Amenities, Services, etc.
  • Who is your target market? Eg : Millennials, Backpackers, Digital Nomads, etc
  • How much can you charge customers?
  • What will you name your business?

In addition to letting you know what your expectations are, you will be able to clearly distinguish them when you are considering renting your home on Airbnb. The plan will give you an overview of what you want, what you need to do, and what you plan to accomplish. Make sure this is one of the first tasks you tackle once you have sorted out city regulations, taxes, insurance, etc.

Airbnb Mechanism

6. Understand the Mechanism behind Airbnb

One of the most important tasks is that you need to have a clear understanding on how Airbnb operates. Educate yourself on the process and requirements. This information is freely available on the Airbnb website as well as you could invest time in joining Host groups online as well as forums on Facebook and LinkedIn. This would greatly benefit in understanding how other hosts operate and common issues and solutions they have found helpful, especially when starting out for the first time. This could be a great resource.

A Brief Overview of the Renting Out Process on Airbnb

  • Begin by creating an account on Airbnb.com. Once sign up is completed, indicate what kind of space you are listing, eg: entire home, apartment, or bed-and-breakfast.

  • Provide info on the specific property type. Eg , a house could be a tent cabin, boutique hotel, hostel or campsite.

  • The next step is to indicate whether you will be renting out just a room or the entire place. You are required to indicate if you are listing on Airbnb as an individual or as part of a company.

  • Include information about the number of bathrooms, bedrooms, bed configurations, and how many guests may stay at the property.

  • Once you’ve entered all the basic details about your Airbnb property, write up an attractive listing description of your property accompanied by standout photos. A listing with professional photos is more likely to attract guests and convert to a confirmed booking. (Airbnb's most sought-after listings are the result of this tried-and-tested method! )

  • Finally, let's talk about pricing your Airbnb. See what similar properties charge on Airbnb. As well as nearby Airbnb booking prices, you should also consider seasonality, immediate availability, holidays, and the day of the week when setting a price for your listing. Depending on the expected impact of these factors, you can raise or lower your prices.

You should also educate yourself on the Airbnb rules and regulations, policies and payout system. You can get all this information on their terms and conditions page. While posting a listing on Airbnb is free, once a reservation is made, the company charges hosts a 3-5% service fee.

Besides having a listing on the website, you can promote your Airbnb listing on social media, vacation rental forums, other OTAs, and your very own direct booking website.

7. Cleaning and Upkeep of your Property

Cleanliness is one of the things guests look for in an Airbnb rental property. Remember that it's very important to provide every guest with a clean, fresh property with clean linens. Cleaning and refreshing the space on a daily basis can be challenging if you're the one always doing it. Have a clear understanding of how you as a host would prefer to operate. Hiring a cleaning company would do this professionally, so it's worth having one do the cleaning. You always have the option to charge the cleaning through your listing so it can be incorporated into your cost. In general, consider the cleanliness and overall appearance of any space—indoors and outside— that guests can see or access.

Maintenance of the Property

8. Have an Emergency Support System in Place

It is crucial to have a plan of how you would get about getting any repairs done if an emergency situation arises. You must have on-call emergency support from a handyman for plumbing, electrical, and other such issues. For example a pipe might burst open or you need an electrician on site to solve a wiring issue. Prior to listing your space, establish a relationship with trustworthy referrals. Make sure this handyman team is well compensated and appreciated. The value of a reliable and quality service provider cannot be overstated! Hire locally if possible. Then they will have a vested interest in your business and are more likely to do a good job in a long-term business relationship.

On a side note, always keep an emergency backup plan in place in case of hiccups. While following a disaster preparedness plan to the best of your ability, you will have to accept that some things simply cannot be planned for!

9. Be Organized

Being organized is one of the key components of running an Airbnb. To run an efficient business, you need a few things streamlined. Here are a few of the things you should always keep up with,

  • Keep your calendar updated at all times - In cases where a potential guest believes a date is free, but you forgot to mark it as unavailable, the experience can be frustrating for both parties. List your definite open dates on your calendar. Your listing will rank higher on Airbnb if you decline fewer guests.
  1. Check in instructions - be precise as much as possible. Provide information such as the address including the exact GPS coordinates), where to park, lockbox information, front door location, and how to get in. Prepare a basic check-in map that guests can use to avoid messaging you for questions. Likewise be transparent on the check out information and make sure the procedures are well communicated to guests.
  • Clear Communication - The Airbnb platform is built on solid interaction between the host and the guests. Be sure to communicate regularly before and during any booking. Hosts are expected to respond to booking enquiries and initial queries within 24 hours, and this will affect your response rating.

  • House rules - Have a binder readily available for all guests, listing out your house rules. Simple rules like no smoking, no pets, quiet time hours, and no unregistered guests are common courtesies. You could include your general guidelines, plus useful information such as information on what to do in the locality as well as emergency telephone numbers.

10. Get Ready to be a Hands on Host

You should familiarize yourself with the challenges associated with hosting before you sign up with Airbnb. In order to provide your guests with great customer service, there are logistical considerations and time commitments.

Do You Have Time to Host?

Do you have the time and the flexibility to do what it takes to succeed as an Airbnb Host? The first few months of running and listing an Airbnb listing require dedicated time and effort. While you may be spending less time on bookings once you have your procedures down, you can still expect to be on call in the event of an emergency regardless of how well your procedures are working.

Strive for a High Host Rating

Your Airbnb host rating will improve as well as your search ranking, which can lead to more bookings in the future. Cleaning, providing essential amenities, accurate listing details, a smooth check-in process, and proactive communication are all factors identified by Airbnb as important to getting good reviews.

Host like a pro

The details are what make a successful host. Be sure to provide the guests with games, books, movies, and other entertainment options in addition to stocking the place with necessities. Ensure there is water, coffee, and tea in the kitchen as well. If you would like to be a generous host you can also throw in a welcome gift or a bottle of wine when guests arrive. Think of ways to make the guest happy so that you will receive ratings stars in return!


Once you develop a routine that suits your lifestyle, hosting on Airbnb can become your full-time job. In addition to growing your business, you could even grow it by adding more properties and adjusting your hosting strategy accordingly. The decision on what to do with your business depends entirely on you, whether you decide to keep it a part-time business or expand it to earn more income.

Ready to find out how Hostaway can transform your business?

Hostaway is proud to support thousands of Property Managers and Airbnb Hosts Around the world. We take pride in being Top Ranked in Vacation Rental Software Review Sites: Capterra, G2, Software Advice, Trust Pilot, to name just a few! Check out our reviews and read the Hostaway Case Studies from real successful and growing Short-Term Rental Managers!