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Making Money With Airbnb: Why I Rent Out Our Guest Room

It never really occurred to me how much space in a typical house goes unused until Ms. FP and I moved back into her four bedroom house. As a renter, we never lived in an apartment bigger than 800 square feet or so. Our smallest apartment (where we found all of that sweet, sweet trash) was about 600 square feet.  At the beginning of this year the two of us moved back into a 4 bedroom house that was double or triple the size of any apartment we’d ever lived in.

It seemed like a waste to have so much space for just two people.  But we didn’t want to get roommates either. That’s when we decided to try out our hand at Airbnb.

Are You Really Using All Of Your Space?

Moving from our small apartment into a pretty big house really showed us how much of our home was basically going unused.  When you think about it, most people probably need just a few parts of their home – a spot to watch TV, a spot to sleep, and a spot to eat and cook.  Maybe you work from home and need a spot to work.

A few months back, the Money Wizard wrote about a UCLA study in which researchers plotted the location of family members in a typical house.  The researchers performed a sweep of the house every 10 minutes, then plotted each family member’s location.   Below were the results.  As you can see, the majority of the time, people hung out in the kitchen or family room.  Many other rooms basically went unused.

What this means is that, for most people, a house isn’t being used to its full potential.  Most of the time, you’re not really paying to heat or cool yourself.  Instead, you’re paying to heat and cool stuff that’s sitting in unused rooms.

And the absolute biggest waste of space has to be the guest room!  It seems like everyone with a house has a guest room these days.  People decorate them, keep them clean, and put nice stuff in them.  And then these rooms only get used a handful of times per year.  We were no exception.

If you have a guest room, you’re sitting on a potential income generating portion of your house!  Your home is likely your biggest asset.  Figuring out a way to monetize it, even just a little bit, is an easy way to put that asset to use and defray some of your living costs.  It’s also a good way to fix the problem of having a house that’s too big for you.

I knew about Airbnb, but had only tried it out once as a guest, and never as a host.  But I’d always been interested in the concept.  And I hated that we had all this extra space sitting unused.

So, in April of this year, I took some pictures of the guest room, put up a listing on Airbnb, and Ms. FP and I began to welcome our first guests.  And so far, we’ve been very happy with the experience.

The Advantages of Airbnb

As you can tell, I’m a big fan of the sharing economy.  Airbnb comes with a lot of advantages that you can’t get from a normal roommate situation.

1. It’s Better Than A Full Time Roommate.

The traditional way of monetizing your home would be to find a roommate.  The problem with having a roommate is that you lose a lot of flexibility.  If you want your house for yourself, you’re stuck.  With Airbnb, all you need to do is block out those dates on your calendar.

There’s also a big mindset shift with an Airbnb guest as compared to a roommate.  One of the things that Ms. FP hated about living with roommates was the fact that her roommates had their stuff in her living room and kitchen.  It’s not necessarily that her roommates were messy – most of them weren’t.  But when you have multiple people living in one house, it’s really hard to keep the place free of clutter.  A roommate sees your house as their house, basically.

It’s a totally different experience with an Airbnb guest.  That’s because there’s a general understanding that it’s your house and the Airbnb guest is just that – a guest.  When I’m a guest in someone’s home, I tend to treat the home with a ton of respect.  I won’t walk around someone’s house tracking mud, or leave my stuff around, or make a ton of noise at night.  I’ve found that most people are the same way.  When they stay in your home, they’re super respectful.

Another big bonus with an Airbnb guest versus a roommate is the fact that Airbnb guests don’t spend much time in your house.  Someone staying with you on Airbnb is typically coming to your city for a specific reason.  Since we’re close to a college campus, almost every guest that stays with us is coming into town for a conference or for school interviews.  We don’t see them very often. Most of the time, they only come home to sleep.

2. Way More Money For Less Time.

This is pretty expected, but renting out a room on Airbnb brings in much more income than renting that same room out to a traditional renter.  If you’ve followed my side hustle reports at all, you know that, in months where I’m fully booked, I can bring in well over $1,000 in a month.  A room in my house would probably rent for around $600 or so per month if rented out normally.  I can bring in that same amount in about 12 days on Airbnb.

