I love to travel, and I love travel savings.
It’s an important part of my life. I put in work to maximize savings during my (kind of) luxury trips around the world, managing costs to stay focused on long term wealth.
There are a lot of tools for saving on travel. Travel reward credit cards, traveling in off seasons, flying to countries with favorable currency exchange rates, etc. All of these tools can let you travel the world in luxury without spending luxury amounts of money.
For me, Airbnb is one of the best tools out for there for saving money while traveling.
I use them often when I’m traveling and want to find a good price or have a more local experience. I’m usually in a hotel for the points, but I have used Airbnb all over the world.
A few years ago, I had an epiphany. Why don’t I rent out my own place on Airbnb while I go on vacation?
Initially, I came up with all kinds of excuses not to do it.
“Suppose someone comes and throws a crazy party in my house…”
“Don’t I have to clean and put things away?”
“Don’t I need a professional photographer?”
But then I looked into how much money I could make …
I had an upcoming trip to the Dominican Republic. My wife and I had to go for a wedding in Punta Cana, and we decided to make it an extended trip and see La Romana as well.
After doing the math, I realized I could make $1,000 renting out my place.
This was half the cost of the trip.
So, I did a little research, cleaned up, signed up, and had a great experience with three guests and their first time to San Francisco. They even left us chocolates to thank us for being good hosts.
I’ve repeated this multiple times with varying levels of success. I want to walk you through the steps to earn a little extra money when you leave for vacation. Airbnb is my vendor of choice, but VRBO and HomeAway should work too.
Learn the Law
You will need to do a little reading. At the minimum, see if your city is listed on Airbnb’s Responsible Hosting Guide and make sure to search “can I do Airbnb in [my city]” and read the top results.
A lot of the legal issues surrounding Airbnb hosts involve those hosting a lot and for serious money. If you are only hosting a few weeks a year, you should be fine. Airbnb does collect taxes for you in some states and sends tax information. Make sure you put the income on your taxes. Also, consider this Airbnb help article on legal and regulatory issues.
Determine Your Worth
Before you put in the work, you need to estimate how much money you can make and if it’s worth the time. Just like hotel rooms, Airbnb rooms in big cities and good neighborhoods earn more money. If you are deep in the suburbs, your house may not earn enough to be worthwhile.
Go onto Airbnb and search near your address for listings.
You are specifically looking for two things in your neighborhood: average rental prices & average vacancy.
I recommend you don’t over think this part. Start with the prices. Look at a few places, and understand what they are going for. Use the filters to make sure places have similar amenities. Look for other places with a pool, TV, wireless internet, or whatever amenities you have to offer. Exclude any places with amenities you don’t have, and ignore outliers. Also, take note of the number of reviews. You won’t have any yet so look for places with low review numbers for comparison.
Now that you’ve found a few places, check their calendars to estimate their vacancy rate. Ideally, they have fewer open dates, showing a lot of demand near you. If you see a lot of vacancies, don’t stress. Just make sure to post early and price competitively.
First, take the average price you are seeing and then count the number of nights you will make your home available. Next, you need to discount the total revenue because of vacancy. If things look “normal”, as in there are more days booked then vacant typically, use 25%. If it’s really bad with a lot of availability, use 50%. And if there are many places, all with limited availability and a lot of reviews (lucky you), then use 15%.
Now, just multiply them together. For example: Let’s say you can get $125 a night for your two bedroom condo, 10 nights of availability, and normal activity. That’s $125 x 10 nights X (1-25%) = $937.50.
That’s almost $1,000 in travel savings for a few hours of work.
Take Great Photos
The first step to this easy money is making your place look good. Terrible photos will cost you money, making your place harder to rent even at lower prices.
You can use a smartphone, but a basic point & shoot with a real flash will look way better. Borrow one if you don’t have one.
