The hotel industry is running scared. The reason? AirBnB – the $10 billion startup that allows homeowners to rent out their spare rooms and couches to travelers. The homeowners make coin, and travelers get a bed for the night, often at a lower cost than what a traditional hotel would charge.
Over 800,000 listings are available in 33,000 cities worldwide, with hundreds of millions of bookings made every year. I have saved a bit on AirBnB myself. But this success has also come with a number of horror stories.
Are you thinking about renting your spare rooms out on AirBnB? Here’s why you should, and also a cautionary note on why you should think twice.
The Cons Of AirBnb
The AirBnB model is great for travelers, but what about for hosts? Here are three major considerations you need to take into account when you rent your space out on AirBnB.
You Might Get Evicted
If you own your home, this doesn’t apply to you. But if you rent? Pay attention. Subletting your place on AirBnB might get you evicted.
Much like Madonna was the face of Pepsi in the 80s, Shell is the face of AirBnB in New York. Her face has been plastered across subway adverts for the company, and she has appeared in video commercials, talking about her experiences with providing free accommodation for those displaced by Hurricane Sandy.
Shell’s apartment was a beautiful and spacious 1880s Dutch barn, located in hip and happening Stuyvesant, just on the outskirts of New York City, where her rent was $4000 a month. And like many rentals, Shell’s lease expressly forbade her from subletting her apartment.
When her landlord caught wind of what she was up to, he was furious. “Friends are one thing,” he said. “Groups of social-networking strangers is a completely different ball of wax.”
Not long after, he quickly gave her the boot. Shell had to find a new flat, and her loyal customers had to find somewhere else to stay when they were in town.
You Might Break The Law
In some locales, AirBnB — much like Uber — operates in a sort-of legal grey zone. Like New York, for example.
Last year, host Nigel Warren was fined $2,400 for violating a New York ordinance which prevents homeowners from offering short-stay accommodation. The fine could have been potentially much larger, as Nigel was also on the hook for breaking other city codes and regulations.
New Yorkers are prevented from renting out their properties for less than 29 days, due to a 2011 law that was released to curb the spread of unauthorized hotels in the city.
Should you decide to rent out your home on AirBnb, you should think long and hard about whether you’ll find yourself on the wrong side of the law in your city.
Your Apartment Might Get Trashed
When you rent out your apartment or spare room to a near-stranger, you’re making some very big assumptions. You’re assuming that the person you’ve entrusted your house — your home — will treat it with respect, and none of your belongings will be stolen.
And for the most part, that’s usually the case. There’s only been a few notable exceptions of people having their homes turned upside-down, like someone’s staged a reenactment of Project X. But when things do go bad, they go really bad, as San Franciscan AirBnb host Emily J found out:
Someone named Dj Pattrson (was it a guy? A girl? I still don’t know – but I have noticed much too late that the person misspelled their own last name) came into my home earlier this month (apparently with several others, according to witnesses) and set out on what I believe to be the carefully-planned theft and destruction of my home and my identity. With an entire week living in my apartment, Dj and friends had more than enough time to search through literally everything inside, to rifle through every document, every photo, every drawer, every storage container and every piece of clothing I own, essentially turning my world inside out, and leaving a disgusting mess behind.
The immediate response of AirBnb left a lot to be desired. In a later blog post, Emily slammed the lack of support provided by AirBnb, and talked about how her life hadn’t gone back to normal.
In the meantime, I am still displaced, bouncing between friends’ homes, clutching my pillow and what’s left of my normalcy. I spend my mornings recalling nightmares and breathing through panic attacks, and my afternoons scouring the city’s pawn shops in the vain hope that I might recover some of my stolen treasures. I do not feel anything close to safe.
To the credit of AirBnb, in the years since this high-profile incident, they have released their Host Guarantee, which promises to protect all hosts from damage and theft to the tune of $1,000,000.
The Pros Of AirBnB
Despite the horror stories, there remains some compelling reasons why you might want to rent out your space to near-strangers on AirBnB.
Money, Money, Money
For many, AirBnb is their main source of income, with some charging upwards of $100 a night to rent out their spare room, that would otherwise lie dormant. Entire homes can go for much, much more, with one San Francisco apartment costing $700 USD per night.
And if you have a bit of capital behind you, you can acquire enough properties to build a six-figure AirBnb business, as Bradley, the subject of this FastCompany article does.
At 90% occupancy, Bradley can make about $4,000 per apartment on Airbnb. He pays about $2,000 of that in rent and utilities. That comes out to about $2,000 profit per apartment per month, or $24,000 each year. With six apartments, he could make up to $144,000 in a year.
That’s more than the average wage of a software developer in Silicon Valley! And if you’re still not planning on living entirely off your AirBnB rental, you can still offset your bills, your rent, and your mortgage.
You Meet New People And Expand Your Horizons
This is something that rings true for both guests, and for hosts.
This summer, I spent three nights at an AirBnB booking in Brussels, Belgium. The room was far, far cheaper than most hotels in the city, and I got to stay near the splendidly modern skyscraper headquarters of the European Commission.
My host for the weekend was a Japanese translator, working in the city. Mine wasn’t the only room that was rented out, too. Next door was a Spanish couple, off to attend a rock concert in the nearby city of Leuven.
After leaving Brussels, I hopped on a train to Antwerp, where I stayed with a Belgian-Nepalese couple. Like my previous booking, other rooms in the property were booked. I met a Kyrgyz UN worker visiting friends in the city, as well as two film students from Los Angeles who had taken two months off for a Euro-trip. It makes perfect sense for digital nomads too.
It’s highly unlikely I would have met these interesting people, had it not been for my choice of accommodation. And when you open up your home to strangers, you get a chance to meet people you otherwise wouldn’t have met.
But What Do You Think?
Are you an AirBnB host? Have you had any bad experiences? Good experiences? Got any thoughts on this post? Let’s talk about it.
Image Credits: European Commision – Brussels (Mooglr), New York Sunset Panorama (Darren Johnson)