To AirbNb or not to AirbNb?

18 Replies

I have a house in a nice neighborhood in Tempe, AZ. Decent location. The house has been renovated with wood floors, and I bought really nice furniture from Pottery Barn and such. A Baby Grand piano in the living room. 

I'm considering making it a STR when I'm gone on work trips which is about half the month. I'd probably lock up my master bedroom and bathroom, and make the rest of the house available for rent. Which would be 2 bedrooms (+ a sleeper sofa in the living room) and one bathroom.

I talked to the HOA manager, and while they do allow STRs at a 25$ fee for each reservation, she cautioned me against it. She said we had one AirbNb in our neighborhood where a tenant committed suicide (!). Several where tenants were stealing from landlords or causing damage. It sounded very discouraging.

I'm interested to hear what the pros on BP have to say about it. Yay or nay?

Hello Ada, it sounds like you have a nice home.

I currently have an Airbnb property and the home is outfitted with the most basic of essentials. Within the first month someone stole my vacuum cleaner. I would not suggest Airbnb for your home as it seems very nice and damage done by a guest may not be fully re-compensated. Imagine if you came home and your Baby Grand was damaged, it would be a crippling feeling.  Having a really nice home does not really allow you to charge so much more for a rental on a nightly basis I have found either so with less at risk I believe your overall risk is lower. That is my $0.02.

NOT to Airbnb!

I have more and more issues with Airbnb guests in my (rather high end) properties with up to 14 guests. The fact that airbnb's security deposit is a joke is now more and more known to the guests to whom it sends a bad signal. (google it and see for yourself).

I had claims in 4 cases this year with airbnb, (had only one last year and none in 2016), all being partially or totally denied, and all taking a lot of time. They want an invoice for the cleaning and your copy of maid's check is not enough. If you spend time fixing something broken, it does not count, you need to get it repaired by a licensed contractor, get a bigger invoice and then "hope" they'll refund, until they find another reason not to.

And of course, noise or extra guests are not considered "damage" and won't lead to compensation.

And more and more guests cancel when you ask for their ID and Airbnb takes their side (they don't support owners imposing ID check).

So for anything other than a room rental to one or two persons inside your house when you are present (which is not my thing at all), I don't recommend Airbnb any more.

If you like high blood pressure go for it. LOL  only because its your home so you will take it a bit personal.
For business, and you airbnb it on another house then go for it.

Make a it STR or MTR (Medium Term Rental). Don't go for vacationing people. Go for temporary workers like nurses, professors, consultants and the like. Those kinds of people would take better care of your place.

I would agree with Paul Sandhu. Workers, medical and people in between selling and moving into new home will be best type of tenants. You can vet these types of people. I have great STR tenants with these types. No problems so far.

Originally posted by @Kevin Lefeuvre :

I had claims in 4 cases this year with airbnb, (had only one last year and none in 2016), all being partially or totally denied, and all taking a lot of time. They want an invoice for the cleaning and your copy of maid's check is not enough. If you spend time fixing something broken, it does not count, you need to get it repaired by a licensed contractor, get a bigger invoice and then "hope" they'll refund, until they find another reason not to.

Sorry to hear about that experience. Did you have insurance for your STR on top on what AirbNb offers?

I also rented a STR to a family whose house burned down. Insurance put them up in a motel. That lasted about 48 hours. They stayed with me for 3 months, and the insurance company paid the going rent for the STR. The guys main thing he needed was fast internet, he was a programmer.

@Ada Tor Wow. I couldn’t disagree more with my fellow posters. In fact @Kevin Lefeuvre reply was surprising. It’s true it’s not for everyone but I think it would be perfect for you IF the HOA didn’t already basically tell you not to do it. The HOA can make your life very difficult if they want to, and it sounds like they will. No one is going to kill themselves in your property. That’s rediculous.

@Lucas Carl and everyone else.  Nobody ever died in my property, but several weeks ago I had someone overdose.  His boss and myself made a welfare check on him since he didn't show up for work.  He could have died if he was not sleeping on his side when he vomited.

Had another tenant expire on me.  Vietnam veteran suffering from dementia and was found about .25 mile away by some railroad tracks.  

The OP place is too nice for an Airbnb type of rental.  He needs some responsible people in there, imo.  

@Ada Tor . Soooooo would anyone be opposed to VRBO? Should we just recommend anyone that has a home that’s not junk shouldn’t STR?

@Ada Tor The worst thing that could happen is that you have a bunch of musicians in there that tear things up.  I have an ongoing joke with my wife...whenever we are leaving a hotel room to check out I say "Wait, wait. I forgot something!"  Then I tell her I have to go back in the room and throw the tv out the window.  Keith Moon used to do this, he  was the drummer for The Who.

