What you need to know before renting out your property on airbnb

Airbnb is a fantastic way to turn extra space into income and meet fascinating new people from all over the world. The stats tend to agree, with people all over the country setting up their space to accommodate paying guests – In Melbourne and Sydney alone there is close to 60,000 listings, and the average host earned $5,600 in 2018. That’s a nice chunk of change that can be recirculated into reno’s, maintenance, repairs, mortgage repayments or even diversifying investments.

If you’re planning on joining the shared space economy, there are a few things you need to know first.

THE PROS AND CONS OF HOSTING AN AIRBNB

PROS

• Generates income from a space that may have been unused or underused.
• You decide when the space is available and how much you charge.
• Provides hosts with hospitality experience.
• Can offer an opportunity to be social and meet people from all over the world.

CONS

• Can be a lot of work. Preparing and cleaning rooms, washing sheets, cleaning bathrooms, greeting guests and everything else that goes with it can be exhausting.
• A stranger or several strangers will be in your home, which could disrupt your usual lifestyle.
• Bookings aren’t guaranteed – you could go for long periods without any interest and then be inundated with inquiries and requests.
• Your property may experience more wear and tear.
• You’ll need to check your Airbnb app frequently and respond to enquiries promptly.

CHECK WITH YOUR BODY CORPORATE

Most body corporates allow Airbnb hosts to rent their properties out with no questions asked, and in many cases there’s not much they can do to stop you. With that said, it’s always best to check with your body corporate first to try to keep everyone happy.

If several of the residents oppose Airbnb, they may be able to ban or impose strict rules on the activity. To limit the risks of this happening, ensure your guests are always quiet and respectful, particularly at night and early in the morning. There has been horror stories in the news of people renting Airbnbs and holding enormous parties, but you can stipulate a specific profile of guest that you like and you don’t need to consider the others.

KNOW YOUR TAX OBLIGATIONS

Income from Airbnb is taxable and should be declared to the ATO when you file your return. Plus, while capital gains on the family home usually aren’t taxable, they may be when you rent it out on Airbnb – something to remember and discuss with you agent and accountant if you’re thinking about selling.

You can also claim expenses incurred when providing the accommodation such as:

• Repairs and maintenance.
• Mortgage interest.
• Depreciation on furnishing and appliances.
• Internet and phone bills.
• Water, power and council rates.

If you’re only renting out a part of your home and living in the other, you won’t be able to claim all your expenses – just the portion that applies to the part you rented out. This can get a little complicated so it’s often best to use an accountant to prepare your Airbnb return.

IF YOU’RE RENTING, ALWAYS ASK YOUR LANDLORD

Your landlord may not allow you to sublet the property so it’s always best to check first.
Ask your landlord for permission in writing and explain which parts of the property will be rented and what your terms will be. Let them know that you’ll be covered by Airbnb’s Host Protection Insurance for up to $1,000,000 in the event of damage by guests.

It’s also a good idea to run the idea past your neighbours and provide your number to call if there are any disturbances. Keeping them happy is in your best interest. If they complain, it may compromise your side hustle – and your lease.

GET YOUR LISTING RIGHT

The most important parts of your Airbnb listing are your photos and your title. The photos should be light and bright, presenting the space in the best possible manner. Consider using a professional photographer if you’ve got the budget for it. Write a snappy, short title that highlights your property’s best features. This will help it stand out from the rest.

And last of all, be honest. If your listing isn’t a true representation of your property, you’re unlikely to get many positive reviews, and positive reviews are a currency unto themselves these days.