3. Overhead Is Low If You’re Renting Out A Room In Your Home.

One issue a lot of people have with Airbnb is that it takes a lot more time and overhead to run an Airbnb as compared to a traditional rental.  This is definitely true if you’re renting out an entire house or apartment.  It’s a time intensive process to clean a large space between guests and get a place ready for the next group.  Not to mention that, if you’re renting out an entire home on Airbnb, you’ll probably need to invest some money in purchasing furniture.

But when you’re renting out a room in your house on Airbnb, the overhead is minimal.  There’s very little extra utility use, at least not enough for me to notice any real difference in our electricity or water bill. We’re also just using furniture we already had.

The only costs we really have are the cost of washing sheets.  To minimize these costs, we have multiple sheets that we’ve earmarked for our guest room.  Doing this allows us to stagger our laundry so that we can wash most of our sheets with our regular laundry.

4. Your House Will Never Be Cleaner.

I think this is the most underestimated impact of renting out a room on Airbnb.  Ever look around and realize that your house has gotten pretty dirty?  I know that’s what happens to us when we go through long periods where no one is visiting our house.  Clothes get left on chairs.  Dirty plates start piling up in the sink.  Dust bunnies start collecting in the corner.

This all changed once we started renting out a room on Airbnb.  Suddenly, we needed to keep our house clean! Sure, there’s some work involved in cleaning up our house when guests are coming.  But the thing is, cleaning gets so much easier when your house is already clean to begin with!  I really only have to sweep up our guest room, change the sheets, and make a quick sweep of the bathroom between guests.

I will admit that cleaning is work.  I’d rather not do it.  But it’s work that doesn’t just benefit our guests.  It benefits us too! Our guests get a clean place to stay, and as an advantage, we get a clean house to live in.

5. You Can Get Freebies!

You can probably guess that I love free stuff.  And the great thing with becoming a good Airbnb host is the ability to snag free things from companies looking to advertise their products.  If you just keep an eye out on some of the major Airbnb forums, you can often find companies offering to give free stuff to Airbnb Superhosts.  As an example, I’ve received boxes of travel sized toiletries, USB plugs, and smoke alarms.

My absolute best freebies are the two free mattresses I’ve received from startup mattress companies. These companies are super popular in the startup world.  Instead of buying a mattress in a store, you can purchase a mattress online and the company mails it to you in a box. There are so many of these companies out there that there’s even entire blogs and YouTube channels dedicated to reviewing mattresses.

Since I’m an Airbnb Superhost, I’ve been lucky enough to receive $2,000 worth of free mattresses and pillows from these companies!  I guess the idea is that a guest will sleep on the mattress, then consider purchasing it later.  I have no idea if that will actually work out, but who cares, free mattresses for me!  Even if I stopped doing Airbnb right now, I’d still get to keep the mattresses, which are definitely better than our old mattresses.

I didn’t expect to get any freebies when I first started hosting.  But it’s been a nice bonus and I’m always keeping an eye out for other freebies!

But What If Some Crazy Guy Comes Into My House?

The biggest fear that anyone has when it comes to renting out a room on Airbnb is the fact that you’re inviting a stranger into your house.  This is a definite concern for sure. but I think it’s an overblown fear.  I feel like most people in the world are normal people.  And with the way the internet works, it’s pretty easy to figure out who’s coming to your door.

You also greatly diminish the chances that a crazy person comes into your home when you’re renting out a single room on Airbnb.  Anyone looking to throw a big party or steal from you or do any other number of bad things is probably not going to do it in a house where the owner is also living in it.

There are other precautions you can take to avoid problem guests.  I require all of my guests to verify their identity with Airbnb.  Basically, guests that want to stay in my house have to take a picture of their ID and give it to Airbnb. Below is what you can see if you look at a typical Airbnb profile.

I also always do a little bit of background research on each guest that messages me.  If they have good reviews already, then that’s great. They’re probably less likely to be crazy.  I’ll also do a quick Google search and see what type of internet presence they have.  A professional LinkedIn profile or some sort of work profile is definitely something I like to see.

Finally, you can limit the crazies just by chatting with your potential guests!  I can almost always get a feel for the type of person coming to my home based on the type of messages they write.  If the message is written professionally and explains why they’re coming into town, I’m much more likely to accept the request.

In the end, you’ve got to trust your gut.  Most people who are crazy won’t be able to hide it.  You’ll probably be able to tell.

More To Come!

