Whether you’ve adopted a hassle-free apartment lifestyle or you owe property taxes on your lakehouse, even the most successful retiree still has to consider housing costs over the course of their retired life. If you own your own space, though, you may have an option to help offset those pesky living expenses: renting out part of your home as an Airbnb.
If you’re considering this option as a way to generate a little side income, here are a few things to keep in mind as you go about the business of becoming a bona fide Airbnb host.
Crunch the Numbers
Before you start purchasing new furniture or painting the walls, it’s important to begin by considering the tax implications involved in renting out part of your home on a regular basis. After all, if you do it right, you’re going to be making hundreds and possibly even thousands of dollars each year, and there’s a good chance that Uncle Sam is going to expect some of that income. The big question is, how much?
It’s nearly impossible to give a definitive response to the tax question in a single paragraph, as the answer varies by state and can be impacted by a few factors regarding the location and operation of the rental itself. For instance, your rental income will most likely be classified as part of your gross income for tax purposes. However, you might live in a state like Alaska or Florida that doesn’t collect income tax. If you find that you do have to pay taxes on your rental income, though, you can offset some of this cost by reporting any expenses (from home repair costs right down to toilet paper) that are related to your rental space. Some of these upgrades can be deducted from your taxes.
It’s certainly worth doing your homework in this area, as it can help you decide if it’s truly financially worth it to commit to the life of an Airbnb host.
Consider the Rules
While taxes are a critical first step, you’re also going to want to consider the Airbnb host guidelines that come along with renting your space. As is the case with most crowdsourced platforms, there are several important rules to follow if you want to be an Airbnb host. These include:
- Your rented space must only be used for lodging.
- You must be responsive and accept reservations consistently.
- You cannot frequently cancel reservations for your guests.
- Your listing must accurately represent what is being rented.
- If you’re renting a mobile space, it must be at least semi-permanently located on private property.
- You must provide essentials for your guests.
It’s also important to research any laws that could restrict or even prevent you from renting your space. In the city of Boise, Idaho, for instance, legislation is being considered that could restrict Airbnb owners to one short-term rental unit per taxable parcel of land. While each state, county, and town will have its own rules and regulations, it’s essential that you consider your own local situation before you invest in converting your space to an Airbnb.
If you follow these rules, you should be able to operate your Airbnb without any issues.
Prep and Post Your Space
At this point, you’ve considered your income and expenses as well as the rules and restrictions involved and decided to move forward with the project. The next step is to prepare your spaces for the Airbnb experience. Here are a few of the primary things you’re going to want to keep in mind as you go about this task:
- Start with any major activities like flooring, painting, and replacing furniture.
- Evaluate your bathroom sink, shower, and toilet to make sure they’re functioning and clean.
- Make sure to model your space with trendy, charming decor.
- Keep your spaces high-quality yet simple.
- Provide a generous stock of bathroom essentials.
- Consider creating a care basket with snacks, drinks, and minor self-care items.
- Include a coffee bar and wine glasses.
- Provide information for local hotspots.
- Include local specialty tips, suggestions, and even products.
- Create an airtight cleaning schedule.
Once your space is prepped, it’s time to get it out there in front of prospective guests. Take high-quality photos, settle on a realistic price, and then list it!
It’s the Little Things
As you go about prepping your space, remember to enjoy yourself. Remodeling is infamously difficult, but it doesn’t have to be that way. In fact, 54% of couples claim to actually enjoy working on home improvement projects together. Of course, most of the magic comes with that age-old adage of maintaining a positive attitude as you go along.
In addition, you can always take advantage of any larger projects that are hired out to a contractor to head off on a little getaway together with your significant other. Pack up your essentials and then take advantage of the opportunity to visit family or even get right out of Dodge and go on that vacation you’ve been putting off for who knows how long.
Garnering Those Good Reviews
As you prepare for this next stage in your retirement, make sure to take a step back, take a deep breath, and tackle each element of your new Airbnb rental with a calm and collected mindset.
Both preparing for and living through retirement can be overwhelming at times, but if you focus on the positives and take things one step at a time, you can pull together a beautifully hospitable rental for Airbnb customers that will simultaneously help balance your checkbook and deliver a healthy dose of relaxing fun for anyone who pays you a visit.