@Ada Tor STR is a business, and as such require processes, operational standards, etc to be successful. Just casually renting your property when you’re away is easy, unfortunately it may be very unprofitable. A business can spread the risk over many properties and many STR for each property. You have two major problems as a casual landlord 1. You don’t have the processes, procedures and knowledge necessary to limit risk 2. You don’t have the diversification of many properties and many rentals Renting out a property STR when you are on the premises radically reduces these risks I no longer rent my properties for anything less than 12 month lease with very deep background checks and relatively high security deposits ( my properties are high end) However, I do rent though AirBNB for three months every summer when I leave for cooler climes. In speaking with the property owners I rent from (high end properties) all have had bad experiences that made them reevaluate whether the income was worth it. They all decided on being much more selective in choosing who to rent to, and renting at below optimum pricing in order to be able to pick and choose tenants.

Thanks for the replies. I'm considering just moving my expensive furniture to a storage unit and getting some more expendable things so that I can proceed with my STR.

It's funny how sometimes we become prisoners of the "stuff"... 

@Ada Tor Could you not move all your expensive furniture into the smallest bedroom and place a lock on it? Less moving expense (twice), your storage cost is going to be the lower amount of rent you can command for the property. If the house becomes profitable on a regular basis, you can relocate the furniture and have another bedroom. If it becomes really profitable, you can leave all the good furnishings in the house and buy yourself new and better furniture. Some people would buy the new furniture for themselves and claim it as a business expense for the STR. Do you have your old receipts for the existing furniture? You might be able to deduct that as an expense.

Originally posted by @Paul Sandhu :

@Ada Tor Could you not move all your expensive furniture into the smallest bedroom and place a lock on it? Less moving expense (twice), your storage cost is going to be the lower amount of rent you can command for the property. If the house becomes profitable on a regular basis, you can relocate the furniture and have another bedroom. If it becomes really profitable, you can leave all the good furnishings in the house and buy yourself new and better furniture. Some people would buy the new furniture for themselves and claim it as a business expense for the STR. Do you have your old receipts for the existing furniture? You might be able to deduct that as an expense.

 Paul, 

I have some really nice big pieces like a baby grand piano, solid wood armoire, cabinets, tables... my bedroom is fully furnished with a very expensive bedroom set as well. Wouldn't fit, unfortunately.

I started renting my own home on Homeaway earlier this year, after finishing a 200K renovation. Last weekend was the fifth time, so I don't have a ton of experience, but as of right now, I wish I had done this a long time ago. I'm renting at high rates for special events, to extended families or groups who want a big place (we have 4 bedrooms with kings/queens). Everyone has been incredibly nice and very respectful of the property. Last weekend, after paying an absolutely exorbitant sum, my renters were gone by 11, having taken out the trash, stripped the linens and put them in the laundry room, loaded the dishwasher, and left a couple hundred dollars worth of liquor and gourmet food in the kitchen. I told my kids that I'm sending them to boarding school and renting the house every weekend. 

@Ada Tor placing a claim on my home owner insurance for $500 is not worth, the time , the effort, not to mention the deductible, the burden of proof, even the coverage of some personal properties, etc. These things should be covered by the security deposit which is inexistant on airbnb. The process should be easy. 

@Lucas Carl the question (and my answer) was about airbnb not STR in general, and specifically for higher end houses. I won't recommend airbnb for high end houses. Airbnb guests are clearly acting more irresponsible than VRBO guests or at least in my policies where I have $1500 security deposit for a 2000 sqft house with brand new furniture through VRBO. I have no problem there. Here are some posts that airbnb is totally aware of since years and clearly plays the game of the guests. Not a secret at all. Some of them clearly create new accounts after each damage and restart.

https://community.withairbnb.com/t5/Hosting/Securi...

https://community.withairbnb.com/t5/Hosting/Smokin...

https://community.withairbnb.com/t5/Hosting/Proble...

in one comment, one guest writes this:

"Nick July 8, 2018 at 8:29 am Tip of Advice: If you don’t pay, there is nothing they can do about you."

So more and more airbnb guests are aware of the situation.

VRBO or others where you have a real security deposit in your hands, things are different. Not that the security deposit covers everything (I have $15k furniture in that house so the $1500 deposit won't cover is all) but the fear of losing the deposit forces the guest to act responsibly. Knowing that you have no recourse, it will be all based on how good people they are. And yes 95% of people are good people. 5% are not.