How to Manage a Successful Airbnb or VRBO Business | Zensurance
How to Manage a Successful Airbnb or VRBO Business
Home/Small Business Insurance/How to Manage a Successful Airbnb or VRBO Business
Becoming an Airbnb host and renting out all or a portion of your house, condo, or seasonal property is an attractive way to earn extra income. But simply listing your property on Airbnb or any home-sharing website, such as VRBO, isn’t a guaranteed path to success.
Public health restrictions designed to reduce the spread of COVID-19 may be relaxing in some provinces. That may entice property owners to jump in (or jump back in) to the private short-term rental market. But there are potential pitfalls of which to be wary.
According to the Hotel Association of Canada, only 17% of Airbnb’s total revenue in Canada is generated by what it calls “true home-sharing”, where the owner is present during the guest’s stay. Approximately 80% comes from hosts renting their entire homes where the owner is not present. Meanwhile, a 2019 McGill University study finds almost 50% of all Airbnb revenue was generated by commercial operators that manage multiple listings. In addition, nearly half (46%) of all active Airbnb listings in Canada are in Montreal, Toronto, and Vancouver.
Interestingly, municipalities across Canada may be taking a closer look at regulating the short-term rental industry. For example, in North Bay, Ontario, the city council is mulling over creating a bylaw to ensure short-term private property rentals doesn’t exacerbate current housing shortages. In its report, North Bay’s city staff notes Airbnb and VRBO are the top rental platforms, and much of their rapid growth in the region is attributed to “a shift in the business model: from home-sharing to commercial operation”.
Things for Airbnb and VRBO Hosts to Consider
Whether it’s Airbnb or VRBO you intend to list your property on, take the time to familiarize yourself with the challenges and risks that come with being a host.
You want your hosting business or side hustle to be successful. Therefore, think about taking the following steps before listing your property:
Laws, regulations, and taxes. Check your municipality’s bylaws and rules to find out if there are any limitations or restrictions related to being an Airbnb host in your neighbourhood. Plus, determine if your municipality requires registered short-term rental operators to file a municipal accommodation tax report. For instance, in the City of Toronto, all hosts or operators must collect and remit a 4% municipal tax from their reservations quarterly.
Insurance. A word to the wise: protect yourself from third-party liability lawsuits and damages to your property. Both Airbnb and VRBO provide hosts with some levels of protection. However, listing your property on Airbnb or VRBO turns it into a business property. If you file a claim, your personal home insurance policy may not cover you for third-party bodily injuries or property damage. Speak to a licensed insurance broker and ensure you’re adequately covered as a host.
Enhanced cleaning measures. The COVID-19 pandemic remains a fact of life, and it may for many months to come. That means you need to allow for time between reservations to thoroughly clean your dwelling, as well as do any necessary maintenance work.
Count all the costs. Even individual, private property host needs to approach hosting on Airbnb and VRBO in a businesslike fashion. That means laying out a business plan that accounts for all expenses and projected income. Hosting guests means there’s likely to be an increase in your utility bills (electricity and water). Do you require a business licence in your municipality to be a host? If so, what does it cost? Lastly, don’t forget bookkeeping. Track all your expenses and income and save receipts for when you need to file your taxes.
7 Ways for Airbnb and VRBO Hosts to Be Successful
Let’s face it: there are many risks associated with renting out your property. But you can mitigate those risks. Here are seven ways to protect yourself, your digs and ensure you delight your guests:
Think of the customer’s experience. What kind of amenities will you offer? Including a few simple items to make your guests more comfortable goes a long way (and may result in a positive Google or online review). Offering free toothpaste, dental floss, soap and shampoo, and bottled water is always welcome and leaves a lasting impression.
Identify your target market. What kind of guests do you want to stay at your property? For example, will you allow your guests to hold a party? Or would you prefer only families and couples? Tailor your rental listing to attract the guests you want. And as it’s your place, set the house rules. For instance, if you don’t want guests to bring their pets with them, make that clear from the get-go. Ensure your visitors know and agree to the rules you have in place.
Communicate with your guests. Think about providing your visitors with everything they need to know. Set up emails to send to them before they arrive and let them know how to check-in and out, contact you if they need to, and offer a few tips on places to see and things to do near your property. Make it easy for them to locate nearby grocery stores, pharmacies, and restaurants. After they check out, send a follow-up email, and ask them to rate their experience staying with you.
Are you renting a condo? If the property you wish to rent is a condo unit, double-check with your condo building’s property manager or board to ensure you are permitted to do so.
Think of the contents in your dwelling. Don’t leave any valued or expensive items in the residence that you cherish. If they are damaged or stolen, can you replace them or live without them? Also, think about the furnishings in your place. Durable, easy-to-clean furniture and carpets or area rugs will make cleaning up after a guest’s stay less onerous.
Install security measures. Installing a home security monitoring system is a wise move whether you’re in the short-term vacation rental business or not. It may be worthwhile to look into installing additional security measures like a smart door lock, which gives you the ability to grant access to the property when you’re not home and keep track of who opens the door and when via a smartphone app.
Review your property insurance. We can’t stress this point enough. Firstly, talk to your home insurance provider to let them know you intend to participate in the short-term rental vacation market. Secondly, speak to a licensed broker and have them review your existing coverage to ensure there are no gaps in it. You don’t want to be overinsured but being underinsured is a far worse position to be in if something goes awry and you need to file a claim. All insurance coverage has limits. Enhancing your protection with an Airbnb or VRBO insurance policy may be your best bet.