Airbnb starts paying 50% at booking for 1%. Are you signing up?

19 Replies

As you know, until now, airbnb would payout once the guests have checked in (Day D+1). 

Now they give you the option to receive half of the payout, at booking time (or Booking Day+3 exactly), but would charge another 1% fee for that.

Do you sign up?  Thoughts?

My 2 cents:

Let's assume your annual gross is $100k through airbnb.

Let's assume your airbnb bookings are averaged 30 days ahead of check-in date.

You will be paying $1000 to airbnb in order to have access to $50k one month sooner. That's 2% annualized. 

It basically means if you are able to make your cash work for more than 2%/year (like a mortgage to pay off at a minimum) you better activate their "early payout" option. 

I won't.  It makes my bookkeeping confusing and puts me on the hook for refunds that get pulled from my account when guests cancel.  I don't want money to touch my account until I know it's staying.  Further, my bookings tend to go in fits and starts; I don't want a couple of months with huge amounts of income and a couple with very little, I want it more evenly distributed.  (VRBO defaults to paying out when guests book; I called them and asked them to change it to when guests check in, for all the above reasons)

True: The fact they only do this for 50% of the amount is both annoying and risk of confusion when reviewing numbers.

Regarding the regularity of income: I don't think this has any impact: it's just a shift. 

On VRBO I'm in advanced payment mode and actually like it.

Absolutely not. They shouldn't be holding this money anyway. VRBO/Homeaway pays this money out after the renter makes a payment. In the rare instance where there is a cancellation I keep enough money in my account that I don't have to worry about it.

Nope, they're already making money on our money by collecting it from the guest at time of booking and paying out during the stay (and now seems to be later than it originally was).  One could argue that they are hold OUR money once the guest books and they should be paying us interest, not vice-versa.  As you mention @Kevin Lefeuvre and @John Underwood , VRBO prepay's without interest or penalty - for which is great except when a guest cancels as you mention @Julie McCoy .

It feels like extortion. They should be paying us early anyway. So when someone comes to me and says, hey, I'll give you what's already yours if you pay me, I tell them to get lost.

Originally posted by @Kevin Lefeuvre :

True: The fact they only do this for 50% of the amount is both annoying and risk of confusion when reviewing numbers.

Regarding the regularity of income: I don't think this has any impact: it's just a shift. 

On VRBO I'm in advanced payment mode and actually like it.

 I don't want to show income in January from a stay that doesn't happen until July.  *shrug*  (and I REALLY don't want to show income in December from a stay that doesn't happen until the next year!!)

Hello!

Does anyone know of a San Diego Airbnb/short term rental expert I could take out for a steak dinner (serious)? I network with real estate professionals a lot, but have found it difficult to get short term rental expertise. I run a couple of short term rentals, but want to make it a larger size of my portfolio and would love to chat it up with someone in the area. Serious on the steak dinner offer (anywhere you want!).

Thanks,

Sam from San Diego.

@John Underwood @Michael Greenberg @Tim Schroeder I hear you all. I am absolutely not a pro-airbnb especially since this year my airbnb share of income has gone down to 30% ish and had several damage issues where they were a pain to deal with to get some compensation.  Or even the ability to refusing someone. I also lost my super host status because I refused to host some weird liars. I increased my prices so that VRBO clients have more chances to book, except for some last minute discounts. That's where my 30% comes in now. I am counting the days I can afford to close my listings on airbnb. 

But, but... that said... let's be fair: even with the 1% additional they cost less than vrbo who gets the annual fee +[7-10]% guest service fee (huge) + 3% payment clearance. As a reminder airbnb charges only 3% all in all.

@Julie McCoy Gotcha! You do cash-basis accounting. I do accrual. 

