Why this innovative new way to ‘short let’ your living space is causing such a buzz – and how you could use it to pay for holidays, bump up your savings and even create a second income stream worth tens of thousands, for just a few hours a month ‘work’
Airbnb is an online startup that was set up in 2008 as a ‘hospitality exchange service’.
That sounds about as fun as gargling jagged lumps of hot coal, so let me explain exactly what it involves in slightly less clinical terms.
It’s is an online service that allows ordinary people like you and me to rent our living space to tourists or travelers for short or medium term lets. It’s a little bit like couch surfing, except instead free accommodation, you charge people to stay.
Airbnb take care of the payment procedure, the booking system, the paperwork and even the insurance (up to £600,000 or $1 million). They make their money through commission – typically around 6% – 12% according to the booking.
It’s HUGE and growing fast. Airbnb had already served a whopping 4 million guests by the end of 2012 and that figure has sky rocketed to 9 million (as of October this year). Currently a booking is made on the site every 2 seconds.
Who can get involved?
Anyone. Whether you’ve got a single spare room, a studio apartment, a flat, a house, a boat, a 74 bedroom castle with pink turrets… it caters for EVERY sort of property or space.
Rentals range from £9 to £6,468 a night – but tap in the postcode, area code or location into their search facility and you’ll quickly get a sense of what properties go for in your area.
The benefits of this simple but brilliant service are that…
– Travelers get to stay in a ‘home’, often with a kitchen and living area facilities, rather than a faceless hotel.
– Renters (ordinary people like you and I) get to make great money renting out unused space.
If you live in a city that’s popular with tourists or somewhere that’s pretty or rural that attracts visitors this can be extremely lucrative.
In fact, you can often make as much as 3 – 4 times the amount you would make through a traditional long-term rental.
How Mike used Airbnb to cover his mortgage, rent on another flat and still make £1,200 profit a month
Let me introduce a friend of mine, Mike, who owns a 2 bed flat in Hackney, East London.
It’s an area that used to get a really bad press. Just 10 years ago the stretch of road between Lower and Upper Clapton (close by) was commonly referred to as ‘murder mile’.
The Independent called it “Britain’s deadliest road” and claimed “the sound of gunfire and the accompanying whine of an ambulance or police car is never far away.”
These days you’re more likely to hear an art student struggling to pronounce the name of a specialist craft beer in a £4.50-a-pint-bar than you are gunshots. It’s fast becoming an area famed for arts, fashion, culture and hipsters.
That means hordes of German, French and Japanese trendies now flock to this corner of London to sample its delights.
Anyway I’m going off on a tangent – the point is it’s not exactly Chelsea dahhhling.
So Mike lives off a big smelly, busy road in this part of town. He has a 2 bed apartment on the top floor of a modern block. No balcony or garden but a good space, pleasantly decorated.
Last year he and his girlfriend decided to put work on hold (they’re both freelance) and travel around Mexico for 4 months.
To fund their travels (and pay the mortgage) they tried listing the place on Gumtree and various other websites. The problem was they weren’t exactly bowled over the offers they got. They were hoping to pay the mortgage, bills and then some.
And then someone told them about Airbnb…
Within just a few days of listing the place on the website they’d had their first booking at £100 per night for a 3 night stay.
So they shuffled off to a friend’s house for 3 days to give it a trial run.
It went great.
They had a friendly and respectful young couple to stay and made £300 (less Airbnb’s booking fees which are around 6 – 12%). The couple gave them a good rating and review and suddenly they were in business.
The problem was they were leaving for Mexico in a month’s time and weren’t going to be around to take subsequent bookings or let visitors in and give them the key.
So they chatted to a neighbour and got them involved. The neighbour would see guests in, show them the ropes and hand over the keys to visitors and then clean the place afterwards in exchange for a small fee.
The upshot was this…
Even though it wasn’t being booked out all the time they still made more than double what they would have made renting the place on a long or short term let with an estate agent.
