Do you travel a lot or have a second home that sits empty much of the year? You might be thinking about making a little extra cash by renting out one or both of your homes when you’re not there. How hard can it be?
Having been a short-term rental host for years, I can say with certainty that while it can be rewarding (financially and otherwise), it’s also time-consuming – very time-consuming. On average, I spend several hours a week on tasks related to our two short-term rentals: a house in the Bay Area suburbs that we rent out when we travel and a small condo in San Francisco that we rent to travelers when we’re not using it for ourselves.
Don’t get me wrong. I like being a short-term rental host. It’s challenging and frustrating, but always interesting, and it’s nice to have the extra income. But I didn’t realize when we started down this path that I’d be running a business that would require regular attention.
Here are some things I’ve learned over the years about what it’s really like to be a short-term rental host.
It takes time and attention to attract the right guests
If we had an apartment in Manhattan or a cabin on the edge of Yellowstone Park, we wouldn’t have to worry about attracting guests. But we have an ordinary suburban home and a cookie-cutter condo in a highly competitive short-term rental market. Reaching potential guests in a way that makes our listings stand out among thousands of others is a big part of my job.
Here’s what I do to market our short-term rentals:
- Research short-term rental listing sites to figure out which ones work best for us. The sudden success of Airbnb made the short-term rental listing site market very complicated. There are now lots of site to choose from and new ones seem to appear every day. We’ve avoided Airbnb because they block direct communication with guests before booking, and VRBO announced that they will be doing the same (more on that here). So I am constantly searching for alternatives.
- Create short-term rental listings and keep them up-to-date. It takes a concerted effort to write a great listing description and take great photos that help your home stand out from the competition. But your work isn’t done once the listing is up. I’m continually updating our listings, especially our availability calendars, so they attract the attention of guests who are a good fit for our homes.
- Respond to and follow up inquiries. Weeks might go by without a single inquiry, and then there’s a flurry. Unless an inquiry is clearly spam (“I want to rent your beautiful home and send you a cashier’s check immediately!”), I always try to respond right away, even if I’m busy with other things. I take the time to answer the guest’s questions, and then I suggest a phone call “so I can tell you more about our home.” Being polite and friendly pays off. We’ve had guests tell us that they chose our home because they felt more comfortable with us than with some of the other hosts in our area.
Being a short-term rental host is not likely to be as lucrative as you might think
Read stories about short-term rental hosts who made enough money to quit their day jobs? They are few and far between. It’s a good guess that those hosts have homes in popular year-round tourist destinations that are always full and command a very high rent, or that they are among the increasing number of hosts who rent out several properties at a time.
The reality is that hosts like us, who occasionally rent out the home we live in and, possibly, a second home or vacation home, can’t expect to get rich. Our best scenario is to break even and maybe make a little extra cash. For us that’s fine. The income from renting our home helps us afford the travel we love and ensures someone is there to take care of it while we’re away. The condo rent covers our expenses and lets us hold onto a property that (fingers crossed!) seems to be appreciating every year.
To decide whether you really want to take on the work of being a short-term rental host, be realistic about how much money you’re likely to earn. Remember, it’s a business, with lots of associated costs. There’s the mortgage, property taxes, income taxes, insurance, HOA fees, and the like. The utilities. Maintenance and repairs. Furnishings and supplies. Move-in and move-out cleanings. A manager, if you need one. Not to mention listing site fees or commissions and any local fees or taxes.
The short-term rental business is unpredictable
What’s your tolerance for the unpredictable? The fact is you can’t count on getting the right guests whenever you want them. Our condo sometimes goes weeks without a paying guest. Too often for my comfort, we haven’t found the right guests for our home until right before we were due to leave on a trip. We also had a guest cancel at the last minute because he fell seriously ill. We felt that it was only right to return his deposit and the rent he’d paid, but it made a big dent in our travel budget.
There’s always a risk when you open your home to strangers
Our son, who is moving to a new home close to a surfing beach, hopes to recoup some of the rent by “Airbnbing” the place when he’s away. “Be very careful about the guests you accept,” I cautioned. “I know, Mom,” he assured me in that tone only grown children of older parents use. “I’ll only take guests who have great reviews.”
Great reviews are fine, I thought. But anyone can write reviews. I think you need to go beyond the reviews to make sure your guests are the kind of people who will take good care of your home and respect your neighbors. We screen our own guests very carefully. We look them up on social media and compare what they tell us to what we find, ask for identification, such as driver’s licenses or passports, and check references. Most important, we have direct conversations with guests on the phone or on Skype. (That’s why we look for listing sites that don’t block pre-booking communication with guests.)
There’s a lot to learn about running a short-term rental business
I always knew we’d need to pay taxes on the rental income, and when we bought the condo we checked to make sure the HOA would allow us to rent it out. But there has been so much more to learn.
I’ve worked hard to educate myself about insurance (many homeowner’s policies don’t cover short-term rentals), income taxes (carefully tracking rental income and related expenditures is essential), and local regulations ( San Francisco now requires short-term rental hosts to register and pay a fee). Keeping up to speed on these kinds of practical matters isn’t the fun part of being a short-term rental host. But it’s the only way to avoid potentially serious – and costly – problems.
Are you a short-term rental host? We’d love to hear what it’s like for you. Please share your experiences and thoughts in the comments or on our Facebook page.