Owning an Airbnb and being a host, enables you to earn money while making the most of your vacant space. You get to earn a lucrative income while meeting interesting and amazing people. However, the underlying truth that most of the hosts overlook is the expenses that they’ll incur while hosting. With the underlying expenses, the hosts need to recognize the hidden Costs of Hosting, whether it’s a side job or a full time one.
To gain insight on the topics that go unnoticed, make sure to continue reading. This article will provide you with additional knowledge on the Hidden Costs of Hosting to operate your business and in turn, maximize your earnings.
1. Cleaning Costs
In consideration of the Hidden Costs of Hosting, the cleaning expense should be one of the more important considerations. Cleaning fees are often charged to guests when they leave, but the amount that is collected seldom accounts for the total amount of professional cleaning that has to be done. The fee for cleaning a property, depending on the property, can be from 50 dollars to more than 200 dollars in one booking.
Aside from this, if your properties have back to back bookings, you will probably have to contact a cleaning service that specializes in same day turnover which is even pricier.
Certain hosts decide to avoid this expense by cleaning the property themselves which could amount to a huge time and effort cut but this might be worth it in certain scenarios.
Tip: A helpful strategy would be trying to negotiate rates with a certain cleaning service you will be availing regularly or do some research and find what the best type of cleaning supplies are and spend a little more money to be able to do it yourself properly and efficiently.
2. Maintenance and Repairs
Moreover, repair and maintenance expenditures are other incidental costs of hosting. Vacation rental properties, being more guest oriented, suffer from additional wear and tear compared to normal rentals. The most common maintenance problems are:
- Reupholstering broken furniture
- Repainting walls
- Amending appliances
- Addressing plumbing issues
Even small repair works can attract a large number of funds especially if someone has to be contracted to do the work. Unforeseen maintenance expenses can greatly affect your profits, therefore it is very important to create a separate fund intended for property maintenance.
Tip: Make routine checks on your property to identify minor repairs before they become expensive maintenance.
3. Utility Bills
Many landlords do not give a second thought to the increases in utility bills when renting out their homes on a short-term basis. In comparison to long-term occupants, guests tend to use more water, electricity, and heating/ cooling resources. Some crude costs that normally go Hidden Costs of Hosting include rising utility expenses which directly affect the revenue stream.
For instance, a warm cozy atmosphere during cold winters may lead to guests to unreasonable reliance on heating, while strong air conditioning will be favored in summer. Moreover, guests are reckless towards turning off the lights when not required and do not conserve water which increases the bills drastically.
Suggestion: To control the appliances’ wastage consider putting in smart home devices. Motion sensors and smart thermostats act as ideal devices for moonsensors helping to save both energy and costs.
4. Listing Platform Fees
While platforms like Airbnb and its relatives allow for the listing of properties with ease of access, they do require a fee. There is a service cost that ABC charges that additionally varies based on the booking agreement which ranges from 3% to 15% as mentioned in the article. Oftentimes these Hidden Costs of Hosting go unnoticed by new hosts hence getting categorized as a crude cost of being a host.
If you list your property on various platforms such as booking.com or Vrbo then additional fees and commissions will apply. The cumulative amount of these fees translates to a reciprocal decrease in earnings.
5. Taxes and Permits
Taxes can be one of the most unnoticed Hidden Costs of Hosting an Airbnb, Depending on where you are renting out your property, you may have local occupancy taxes, income taxes, or even property taxes. If you are located in certain areas, licensing and permits for renting out property on an hourly basis might also be required, which usually come with fees.
Even noncompliance to local requirements and regulations can lead to fines and penalties which push up your hosting expenses, so as bespoken earlier, it’s important to check with the local authorities for the taxation policy and permit policies in your area.
Tip: No need to wait for the tax filing time to spend on Professional tax consultancy, doing so throughout the year ensures compliance.
6. Furniture and Decor Updates
All guests would at least expect a furnished house/apartment and so on which ultimately means that an amount has to be spent on furniture, home decor items, and other services. But this initial capital outlay and continuous spending can also be one of the unseen costs of hosting.
With time and age, clothing especially furniture requires replacements over a certain amount of time as wear and tear set in. Not just that but many rent seeking host feel the competition in the market is enough to replace home decor just to keep their competitive edge up. Those things can make your life a bit tough if you’re not careful.
Recommendation: Invest in furniture that is built to last and decor that is not prone to going out of style.
7. Guest Supplies and Amenities
Particularly with high-end accommodations, having a good experience means stocking your property with seamless necessities and provisions. Such essentials would include:
- Toiletries
- coffee/tea supplies
- cleaning products
- linens and towels
Although these items appear to be insignificant, they are recurrent expenditures. As a rule of thumb, guests would want a certain level of comfort and amenities within the premises, and restricting the supplies will attract undesirable reviews that directly affect how many bookings you receive.
As a hint: Regularly purchasing in bulk would lower the cost and guarantee that you would often have enough of the guest provisions on hand.
8. Insurance
Policies for traditional homes mainly do not cater to cover Airbnb rental services. It follows that you must be able to mitigate these risks and invest in meaningful coverage that will protect you against possible damage done by a guest on your property. This is another Hidden Costs of Hosting.
Host host protection insurance is available through airbnb, however, it does not protect against signing. Because of this, such a need is great with appropriate insurance which includes liability coverage, property damage, and loss of rental income.
As a hint: Make an effort to explore various available insurance plans so that you are adequately wrapped up while running your short-term rental.
9. Marketing and Photography
Airbnb established a platform through, which you can now advertise your property but making your advertisement stand out is important and for that, you will need to sell photographs and marketing which is not cheap. Running marketing campaigns and hiring photographers who excel in the field could prove to be expensive but they’re a must-have for the hosts.
Meeting the requirements of having an attention-grabbing description along with high quality photographs could boost your booking frequency but that is just the first payment required by you and is classified as an additional cost of hosting.
Suggestion: Hire people who specialize in marketing and photography at a professional level to maximize your visibility and your chances of booking the property in turn.
Hosting on Airbnb can be a profitable venture, but it’s essential to understand the Hidden Costs of Hosting to avoid unpleasant surprises. From cleaning fees and maintenance to taxes and insurance, these expenses can quickly add up and impact your earnings.
By being aware of these Hidden Costs of Hosting and taking proactive steps to manage them, you can maximize your Airbnb profits and ensure a sustainable hosting experience. Remember, hosting is a business, and like any business, understanding your expenses is key to long-term success.