Start by cleaning (or getting someone to clean) your place. You want pictures of each room, the outside if possible, and the nicest of your amenities (e.g. hot tub). You can check out Airbnb’s blog to get some expert tips.
Make sure you get the beds, at least one bathroom, the kitchen, living room, and pictures of unique things you have, like a large TV or coffee machine.
Before you shoot, remove your personal items. Move them off camera so your place doesn’t look cluttered and junky. No one wants to see your dirty drawers in the corner of the bed they are about to rent.
Once you have a great set of photos, time to create a listing that makes people want to book with you.
Make a Great Listing
There is a lot of information you can provide to anyone who wants to rent your home. Maximize it.
Use the main areas (the title and main description) to quickly sell someone on why your home is great. Use the rest of the information to explain nearby local attractions, landmarks, and places to eat. Make sure to highlight the things inside your house that make it great.
Make sure to highlight the key things that will attract someone looking in your area:
- Easy access to public transportation
- Near to restaurants and shopping
- Close to a famous landmark or large attraction
- Convenient for an upcoming event (Super Bowl, Concert, etc)
Brag! This isn’t the time to be humble.
Find Great Guests
There is an important decision to make about making money or having control.
When Airbnb first launched, every booking had to be individually approved by the host. Hosts knew the name of the guest, could check out reviews, and see if they had their ID and social networking accounts verified.
In order to make bookings faster, they launched Instant Book. Now, you can set preferences about who can stay, but you won’t be able to approve or deny the person. This is supposed to lead to more bookings because you’ll be highlighted and are easier to work with.
So the decision: more money with Instant Book or more control over who stays at your home?
Personally, I choose control.
I want to make extra money, but this is my home. So I like to make sure the person has a few reviews, didn’t create their account yesterday, and communicates normally. I also read the messages they send me and might ask about their trip.
Fill out the calendar. Choose the days you will be away and set your place as available. You can set a price, or use the Smart Pricing option. The latter will adjust your price to be competitive and raise it when it can get more because of an event or seasonality. I’ve used both and am liking the smart pricing.
If you disabled Instant Book, you’ll start getting reservation requests. If you install the app, you will get a notification and be able to respond quickly. You’ll have 24 hours to review the person and approve or decline the request.
Airbnb caught some flack for hosts who were disapproving black folks at a higher rate than others. DON’T BE THAT PERSON. If you decline a reservation make sure it’s for a real reason and send a nice message letting them down.
Try and find someone who will stay for as many days as possible. If you are gone for long, you can hire help turning over the house, but one good guest is the easiest to deal with. All you have to do is clean before you leave and leave the keys.
Approve a guest’s stay, and start getting things ready.
Be a Great Host
Make your place presentable. Hire a cleaner or do it yourself. Put away valuables somewhere you can lock things (I’ve used my office, my car, or my safe). Order new sheets for the guests (this is more for you than them). Get some shampoo, conditioner and body wash. Make some room in the fridge for their things.
Make sure they can easily get into the unit without you. I use a lockbox and haven’t had an issue yet. Doormen, hide-a-rocks, and fancy electronic house locks are all good options.
I like to leave snacks or wine for my guests. It’s only a few bucks and getting good reviews is important. Do something a little extra … it’ll pay off in the long run.
Travel Savings aka Money!
Part of setting up your profile is telling them how to pay you. You’ll get paid the first day of the reservation. Money goes directly to you while you are on vacation.
You need to report the income on your taxes and need to pay any applicable local tax, but it’s only a few thousand.
I’ve made a few thousand dollars over the years. Guests have always been good and I am clearly a fan. One day, I hope to make more money renting my place than I spend on a vacation.
Damien is a Personal Finance Nerd and former Facebook Product Manager who started Wealth Noir to help others find wealth. He actively invests in stocks, robo advisors, and cryptocurrency … but loves real estate investing. He holds an MBA from MIT and a Comp Sci & Econ degrees from Unv. of MD. He’s a proud dad, which is his biggest accomplishment.