{"id":77737,"date":"2016-04-12T14:30:15","date_gmt":"2016-04-12T20:30:15","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=77737"},"modified":"2023-04-02T05:35:21","modified_gmt":"2023-04-02T11:35:21","slug":"2016-04-12-10-dos-donts-airbnb-short-stay-landlords","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2016-04-12-10-dos-donts-airbnb-short-stay-landlords","title":{"rendered":"The Top 10 Dos and Don\u2019ts for Airbnb Short-Stay Landlords"},"content":{"rendered":"<p><iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC8195271830&#038;light=true\" width=\"100%\"><\/iframe><br \/>\n<em>The links to third-party products and services on this page are affiliate links, meaning that BiggerPockets may earn a commission (at no additional cost to you) if you click through and make a purchase.<\/em><\/p>\n<p>I don\u2019t want to be a buzz kill\u2026<\/p>\n<p>&#8230;but there\u2019s too much mushy thinking in the Airbnb, VRBO <a href=\"http:\/\/www.tkqlhce.com\/click-8537200-12640803\" target=\"_blank\" rel=\"noopener\">(to learn more about how to rent your place and list for free on VRBO, click here)<\/a>, and short-stay space.<\/p>\n<p>So much so that I see short-stay landlords acting like home-sharers &#8212; and having a lot of fun doing so.<\/p>\n<p>However, if you check their bottom lines, you\u2019ll see they aren\u2019t doing much better than passive landlords. And doing extra work without capturing extra income is not the way to run a for-profit business.<\/p>\n<p>As a foaming-at-the-mouth Airbnb-er since 2011, one who is both a provider and user with stays all over the United States, let me offer a bit of structure.<\/p>\n<h2>Three Short-stay Business Models<\/h2>\n<p>You need to be crystal clear about which type of short-stay business you\u2019re operating.<\/p>\n<p>The table below summarizes the financial goals of the three models<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-main-slider wp-image-77743\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/04\/Table-for-Airbnb-Short-Stay-Landlord-Article-702x336.png\" alt=\"Table for Airbnb Short Stay Landlord Article\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/04\/Table-for-Airbnb-Short-Stay-Landlord-Article-702x336.png 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/04\/Table-for-Airbnb-Short-Stay-Landlord-Article-300x144.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/04\/Table-for-Airbnb-Short-Stay-Landlord-Article-768x368.png 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/04\/Table-for-Airbnb-Short-Stay-Landlord-Article.png 814w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<p>Each business model has its own unique mode of operation, expected level of service, and acceptable rate of return. You\u2019ll notice, however, that only short-stay landlords have profit as a goal.<\/p>\n<p>So if you\u2019re a home sharer or vacation rental provider, you can stop reading here. What follows is not intended for you (although you might find it interesting &#8212; so keep reading).<\/p>\n<p>If you\u2019re a landlord considering a short-stay business, you should follow these \u201cdo\u2019s\u201d and \u201cdon\u2019ts\u201d to avoid costly mistakes and become more profitable than a typical landlord.<\/p>\n<p>The following is for rental owners that choose to provide short-stay housing instead of traditional long-term rentals. It is intended for those who want to maximize the yield on both their time and money.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-main-slider wp-image-73754\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/07\/airbnb-tax-impact-702x335.jpg\" alt=\"airbnb-tax-impact\" width=\"702\" height=\"335\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/07\/airbnb-tax-impact.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/07\/airbnb-tax-impact-300x143.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h2>Do\u2019s<\/h2>\n<h3>1. Comply with local ordinances and pay your lodging taxes &#8212; if any.<\/h3>\n<p>Short-stay rentals are going mainstream. Just like with eBay and Amazon, you\u2019re not going to be able to avoid taxes forever. More and more cities (sometimes states) are requiring lodging taxes for stays of 30 days or less.<br \/>\nRun a legitimate operation. Read your city ordinances carefully. And read the exceptions three or four times &#8212; opportunities hide in the exceptions.<\/p>\n<h3>2. Prioritize your start up expenditures.<\/h3>\n<p>Spend your first investment dollars on installing items that\u2019ll help your guests feel secure. Start with upgrading your locks, bed bug proofing your beds, removing any and all odors, etc. Spend your last dollars on Martha Stewart-ing; decorating comes last.<\/p>\n<p><em><strong>Related:<\/strong> <a href=\"\/renewsblog\/2015\/07\/23\/airbnb-tax-implications\/\" target=\"_blank\">My Client Tripled His Income Using Airbnb: Here\u2019s What He Should Know About Taxes<\/a><\/em><\/p>\n<p>Buzz kill &#8212; right? It\u2019s just that spending your budget in this order will reduce your chance of wipeout.<\/p>\n<h3>3. Compete with extended stay hotels.<\/h3>\n<p>Consider the world of \u201clong-shorts,\u201d where managers and cleaning costs don\u2019t eat up your profit. Compete for travelers who would otherwise opt for extended stay hotels. These folks want more privacy and homey-ness than a hotel can offer. If you\u2019re near a hospital, university, or airport, you may have a golden ticket.<\/p>\n<h3>4. List your offering on multiple sites.<\/h3>\n<p>Start on one platform and add others over time. Consider listing with the big three commission-based sites: Airbnb, HomeAway\u00a0<a href=\"http:\/\/www.tkqlhce.com\/click-8537200-12640692\" target=\"_blank\" rel=\"noopener\">(click here to list your place for free on HomeAway\u2014only pay when you get a booking)<\/a>, and TripAdvisor. Then sync the calendars so you only get inquires for available dates.<br \/>\nIt\u2019s smart to cast a wide net to increase your exposure and minimize your vacancies. Don\u2019t limit your platforms until you\u2019ve had a chance to determine the pros and cons for yourself.