4 Pros and Cons of Airbnbing Your Primary Residence

by | BiggerPockets.com

I was dead set on obtaining a duplex. Even if Denver’s market in the summer 2017 would not allow it. It seemed nearly impossible to find a duplex that would cash flow enough that I could live for free or get paid to live.

There it was. A completely remodeled two-bedroom, two-bathroom duplex just a mile and a half from my office and a few blocks north of Denver’s largest park.

Despite the fact that I really liked this property, it was no different from the others. I could not get it to cash flow. So I gave up, grabbed a bag of Doritos, and started watching reruns of Friends.

Just kidding! That would make for a lame post.

So instead of giving up, I kept thinking. Instead of saying, “I can’t get it to cash flow,” I asked myself: “How can I get it to cash flow?”

My answer? I got creative and decided to convert the living room into a quasi-bedroom by putting up a room divider and a curtain so that I could Airbnb my bedroom. For one year, I slept on a futon, behind a curtain, while a revolving door of Airbnb guests slept in my bed.

How was the experience? In short, it was great! But there were of course, pros and cons. That’s what this article is about. For anyone contemplating renting a portion of their property out on Airbnb, I hope that this article can help you make your decision.

Related: Calculating Your Airbnb Return: How to Estimate Your Rent

First, the Pros

1. The People You Meet

I am a big traveler. I’ve been to nearly 30 countries, and my favorite part of traveling is the wonderful people I have met from all around the world. The cultural differences, their views on life, and of course, their accents!

While being an Airbnb host, I have had the opportunity to host and befriend people from all over without having to leave my living room. In exchange for a cheap place to crash, my travel bug was satisfied. Over the course of the year, I’ve hosted people from the UK, Australia, Portugal, Germany, New Zealand, and of course all throughout the United States.

While world travelers are fun to talk to, they typically come and go for a few days. But I’d also get people who were interested in moving to Denver. In fact, one of my guests reached out to me when she moved. Now, we are very good friends. We hang out all the time and do fun things together multiple times per week. Who would’ve known?

2. Most People Are Nice and Respectful

Typically, people stay for as little as one night or as many as five. This is not enough time for the guests to become super comfortable with you. I don’t mean that you make them feel uncomfortable. It is just that they are more mindful of making sure the bathroom is clean, the bedroom is clean, and that all the dishes are washed (if they are used).

Also, if you are nice and respectful to them, there is a high probability that they will leave you a good review, even if their stay was not perfect. It makes their experience a little bit more personal and a lot cheaper than if they got a hotel or a place to themselves.

I’m not going to sugar coat it. Once in a great while, you do get the annoying or disrespectful guest. The best part about this is, you only must put up with them for a few days. After that, they leave. On the other hand, if you find one of your roommates to be annoying, you have to deal with them for six to twelve months.

3. Additional Cash Flow

The additional cash flow is the most obvious advantage. This was the motivation for me to start Airbnbing my unit in the first place. Without renting out a portion of my unit, I would not have had the ability to cash flow on the property while living there.

I live in Denver, which is a popular place to visit. On average, I was getting $1,100 per month from AirBnbing the bedroom. This allowed me to go from paying $500 per month to cash flowing $600 per month. Not a bad deal.

If I were to just rent the room out full time, I could probably have gotten $800 per month in rent. With doing the Airbnb, I was able to increase the cash flow from a traditional rental by $300.

Related: Easy Steps to Discovering Your Airbnb Income Potential

4. Tax Benefits

I am not an accountant, nor do I have the desire to be. However, a great benefit that I have realized is the household items that I’m able to write off. Almost all my furnishings are write-offs. This includes the bed, desk, futon, art work, and kitchen supplies, as well as the reoccurring purchases such as dish soap, toilet paper, toothpaste, etc.

In addition, to the write offs, I was able to depreciate the portion of the property that I did not occupy. For example, I had a 650-square -oot apartment. I occupied about 50 square feet of that behind the curtain, while the remaining 600 square feet was for the AirBnb guests. I was able to depreciate 92 percent of my unit (600/650 square feet), which amounts to a significant, immediate tax benefit.

There you have it. These are the major pros that I have experienced while renting out a room in my place on Airbnb.

Now For the Cons

1. Shared Space Living

The most obvious disadvantage is that you are now living in a shared space. Not only are you living in a shared space, but the occupants are a revolving door of complete strangers. This can seem scary, and it’s an inconvenience at the very least. You may not be able to use the kitchen or bathroom if it’s pre-occupied. Sometimes, the guests will be on a vacation, and you’ll hear romantic noises coming from the bedroom. That is something you will need to get used to.

A lot of these can be remedied if the guests have their own private bathroom and if the room that you are renting is on the complete other side of the house. This was not the case for me, so I viewed it as a large disadvantage.

2. Cleaning

While I’m sure my mother would love this, I was certainly getting annoyed by it. When there are AirBnb guests, I need to make sure all of the common areas are spotless. I don’t consider myself to be a messy individual (some may disagree), but I am certainly not obsessive compulsive when it comes to cleaning. However, many guests expect an immaculate place, so that’s what I gave them.

The cleaning was a bit time consuming. It took about 30 minutes every few days to turn over the AirBnb and get it ready for the next guests. This does not include wiping things down and keeping the place relatively clean on a perpetual basis.

3. Reviews

Unfortunately, when you are an AirBnb host, you are essentially enslaved by your guests. Not literally, because they are paying you. But, if anything goes wrong, they could leave you a bad review. Having bad reviews impacts your future performance and people’s willingness to stay at your place.

After you have seasoned your place and have 20+ reviews, you have a little more leeway. A bad review here and there won’t kill you. Especially if your place is booked for the next 3+ months. Just make sure that your following guests have a good experience. That way they will write you good reviews and push the bad reviews down the list and onto the next page.

4. Uncertainty

With traditional rentals, you know exactly how much income is going to come in each month. With AirBnb, you don’t. Airbnb prices and vacancy all fluctuate with supply & demand. In Denver, the summer months get a much higher rate than those of the winter months. For that reason, the summers are extremely lucrative and the winters are less so.

Although, I have been doing Airbnb for over a year now, and I have still yet to pay a dollar toward my mortgage.

Conclusion

There you have them: the biggest pros and cons that I have experienced for renting out a portion of my dwelling on Airbnb. I hope you can relate and that this article can help you make a more informed decision as to whether Airbnbing part of your residence would be a good experience.

While some of these may pertain to you, others may not.

Are there additional advantages or disadvantages that I did not think of?

If there is something I missed, respond in the comments!

About Author

Craig Curelop

After developing a huge love for real estate investing and personal finance, Craig decided to join the BiggerPockets team as a financial analyst. Over the past few years, he has looked at hundreds of financial models of startup companies. His experience will help BiggerPockets reach the next level as a startup company. Craig has a passion for helping others get out of their “comfort zones” to get what they want and achieve the “impossible.” In his spare time, Craig enjoys traveling, hiking, exercising, and sports of all kinds.

3 Comments

  1. Charles Bellanfante

    Great post. I am a CPA so I do advise you to have a great explanation if you get audited by the IRS. I am quite sure a 50 feet living arrangement will not hold up strong against an examiner. Yet I did get great understanding of how air bnb works. Thanks.

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