How Does Airbnb Work for Hosts? 5 Things to Consider Before You Sign Up

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Airbnb app on phone
Image Credit: Dreamstime

People all over the world are generating extra income by becoming Airbnb hosts and renting out part or all of their homes to travelers for short periods of time. Is it something you should consider doing to make extra money?

In this article, we’ll look at how Airbnb works, talk about who the service is right for and try to answer questions that you might have before you sign up as an Airbnb host.

Thinking About Renting Out Space on Airbnb? Here’s What You Need to Know

Table of Contents:

  1. What Is Airbnb and How Does It Work?
  2. Are You Allowed to Host an Airbnb Where You Live?
  3. What Is the Sign-Up Process Like?
  4. How Much Can You Expect to Earn as an Airbnb Host? 
  5. What Protections and Support Does Airbnb Offer?

1. What Is Airbnb and How Does It Work?

Airbnb logo

Airbnb started in 2007 when its two co-founders advertised a night on an air mattress and breakfast in the morning (“Air Bed & Breakfast”) to attendees of a design conference in San Francisco.

Today, the company is estimated to be worth nearly $40 billion.

Airbnb connects millions of hosts with travelers all over the world looking for something other than a boring hotel room to stay in during their trips.

Very simply, people with anything from single room to an entire mansion can list their property for rent using the service. Airbnb’s website and app then allow people looking for a place to stay in a particular location to sort through those listings to find something that meets their needs. In many cases, you can stay at an Airbnb with more space and amenities than a hotel room at a significantly lower cost.

Airbnb boasts over seven million listings in more than 100,000 cities worldwide and claims that on any given night there are two million-plus people staying in an Airbnb. The company recently introduced Experiences and Adventures, unique activities and multi-day trips led by local guides.

2. Are You Allowed to Host an Airbnb Where You Live?

Most people who are paying a mortgage on or outright own a single-family home should be fine renting it out on Airbnb. If you’re in a condo, apartment or townhome, there may be some occupancy rules that prohibit such transactions.

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Additionally, some cities and towns have laws that regulate hosting paying guests for short-term stays in private residences.

Here’s how Airbnb puts it:

“Some cities have laws that restrict your ability to host paying guests for short periods. These laws are often part of a city’s zoning or administrative codes. In many cities, you must register, get a permit, or obtain a license before you list your property or accept guests. Certain types of short-term bookings may be prohibited altogether.”

When you agree to Airbnb’s terms of service, you are certifying that you will follow your local rules and regulations. Ultimately, it’s up to you to do your homework so that you don’t run afoul of the law.

3. What Is the Sign-Up Process Like? 

Once you’ve ensured that you’re in the clear legally to be an Airbnb host, you’ll need to sign up for the service. That involves four primary steps:

  1. Inputting your personal and property information
  2. Posting photos and a description of your property
  3. Establishing your booking settings
  4. Publishing your property

Let’s walk through them in order.

1. Inputting your personal and property information

When you head to Airbnb.com, you’ll see an option in the main menu to “Host a home.”

Airbnb home page

The next page allows you to estimate how much you might be able to earn by entering some very basic information about your property.

Airbnb income estimator

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Clicking “Get started” there will take you to a page where you can log in with your Facebook or Google credentials or create a new account from scratch. We recommend you start from scratch by clicking “Sign up.”

When you do that, you’ll be taken to a page where you’ll be asked to enter your email address, name and birthday (you must be at least 18 years old), plus create a password.

Airbnb signup

Next the site will ask you some questions about your property, like whether it’s a house, apartment or secondary unit. You’ll also need to indicate whether guests will have the entire place or just part of it and whether it’s set up as a dedicated guest space. Make sure you have a clear picture of what space you want to offer up to guests before you enter this information.

You’ll also tell Airbnb how many guests the space can accommodate, how many bedrooms are available and what the sleeping arrangements are like. You’ll account for the number of bathrooms, as well. It’s important to be honest about your layout and avoid inflating these numbers.

After that, you’ll enter your property’s location. Guest won’t be able to see the actual address until after they’ve booked a reservation.

Once you’ve confirmed the location on a map, you can let the site know what kinds of amenities you’ll be offering. These can include:

  • Essentials like sheets, towels, and toilet paper
  • Heat and air conditioning
  • Iron
  • TV
  • Private entrance

You’ll also describe any common spaces like a kitchen, gym or pool that guests are allowed to use.

As you might imagine, the more amenities you offer the more attractive your home will be to potential guests.

2. Posting photos and a description of your property

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The next step involves giving potential guests a better sense of what to expect if they book your property. First, you’ll upload photos.

Airbnb upload photos

The importance of taking great pictures of your home’s exterior and interior is such that a whole photography cottage industry has popped up and Airbnb supports it. People have made careers out of just taking photos of rental properties.