<\/p>\n<h3>5. Go after employer-sponsored business travelers.<\/h3>\n<p>There\u2019s a HUGE difference between travelers who pay out of pocket and those who get reimbursed by their employers. Many traveling consultants (like myself) get a stipend to cover housing expenses. Often, the allowance is based on Government Services Administration guidelines.<\/p>\n<p>So be mindful not to disqualify yourself by spiking your rates. From a net income perspective, these guests just might be the most lucrative long-term and frequently repeating clients you can find.<strong><br \/>\n<\/strong><\/p>\n<h2>Don\u2019ts<\/h2>\n<h3>1. Don\u2019t compete with the home sharers on one and two-night stays.<\/h3>\n<p>Fast turns, what I call \u201cshort-shorts,\u201d are games that home sharers can win. Cleaning and providing day-to-day management are their jobs.<\/p>\n<p>To make any money with short-shorts, you would need to pass along your full cost of cleaning. And large cleaning fees are a major turn off to price savvy guests. That\u2019s why you really need to set a minimum stay that pencils &#8212;\u00a0and that might be four nights or more.<\/p>\n<h3>2. Don\u2019t rely on landlord best practices &#8212; many don\u2019t apply.<\/h3>\n<p>If you are a seasoned landlord, you will need to change out your mental framework to be a good short-stay provider. For example:<\/p>\n<ul>\n<li>Fair housing laws aren\u2019t valid in this peer-to-peer economy. You look at people\u2019s peer reviews for quick go\/no-go decisions.<\/li>\n<li>Credit checks aren\u2019t relevant since money is collected in advance.<\/li>\n<li>So whereas having a lot of landlording experience is useful, don\u2019t assume it\u2019s sufficient in the short-stay world.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-main-slider wp-image-74064\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/07\/airbnb-tax-implications-702x336.jpg\" alt=\"airbnb-tax-implications\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/07\/airbnb-tax-implications.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/07\/airbnb-tax-implications-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h3>3. Don\u2019t try to earn more than 5 stars.<\/h3>\n<p>Once you get going, you can add some razzle dazzle. But if you\u2019re a gadget person, stifle yourself.<\/p>\n<p>Don\u2019t buy whiz bang UNLESS you can estimate a reasonable break even date. Will that gadget really help you get more bookings at higher rates and with better reviews? Hmmm\u2026 buying a holographic TV is cool, but it won\u2019t help you get a 10-star review when only 5 stars are possible.<\/p>\n<h3>4. Don\u2019t lose track of the climbing baseline.<\/h3>\n<p>Rents are escalating. It\u2019s possible your local market rents could be higher at the end of the year than they were at the beginning. Rents can swing the other way too, so you have to check local conditions a few times a year. If the baseline exceeds your short-stay income, then sell off your furnishings and switch back to traditional landlording.<\/p>\n<p><em><strong>Related:<\/strong> <a href=\"\/renewsblog\/2015\/06\/08\/upsides-downsides-airbnb-landlords-perspective\/\" target=\"_blank\">The Upsides &amp; Downsides of Airbnb: A Landlord\u2019s Perspective<\/a><\/em><\/p>\n<p>There is no shame in pivoting. After all, you\u2019re in the short-stay business to net more income than a traditional landlord &#8212; not less.<\/p>\n<h3>5. Don\u2019t be a jerk.<\/h3>\n<p>Your reviews are everything in this peer-to-peer economy. Your guests will, in general, be laid back folks who want to do business directly with other nice people. So be fair, but if you need to \u201cget someone told,\u201d then get the resolution center involved. Airbnb has intermediaries to help you navigate crucial conversations with their referred guests. So when needed, let Airbnb facilitate.<\/p>\n<p>But whatever the case, be a generous host. Your reviews equate to your wealth in the collaborative economy. The more good reviews you have, the more others are willing to do business with you. So keep your future opportunities in mind &#8212; keep your cool.<\/p>\n<h2>The Big Takeaway<\/h2>\n<p>Although there are three categories of short-stay rentals, only one of them has a profitability threshold. And following these do\u2019s and don\u2019ts will give you a fast track towards netting more than a traditional landlord would.<\/p>\n<p>These principles are training wheels to keep you from bruising losses. Keep them on until your balance sheet shows you\u2019re proficient. Then go on to create offerings that are nearly impossible for others to compete against. And from that position, you\u2019ll be able to maximize your asset&#8217;s cash flow.<\/p>\n<p><em>Do you use Airbnb? What do&#8217;s and don&#8217;ts would you add to this list?<\/em><\/p>\n<p><strong>Let me know with a comment!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The links to third-party products and services on this page are affiliate links, meaning that BiggerPockets may earn a commission (at no additional cost to you) if you click through [&hellip;]<\/p>\n","protected":false},"author":1328,"featured_media":77746,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"image","meta":{"_acf_changed":false,"footnotes":""},"categories":[7119,4241],"tags":[],"class_list":["post-77737","post","type-post","status-publish","format-image","has-post-thumbnail","hentry","category-biggerpockets-daily","category-real-estate-business-management","post_format-post-format-image"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/77737","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1328"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=77737"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/77737\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/77746"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=77737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=77737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=77737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}