Small business:

Renting out a spare room, or even your whole house, can be a nice little earner

Since its first listing went live in San Francisco in 2008, accommodation-sharing site Airbnb now claims it assists an average of 2 million people to find nightly accommodation globally. Moreover, the platform offers 5 million properties for rent in 81,000 cities in 191 countries.

Certainly, Airbnb comes with risks, as shown by a recently reported case of a US owner who was forced to pay her “nightmare” guests to get them out of her property. However, if millions of holidaymakers globally trust their nightly accommodation to Airbnb, it’s worth some consideration as a business opportunity that could potentially add cash to your family budget or retirement savings.

Airbnb is an online marketplace enabling hosts (owners) to rent their properties or spare rooms to guests. Whether you have a room, an entire house with a swimming pool or a granny flat to let, Airbnb can help boost your financial bottom line. For example, a calculator on the site estimates hosts could earn about $2400 a month by letting a room catering for two guests in a coastal holiday mecca such as Byron Bay in northern NSW.

With potential earnings like this, it’s little wonder a recent University of Sydney report found that since launching in 2011, more than 130,000 properties in Australia are listed with Airbnb. This is roughly 0.2% of Australia’s total housing stock. In coastal communities, Airbnb listings are closer to a median rate of 4%, with even higher rates in holiday hotspots. For example, the report found that 17% of all housing in Byron Bay is listed with online holiday rental platforms.

What it costs

An Airbnb listing is free, although the site takes a 3% commission from owners for each booking and up to 20% from guests, who can confirm this fee on the checkout page when making a reservation.

To determine a suitable tariff to charge, the comparison website finder.com.au advises owners to examine the prices of similar Airbnb properties in the area. “Find some properties that have similar offerings in terms of location, rooms and features and see what prices they are going for,” says Finder’s Bessie Hassan. “Are they booked out? Is your space better or worse?”

Also think of water, electricity, gas and internet usage as well as other amenities. “In particular, if you have any unique features that consume a lot of electricity, such as a heated pool or spa or reverse-cycle air-conditioning, you will want to factor that cost into your profit line,” says Hassan.

To help guests feel at home, consider providing amenities such as soap, shampoo, toilet paper, bed linen and towels. It can’t hurt to have extras on hand as well, recommends Airbnb. There are also the ongoing cleaning and washing expenses to factor in, whether you do the work yourself or outsource it.

Allowing a stranger to holiday in your property comes with a level of risk. To address these hazards, Airbnb offers a “host guarantee” that ensures any damage to your property or possessions, up to $US1 million ($1.33 million), will be reimbursed.

However, the host guarantee does not cover wear and tear, valuables such as artworks or jewellery or even your pets. Hassan recommends retaining your current home and contents insurance policy to ensure these items are fully covered.

The Australian Tax Office will want a cut once you start to attract guests to your property through Airbnb. Don’t simply treat the payments as spending money and be sure to set some cash aside to keep the tax office happy.