My Airbnb experience is far too much to write in a single post, so stay tuned for additional updates and information.  I plan to share some more information about the type of money we’ve made and the tools we use as Airbnb hosts, along with other tips and tricks I’ve learned along the way.

If you’ve got a guest room collecting dust, seriously consider giving Airbnb a try.  It only takes a little bit of time to set up and really, if you don’t like it or find it to be uncomfortable, you can just delete your listing.  You can’t get that same flexibility with a roommate

There’s really no reason your house can’t bring in a little extra income for you.

20 Comments

  1. That’s really interesting seeing how the space of a home is utilized. I suspect our home usage is very similar. At least now that I do not go to work, I am making a lot more use out of our space 🙂

    I didn’t know there were freebies to be had for Airbnb hosts. That’s an awesome deal on all the free stuff!

    • The free stuff is definitely not something a normal person will see. I always keep an eye out on various Airbnb forums, and just happened to notice these companies offering these things to Airbnb hosts. 99.9% of people won’t take the time to snag this free stuff. But I do! And these mattresses are awesome!

  2. Out of curiosity how is the Airbnb covered insurance. What makes me worries is something occurring and home owners insurance not covering me. My current coverage only covers 15days of short term rental a year.

    • So I’ve heard mixed reviews about the Airbnb insurance. Some people say Airbnb reimburses them right away when guests damage things. Other’s say they get no help from Airbnb. From what I understand, it’s supposed to cover you for bad things that might happen. As long as you call Airbnb right away, I think you’re covered.

      If you’re renting out a room in your house, I think the need for insurance is much less. It’s just way less likely that something bad happens to your house when you’re also on premises.

      Out of curiosity, what sort of damage are you worried about from a guest?

      • Nothing specific you just never know. If the visitor slips on a wet floor in my house will I lose all my money in a lawsuit type question.

        • That’s true. As I understand it, Airbnb is essentially supposed to be like an umbrella coverage. If your homeowners insurance doesn’t cover it, then Airbnb is supposed to step in with up to $1 million in umbrella coverage. The important thing is to make sure that any bookings are done through Airbnb. The disasters really happen when people try to get around Airbnb.

  3. Loved hearing about some of the benefits of AirBnb that I hadn’t thought of before (namely that the house would be super clean). We live in a 1 BR in Brooklyn, so there’s no real opportunity to do it here. It’s also illegal in NYC to use AirBnB to rent out your place for less than 30 days. It’s questionable how much that law is being enforced against small time hosts but I’d prefer to skip that risk and hassle. I could see using AirBnB in the future though, particularly if I lived in a home that had a mother-in-law suite setup where guests would have even more privacy.

    • You’re living in a 1 bedroom, so sounds like you’ve got all your space being used! I know on the Airbnb forums and Facebook groups, there are a lot of folks out there talking about the fight between Airbnb hosts and NYC. I wouldn’t risk it myself either if I lived in NYC, although if you look up Airbnb in NYC, you’ll see thousands of listings.

  4. That UCLA study is really interesting to read about. I think intuitively we all know that there are certain spaces in our houses that go unused on a regular basis but it’s nice to see a research study done that actually confirms this!

    I love the point you bring up about having a guest room and keeping it clean but never getting any use out of it. Airbnb was literally made for families all over the country who have unused guest rooms, and I think it’s an income source that sadly most people are completely unaware of.

    I look forward to hearing more Airbnb updates, keep em coming!

    • If you really think about it, even just renting it out a few times a month can bring in some money. Probably enough to save for house emergencies or things like that. As an example, we don’t spend any of our Airbnb earnings except for house related things. This past month, our furnace went out and we had to a call a guy to get it repaired. Since we already had our Airbnb funds sitting unused, it didn’t set us back at all.

      Will definitely be following up with more about Airbnb. There’s really just a ton of info (probably why there are people who blog about nothing but Airbnb!).

  5. Thanks for the informative post! Just curious, how often do you decline potential guests?

    • I don’t decline guests all that often, but mainly because I’ve done a really good job of creating a niche in my airbnb. When I do decline people, it’s for a few reasons:

      1. My place isn’t close to where they want to go (some people don’t really look at how close places are to their destination, so that’s why I always ask to make sure my place is a good fit).

      2. I’m busy and forgot to block off those days.

      3. The person doesn’t really explain what they are doing in town. Since I’m letting some stranger into my house, I really want to know why you’re in town. School? Classes? Job? Tell me something so I can understand that you’re a normal person and not someone trying to murder me in my sleep.