If you plan on doing the photography yourself, some photo tips you’ll want to consider include always brightening the photo and shooting corners to show more space.

Then you’ll be asked to add a brief (500 characters or less) summary of what you have to offer. You can supplement this with information about:

  • Your availability
  • Your neighborhood
  • How guests should expect to get around

You’ll also create a listing title for your property — ideally a catchy one — and provide a photo of yourself that will be visible on the property page.

3. Establishing your booking settings

After you have your property photos and description set, it’s time to set your rules for guests. You’ll be asked to indicate whether you will be allowing small children, pets, smoking and even parties.

Then you’ll work on your booking calendar. This includes:

  • How much notice you need before a guest arrives
  • What hours they’re allowed to check in
  • Minimum and maximum nights they’re allowed to stay

You’ll also be able to block any dates on the calendar that you don’t want to host guests.

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Airbnb calendar

Next, you’ll determine your price per night. You can set a base price that everyone will see or establish minimum and maximum prices and let Airbnb determine the best rate for any given dates based on demand. The site will even give you recommendations for pricing based on your particular property.

At this point, you have the option to turn on a special offer for your first guests. This is a great way to get established as a host on the site.

Airbnb special offer

4. Publishing your property

Finally, you’re ready to publish your listing.

Airbnb publish page

Make sure you’re really all set, because as soon as you hit that red button your listing will be visible and people can start booking!

4. How Much Can You Expect to Earn as an Airbnb Host? 

How much you can earn hosting an Airbnb is of course going to vary depending on several factors, most notably the type of property you have, how many people you can accommodate and your location.

There are some property owners that make six figures annually on Airbnb — but they’re typically investors with second and third homes. People who list their primary residences can add thousands of dollars a year to their wallets, but it takes time, preparation and realistic expectations.

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It’s a good idea to find out what other properties in your area are renting for. This requires not only browsing similar listings on Airbnb but a general knowledge of local real estate prices. Airbnb’s own earnings estimator is also useful.

Here’s an example of how much renting out a private room suitable for two guests in downtown Cincinnati could earn you, according to the site:

Number of Nights Rented Per Month Average Income Per Month
2 $122
7 $428
15 $918
20 $1,224
25 $1,530

As you can see, even if your room is rented out just half the time you could pocket more than $900 extra a month. That would go a long way toward helping pay off a mortgage!

Keep in mind that according to Airbnb itself, “How much you actually make may vary with your pricing, type and location of your listing, actual occupancy rate, season, demand, local laws, and other factors.”

Remember, too, that Airbnb calculates your payout as your nightly rate minus the host service fee, which is generally 3%.

5. What Protections and Support Does Airbnb Offer?

If you’re concerned that opening up your space to strangers on Airbnb is going to be a huge hassle, you are justified in that concern. Not all guests are going to treat your property as they would their own.

With that in mind, Airbnb offers two kinds of protection for their hosts.

Their Host Guarantee gives you free protection of up to $1,000,000 against property damage for every booking.

They also offer what’s called Host Protection Insurance, which covers liability claims against hosts for bodily injury or property damage suffered by guests during their stay.

In the case of any problems, hosts are able to contact Airbnb around the clock via phone, email or live chat.

The support team is able to help with things like:

  • Rebooking assistance
  • Refunds
  • Reimbursements
  • Host Guarantee or insurance claims
  • Mediation between hosts and guests

What Else Do You Need to Know Before You Sign Up to Be a Host? 

Finally, here are a few more things to keep in mind if you’re thinking about becoming an Airbnb host:

  • The best Airbnb transactions take place when there are clear expectations on both sides. Guests expect clean and safe homes that they can be comfortable in. Before your guests arrive, send them house rules that they must abide by (we’ve also seen them posted on the fridge).
  • While many hosts may never see or meet their guests, you can really score some points for hospitality if you make time to greet your visitors and perhaps answer their questions.
  • No matter how much money you spend on sprucing up, cleaning and overall improving your dwelling, you’ll want to keep good records. Come tax time, you’ll need to be able to document every deductible expense you’ve incurred.
  • You’ll want to check what effect Airbnb-ing your property will have on your insurance premium.

Final Thought

As we said earlier, becoming an Airbnb host is not for everyone. If you’re interested in taking the plunge but worried about how much work might be involved, consider this perspective from Team Clark’s Kim, who hosted for a number of years in the 2010s:

“We chose Airbnb because they do everything for you. They handle the money, give you an insurance policy and keep your calendar — it was incredibly easy to get started.”

Hosting provided Kim with extra income to travel more — and stay at other Airbnbs around the world. Imagine what you could do with all that extra money each month…

Have you hosted on Airbnb? Share your experiences with us in the comments below!

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