Saving money is a wise idea, but what if you could make money and save money at the same time? With the successful advent of house rental services, you may just be able to do both.
Since the company launched in 2008, Airbnb has been called the Achilles Heel of the hotel industry and poses serious competition to traditional establishments. Airbnb’s current roster of 3 million listings trumps all three of the world’s biggest hotel brands combined: Hilton, IHG, and Marriott.
If you would like to capitalize on the growing trend of renting out your house in Los Angeles, read on for tips about getting started, risks, benefits, and the all-important rules and regulations.
Renting Out Your House in LA
Before you snap a dozen glossy photos of your spare bedroom, keep in mind that most hosts on Airbnb own their homes. While some landlords may permit subletting, most do not, and to do so without explicit permission may put your lease in jeopardy. But if you’re a homeowner in Los Angeles, then Airbnb and similar services could be a legitimate avenue for you to earn extra income.
If you own property in a prime location like Malibu Beach or downtown Santa Monica, then the guests may flock to you. But you can also live on the outskirts of Los Angeles County and run a successful bed-and-breakfast from your home. For example, rentals are in high demand when major annual events like the L.A. Film Festival and the Rose Bowl Game are underway. Prices climb to astronomical levels during hot-ticket events nationwide, including the 2018 Super Bowl in Minneapolis when room prices peaked at $6,000 a night.
Such price-gouging may earn a quick buck but may not be a good way to establish your reputation as an Airbnb host. Instead, consider renting out space on your property for a more competitive rate, say $200 a night for a private bedroom with en suite bath, and earn an ethical profit.
For property owners who may not have a spare bedroom, there are other options. For example, the concept of glamping, or glamorous camping, has gained traction with some guests willing to rough it in a carriage house, RV, or even a well-equipped tent. As with any space you rent out on your property, it’s crucial to check your local ordinances before creating a rental listing.
Risks of Renting Out Your House
With more than 260 million check-ins since 2008, Airbnb is bound to have a few horror stories about guests trashing rooms and otherwise disrespecting their hosts’ property. While these stories are not the norm, they may cause some potential hosts to proceed with caution.
Property damage, criminal activity, and squatters are a few of the risks an Airbnb host may encounter. Short of a criminal background check, there may not be a foolproof way to ascertain whether a guest will be exemplary or explosive. Be sure to read reviews of your guest prospects before agreeing to house them.
Also, be specific in laying down your personal set of house rules in your listing, so that guests know beforehand that partying is forbidden or that pets are not welcome. Some hosts also opt to charge guests a cleaning fee so that even normal wear-and-tear will be covered.
Benefits of Renting Out Your House
Becoming a bed-and-breakfast host means that you are part of the sharing economy, which benefits not only you but also the community at large. Whereas big-name hotel chains once had a monopoly on the tourism industry, with Airbnb hosts cornering their share of the market, this is no longer true. The “average” person now has the potential to enjoy a piece of the proverbial pie.
Furthermore, regularly renting out rooms to guests may help you pay off your mortgage if you charge an appropriate price point and offer signature touches like iced tea upon arrival or access to the backyard patio.
So, how much money can you make on Airbnb? According to an article published in Travel and Leisure, Airbnb hosts make an average of $924 per month. Assuming a $2,500 monthly mortgage payment on a Los Angeles area home, Airbnb earnings would slash that burden by 37%.
For some Los Angeles homeowners, that figure could mean the difference between paying the mortgage on time and slipping into foreclosure.
California Airbnb Laws
Airbnb started in San Francisco and maintains corporate headquarters there, so many of its rules are inherently geared toward the rental laws of California. Other rules and laws may surprise California residents, such as the fact that renting out property for less than 30 days is illegal in many areas of Los Angeles. Prospective hosts and other members of the Los Angeles community have been embroiled in a legal battle to lift these restrictions. On the other hand, people who stay longer than 30 days on a rental property may be assigned squatters’ rights.
As laws are constantly changing, it is a good idea to consult with an attorney before listing your house on Airbnb or a similar service. If you’re struggling with paying your mortgage and want to consider other ways to get out of debt, Borowitz & Clark offers free consultations. Contact us today to learn more.