5 Costly Pitfalls of Hosting on Airbnb

By Holly Johnson on 8 September 2017 0 comments

Renting out your spare room or property through Airbnb can be a great way to supplement your income. For example, New York City hosts earned a median income of $5,474 from the service from June 2015 to June 2016, according to Airbnb data. Other home-sharing services such as VRBO, HomeAway, and FlipKey all work in a similar way to connect property owners with renters through an online platform. (See also: Best Websites for Renting Out Your Extra Space)

Unfortunately, hosting on Airbnb or one of its competitors isn't just puppies, rainbows, and profits. While there is money to be made, renting out a home, an apartment, or even a room requires a lot more skill — and patience — than many realize. There's a lot that can go wrong any time you're working with the public at large. (See also: 13 Things I Learned From Renting Out My Home on Airbnb)

We reached out to several Airbnb hosts to find out the biggest hassles, the most annoying downsides, and the worst things that can go awry. Their insights provide some valuable lessons on what you should really expect if you get into this business.

1. Rude and unruly guests

Renting a home or room to an Airbnb guest is a lot like running a hotel. You'll get your share of polite and courteous renters who want to enjoy themselves without making their presence a hassle. But you'll also get people who will never be happy no matter what you do.

Airbnb host Zeona McIntyre owns properties in Boulder, Colorado and St. Louis, Missouri, and says she's experienced both the good and the bad. Some have even made her cry.

"Most guests are friendly, excited for their vacation, and really grateful that you are opening your home to them." says McIntyre. "A very small group of them are entitled, rude in exchanges, and unrealistic."

"I have had guests message me at all hours of the night, expecting an immediate response and I've had guests make me drive over in a snowstorm to change a light bulb."

If you ask any Airbnb host, you'll find that none of this is rare. In fact, dealing with an occasional bad egg is really just par for the course for any Airbnb host or landlord. Before you decide to rent a room or your home, make sure you're prepared to deal with whatever — or whoever — comes your way.

2. Bad reviews

One of the major components of any Airbnb business is customer reviews. While good reviews can help attract new renters, bad reviews can cause the opposite reaction. Either way, the review system is an integral part of the equation since it's the only way for new renters to learn what your rental experience is actually like.

As McIntyre notes, however, the review system can be a tough pill for a new owner to swallow — especially if you're transitioning a long-term rental into an Airbnb. With a long-term rental, your tenants tour the property ahead of time and know what they're getting into. With Airbnb, this is not the case.

"People all of a sudden feel empowered to critique your design sense, mattress choice, and even cleaning products," notes McIntyre. Occasionally, even simple choices like these cause renters to leave bad reviews when it's completely unwarranted.

"Constructive criticism makes us better, but it does not need to be hurtful or exaggerated," says McIntyre. But whether you like it or not, becoming an Airbnb host means learning to deal with negative feedback. (See also: This Is How You Rent Your Place on Airbnb — And Succeed)

3. More work than people realize

Too many people jump into their new Airbnb business with the false idea they're going to have it easy. List your Airbnb property for a profit, hire staff to keep it clean in between renters, and you can sit back and collect the checks, right?

Wrong. According to Airbnb host and real estate expert James Carlson, renting a home or even a room can be a lot more work than people realize. And, Carlson should know. Not only is he a realtor, but he runs several properties of his own and teaches classes on becoming a profitable Airbnb host.

Unless you hire out all the grunt work, you'll be doing laundry, cleaning kitchens, and making beds every few days. Not to mention being responsive to future guests and to your current guests' needs. "Remember, they don't have a concierge service," says Carlson. "You're it, so you need to be available."

Depending on the number of units you have, you end up putting fires out a lot, says McIntyre.

"If a unit is not as clean as it needs to be, you need to get another cleaner there right away. If a toilet plugs up and a guest is only in town for the weekend, they need it to be functioning," she says. "The key is not to lose your head."

Most of all, be prepared for an array of inconvenient situations. It's not a matter of "if" they'll happen, only "when."

4. Basic logistics

While unruly tenants and late-night calls can put a damper on your experience, sometimes it's the normal everyday logistics of running an Airbnb that cause the most hassle and stress.

Landlord and Airbnb host Elizabeth Colegrove, who owns multiple properties and blogs at TheReluctantLandlord.net, says some of the hardest problems to solve are the ones that should be simple but aren't.

"One of the biggest pains in the beginning was figuring out trash," notes Colegrove. "Tenants don't take the trash out to the curb and get really upset when there is trash left over from other people."

But, since her properties are mostly single family homes, there's no dumpster and turnovers aren't always around the time of trash day. To avoid miscommunication with tenants about the trash, Colegrove added a notice to her welcome packet so tenants knew they were required to take trash out to the outside bin. She also upped the fee she paid her cleaning company so they would take the trash to the curb on trash day.

Then, there are logistics that have to do with tenants themselves — for example, some tenants want to stay a single night but need to check out at 6 p.m. "Basically they want to pay for one night but get two days, which does not work for same-day turnovers with cleaning," says Colegrove. "We have had to get very strict on turnover and are even thinking about imposing a fine if not out by turnover."

5. Tax consequences

Abby Eisenkraft of Real Life Tax Advice is a tax professional who helps new Airbnb hosts prepare their taxes every year. She says that, especially the first year, Airbnb hosts are rarely prepared for the tax implications of running their business.

Eisenkraft says she's seen a few different scenarios play out over and over. First, many Airbnb hosts never set aside money to pay taxes on their Airbnb income. Unfortunately, this can mean owing more in taxes than they planned for. "They are always surprised — and many are tearful — when they see their tax bill," she says.

Second, new Airbnb hosts tend to be confused about what they can write off, so they try to write off personal expenses that have nothing to do with their Airbnb. Eisenkraft's job is explaining what they can and can't write off, and her answer doesn't always please her clients.

Lastly, new Airbnb hosts are typically surprised when they receive a Form 1099K in the mail showing their Airbnb income. Many falsely assumed their Airbnb business was "under the radar" and thus, not subject to taxes.

Obviously, assuming any of these things can be costly. Knowing about them in advance can help you decide whether you really want to have a short-term rental on your property, with your eyes wide open to both the costs and benefits.

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