Originally posted by @Kevin Lefeuvre :

@John Underwood @Michael Greenberg @Tim Schroeder I hear you all. I am absolutely not a pro-airbnb especially since this year my airbnb share of income has gone down to 30% ish and had several damage issues where they were a pain to deal with to get some compensation.  Or even the ability to refusing someone. I also lost my super host status because I refused to host some weird liars. I increased my prices so that VRBO clients have more chances to book, except for some last minute discounts. That's where my 30% comes in now. I am counting the days I can afford to close my listings on airbnb. 

But, but... that said... let's be fair: even with the 1% additional they cost less than vrbo who gets the annual fee +[7-10]% guest service fee (huge) + 3% payment clearance. As a reminder airbnb charges only 3% all in all.

@Julie McCoy Gotcha! You do cash-basis accounting. I do accrual. 

It's all how you look at I guess. For me, the guests pay the guest service fee so I don't care about that. The 3% AirBNB host fee is really just the VRBO payment clearance fee with another name. So it comes down to the $500 VRBO annual fee. That's $42/month and for that I get better guests who stay longer, book further in advance, and cause less trouble. It's all good. I do like your idea about charging a bit extra on AirBNB. I may do that.

Originally posted by @Sam Crochet :

Hello!

Does anyone know of a San Diego Airbnb/short term rental expert I could take out for a steak dinner (serious)? I network with real estate professionals a lot, but have found it difficult to get short term rental expertise. I run a couple of short term rentals, but want to make it a larger size of my portfolio and would love to chat it up with someone in the area. Serious on the steak dinner offer (anywhere you want!).

Thanks,

Sam from San Diego.

I am not an expert but we have a San Diego (Mission Beach) STR since before I heard of AirBNB (since 1998).

STRs are very risky in San Diego currently.  The city council recently passed regulation that in effect would ban STRs unless the owner lived on site.  Those regulations were to go into affect in July 2019.  

However, signatures were gathered to get the STR ban on the ballot. It was too late to get it on the up coming ballot so now a decision needs to be made to hold a special election with the associated expense or decide this at the regularly scheduled next election which is quite a long time from now. So the regulations are on hold pending having the issue decided by the voters. I have no clue as to how the election would go as people do not like to be told what they cannot do with their property but they also do not like the revolving door of tenants that are a result of STRs.

Any purchase of an RE in the city of San Diego with the intent to STR it would have significant risk. At the very least you need options such as renting it long term or selling it. I would suspect that other STR markets would have less risk

Search short term rentals San Diego and you will get all sorts of references. 

Good luck

Thanks! From what I hear, that election will take place in 2020. They got 2x the # of signatures they needed to push the issue down the tracks (though there’s some dispute over authenticity of those signatures, I doubt the special counsel will be able to prove that).  In all likelihood there will ultimately be some regulation, but nothing remotely close to what the special counsel attempted to invoke. My guess is there will be a certification required and—perhaps—some sort of neighborhood cap on STRs. Mission will be an exception. 

Regardless, I'd love to speak with someone who's a serial STR master leassor or owner!

Sam

Originally posted by @Tim Schroeder :
 the guests pay the guest service fee so I don't care about that. 

Tim, I respectfully disagree. That's YOUR money. That's the definition of retail market value for your rental. (=the amount the customer is ready to pay or actually pays). If VRBO was not getting that extra 7 to 10% fee called guest service fee, it would have been into your pocket. 

@Julie McCoy Thank you so much for this post. Clients ask me about difference between. Vrbo and airbnb and my default answer is I do not like vrbos accounting setup. I never thought to call them and they would change it. Love Bigger Pockets and Thanks again.

I’m not a fan of the pay me now, rent it later for a 1% fee of my money, but @Kevin Lefeuvre certainly presents a strong case based on strategic money management. Currently we set aside the money VRBO pays us in advance. If we deployed that money to pay down the mortgage for example, and use emergency money in the case of a cancellation, I can see that working out.

Yes, it will change the books, but the dollar is working better for you.

I won't sign up for it.  Also, there are some areas that have regulations where you have to keep the money in a trust account until the guest takes possession of the property, so it is of little value.

Mike