      I’ve done a really good job of niching down, so basically, at this point, I mainly only get grad students and young professionals.

  6. This is fascinating! My building doesn’t allow airbnb but I love to read all the ins and outs. I’ve also never rented an airbnb because I was worried about the freak factor from the owners side! This has certainly helped calm that worry.

    Interesting bonus on the cleaning side but awesome also is the free perks. Mattresses are expensive! Good for you guys…maybe I should look into buying something bigger next time! 😉 Great use of your space.

    • There’s no doubt, the crazy factor is definitely something I was worried about too. So far, I’ve been pleasantly surprised. Most people are just regular people like you and me, and really, you can tell if someone is crazy or not just by how they write. If they write in a professional manner and you can look them up online, they’re probably pretty normal.

      Heck, most of the people that stay with me are people I’d totally be friends with. I’ve even had guests send me postcards to tell me about their travels, which is pretty nice.

      The freebies are definitely awesome. It takes some work to find them, but whenever I see a company offering something for free, I always jump on it right away!

      Mainly though, I’m just happy that our space is getting used and generating some income. We don’t need the money, so there’s no pressure for us to book the place like you would need to if you bought a place purely to Airbnb. It’s another reason I feel more comfortable because I don’t need to be pressured to accept a request if I’m not 100% comfortable.

  7. An extra $1,000 a month without having to leave home is pretty awesome. Tell me, is it ever weird having guests in your home? Like do you bump into anyone in the kitchen in their jammies? I suppose I could get over that, or just stay out of the way myself until a guest leaves.

    Miss Mazuma mentioned her building doesn’t allow Airbnb which is becoming standard in apartment buildings. My brother owns a condo on LI that Mr. G and I have stayed at when we visit. Now WE can’t even do that, unless my brother is present. They implemented this measure as a crackdown on owners renting out their units. Another plus for owning a home. You can do as you please.

    • Here’s the interesting thing. I felt it was weird when I first started, but then you realize the people staying in your house are just regular people like you and me. It’s only weird if you make it weird, that’s what I think.

      But the really great thing is that only 1 person has ever used my kitchen! Seriously, people staying in a room in your house just don’t stay in your house. They’re all students, so they’re just looking for an affordable place to stay. The only people who ever did use my kitchen were two dental students who stayed with us for two weeks while they were waiting for their apartment lease to start. And these guys are still friends with us today (they really look up to Ms. FP since she’s already a dentist and is in residency at the same school).

      Most of the time, guests stay out of your way. Like it’s still my house, so I think that the guest understands that and they’re the ones tiptoeing around.

      It is nice to able to do airbnb when we feel like it, although a lot of cities are cracking down on it.

  8. This is fantastic! I currently own my 2 bedroom condo and rent out the other room to someone I found on Craigslist. It’s worked out fine but I always wish that my roommate was around less.

    How hard was it to build up to the $1,000 a month threshold? I really like being able to get a predictable check every month and don’t love the idea of $400 one month v. $1500 another.

    • It really totally depends on the demand for your area. If you’re in a big city and there’s things around you drawing people in, then I bet you’ll have no problem making $1,000 per month easily. How much do you rent your other bedroom out for now? Can you share the type of neighborhood you live in?

      I plan to do a future post where I detail what I’ve made with Airbnb so far. Or you can see my earnings in my side hustle reports. I will say that winter demand has definitely slowed down for my Airbnb, but I’ve also blocked off more than half my month just for my own purposes (family coming into town). During the summer, I could book every single day if I wanted.

  9. Thanks for the detailing your experience with AirBnB.

    I’ve always been curious how to handle claiming income/claiming the expenses if you own your home on the schedule E form?

    Does AirBnB send you a 1099 each year? If you rent it out 20% of the time do you claim 20% of your mortgage under the schedule E along with property taxes?

    When you sell your home do you have to recapture the rental portion that you claimed?

    I’ve never gotten a good feel for it but I am really interested.

    • So this is my first year doing Airbnb so I actually have no idea how these tax things work! Most likely, next year I’ll have to use an accountant to try to figure out that stuff. One thing I wish I could do was put my Airbnb income into a tax deferred retirement account (which is what I do with all of my other side hustle income), but since this is more like rental income, I don’t think I can save it away in that manner.

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