The Business of Airbnb

Ray’s Take: The story of one of the world’s hottest tech companies starts with two roommates, Brian Chesky and Joe Gebbia, offering air mattresses and homemade breakfast in their apartment to out-of-town guests who couldn’t afford a hotel room in San Francisco. What started as a way to make a few bucks to pay their rent is now the company Airbnb.

Airbnb is a privately owned accommodation rental website that enables hosts to rent out their properties or rooms to guests who use the website to find somewhere to stay. Airbnb now offers over 3 million listings in 65,000 cities and 191 countries.

There are several different reasons people are entering into the Airbnb business. Some want to make a few extra bucks off their available space, others want a stable secondary source of income and then there are those who want to build a serious Airbnb business that will become their main source of income.

Here are some things to consider before listing your property and entering into the Airbnb business. Get a market report for your property. Some markets are not big enough to support this type of business and you may not make money if there is not a demand in your area.

Get the proper insurance coverage. Airbnb’s Host Protection Insurance will act as primary insurance and provides liability coverage to hosts. If you have questions about how this policy interacts with your homeowner’s or renter’s insurance, you should discuss your coverage with your insurance provider. Some policies protect homeowners and renters from certain lawsuits that result from injury to a visitor, while others do not.

Protect your identity. Do your due diligence and screen all potential guests. Lock up or store all passports, bank statements, social security cards and anything that shows your full name and address. You may consider holding or forwarding your mail when you have guests.

Don’t forget about taxes. You might be subject to rental income taxes. To assist with U.S. tax compliance, Airbnb collects taxpayer information from hosts so they can provide an account of their earnings each year via 1099 and 1042.

Dana’s Take: Airbnb lists 300 rentals in Memphis and HomeAway lists 219. According to their maps, one or two of the listings are within walking distance of our house.

As we approach our empty nest years, I daydream about renting out our house on Airbnb. Ray would rather sell the house than rent it to strangers. I suppose Ray is right. Last summer, a Cooper-Young couple rented out their home through Airbnb, and police discovered the renter using it for an illicit enterprise. The neighbors weren’t too happy.

Short-term rentals sound like a dream but could turn into a nightmare.

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