Airbnb: A Tenancy Concept Worth Exploring

Would you consider letting a virtual stranger into your home, sharing your personal space for a given time? Are you willing to give visitors free reign over your property, appliances, furniture, and other household amenities? If your answer to either is yes, then you’re cut out to be a home-sharing renter or a landlord.

The question now is how to go about it?

Airbnb is currently the biggest platform for home-sharing and short- and long-term leasing. It boasts over 4 million listings worldwide. It’s not a perfect platform, but the success stories of countless Airbnb hosts are intriguing and encouraging. Travel + Leisure, an online travel magazine, reports that hosts can earn as much as $10,000 a month.

As Revenue Loop is always on the lookout for income-generating activities that most people can adopt, we examined its business model and the possible gains for hosts.

A Simple Business Concept

One of the most potent attractions of Airbnb is its simple and straightforward business concept: Rent out your property to short- or long-term tenants, and earn extra income.

Many of you may have already used this online platform, but for the benefit of those who haven’t yet, Airbnb offers travelers a convenient way to locate rentals that suit their needs and budget. The rental space can be a room, a flat, or an entire house. It attracts travelers, vacationers, staycationers, and employees on temporary work relocation. Airbnb allows short-term rentals on a daily and weekly basis, and also long-term leases on a monthly or annual basis.

You can become an Airbnb host if you have an unoccupied residential property. You can also opt for a home-sharing arrangement and lease a vacant room in your home. This set-up works because most Airbnb customers like it when property owners are within reach. If they have issues with the property’s amenities or have questions about how to get around the area, the owners can immediately help.

Ethics and Investment Required

Money and house concept shotThere’s more to renting a property in Airbnb, or in any other online platform than meets the eye. For starters, you must check your state’s laws on subleasing (if you don’t own the room or apartment you want to list on Airbnb) and tenancy to avoid fines and lawsuits.

You also need to spruce up the place, maybe advertise on social media, to attract customers. Generally, however, the photos and descriptions on your listing are all Airbnb customers need to make a decision.

If you make wise choices about décor, amenities, and pricing, your Airbnb listing can be a good source of secondary income.

Whether Passive or Non-Passive, It’s a Good Source of Income

Airbnb works so well because it appeals not just to travelers but also to property owners who wish to gain passive income from their real estate investments.

Income from rental real estate properties are generally classified as passive; but as an Airbnb host, you’re more likely to be more involved in renting out your property. It won’t be a passive activity, unless you hire a property manager to approve tenants, handle check-in and check-out, decide rental terms, etc.

Don’t let the hard work discourage you from renting out, though. If your activity qualifies as Non-Passive Income, the IRS allows you to offset your losses against other sources of Non-Passive Income (i.e., wages, business income, investment income) by up to $25,000. Now that’s a welcome tax break!

Airbnb offers a convenient and user-friendly platform that allows you to list your property online and reach a global audience. But it’s not the only way to do so. You can also rent out your property independently. You’ll have more responsibilities, but enjoy greater control over the business. More importantly, no percentage of your income goes to the hosting platform.

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Disclaimer: This is an opinion- and research-based article. Revenue Loop did not receive payment from Airbnb to advertise their service. We’re a personal finance website, and we like to talk about topics that help people learn — and earn — more.

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