The new trend (and moneymaker) in the real estate industry today is Airbnb. Homeowners, especially millennials, see Airbnb as an opportunity to gain money to pay off mortgages and student loans. Over 260,000 mobile users have downloaded the app and the site includes more than 2.5 million homes. While Airbnb seems like a great way to make money, there are some things you need to consider before taking part in the trend. Much of the information provided below will pertain to legal liability and the ability to protect yourself in case something happens in your home.
Make sure to check your occupancy rules and licensing requirements in your city. Does your insurance cover temporary housing for others not living in the home? If not, consider purchasing another layer of protection just in case a unique situation arises. Airbnb offers Host Protection Insurance, but a host that uses Airbnb, Alex Ortiz, believes you shouldn’t solely rely on this insurance and states that the Airbnb policy may reimburse you little, if anything at all.
Something else to think about if you’re using Airbnb to help pay off your mortgage is the classification of your home. There’s a possibility that while you’re renting out your home, even if just a few days a month, your mortgage lender could classify your home as an investment property which could lead to higher interest rates. Not all mortgage lenders accept Airbnb income either and they may not count this extra cash towards your total income.
Purchasing a home with the intent to use as an Airbnb will most certainly provide benefits, but it’s up to you to make sure you’ve done all your research. You also need to understand that there will potentially be risks-both financial and legal and you need to see if the income generated outweighs the risks. Are you willing to open up your home to someone you don’t know?
You can learn more about Airbnb on their website here.