In fact it went so well that they cancelled their return flight and ended up staying in Mexico for 6 months!
On their return they had more money in their pockets than when they’d left, so they decided to keep on going with Airbnb.
Mike rented a small 1 bed flat above a pub 10 minutes from his flat on a long term let and moved in. Meanwhile they carried on renting his 2 bed place on Airbnb – only this time at £150 a night (though cheaper for longer term stays).
They did this for just over a year and on average each month they made at least £1,200 profit.
That’s £1,200 profit AFTER mortgage repayments, bills AND the rent on the room above the pub.
They effectively made a full time income, with all their accommodation paid for, for just a few hours ‘work’ a month.
It’s not just Mike…
Another friend of ours from West London listed her place on Airbnb in the summer. She now lives (thanks to the income) rent free in Ibiza in a beautiful poolside villa where she’s able to run her online business.
Some people dip in and out to make a little extra beer money. I know a chap called Ed who rents his 1 bed flat in Brixton (South London) for £80 a night whenever they go away for the weekend or on holiday.
I’ve given you London examples because I live in London. Here’s an interview with a chap from San Francisco who’s using his Airbnb earnings to buy a house:
This is one of the best opportunities I’ve ever come across writing Insider’s Edge. Let’s delve into how much you could make.
How much money can you expect to make from Airbnb?
It varies according to…
– Location (are you in a popular city or an area of outstanding natural beauty? How close are you to transport connections)
– The size of your place and facilities on offer (will your guests have the run of the place or just the use of the room and bathroom? Is there a parking space?)
– The look and feel of your place (‘boutique’ or quirky looking apartments can often command greater prices).
I’ve done some research to give you an idea…
Please note: In all of the above areas you’ll find places that are cheaper and more expensive. I’ve given you the rough mean price range for properties that are regularly being rented on Airbnb to give you a general idea.
I’d love to include more but I’d be here all month – this is just to give you a rough idea.
The best thing to do is to visit the site and take a look for yourself.
You can sign up for a free account here:
Once you’re set up, just tap your postcode in the search box provided to see what’s on offer:
Is renting your place on Airbnb safe?
They are extremely rare but of course there’s the odd horror story.
However, the thing to remember is that 95% of users tend to be friendly, respectful folk.
The ‘bad eggs’ usually tend to fall into 3 categories…
– Grumpy so and sos who’ll leave a bad review for the sake of it
– Inconsiderate folk who don’t leave the place in such a great state
– Party animals who make lots of noise and annoy your neighbours
A tiny minority of renters have had more serious problems – for example where visitors have stolen items or even trashed the place, but I’ve only heard of a couple of instances of this happening (out of the millions of bookings).
The good news is that Airbnb have put some pretty robust measures in place to stop you getting stung.
1. Both the renters and the guests have to have their identities verified through a series of identity checks.
2. There’s a reviewing system so that you can read about guests and renters’ previous feedback. A bit like you find on Amazon – except these reviews can only be left by confirmed guests/renters – not just by anyone.
3. Lastly and perhaps most importantly Airbnb have a Lloyd’s backed £600,000 or $1 million insurance policy (you don’t have to pay extra for this, it’s part of the commission) for all rentals. If the worst should occur you should be covered.
Here’s a screenshot showing some these precautions:
And here’s their guarantee…
7 top tips to help you increase your bookings, maximise your profits (and put your mind at rest)
1. When you’re first starting out charge LESS
If you plan on renting your place for £80 a night, rent it for £60 or less for your first time. Why? Because you don’t have any reviews or ratings yet and they are vital on a site like this.
When you’re brand new, people don’t know what to expect – and are taking a leap of faith if they choose you. That’s why you need to tempt them in with a great deal, get some good feedback and then – when you’re established – you can put the price up.
2. Do your own checks on potential guests
Don’t just rely on Airbnb’s checks, do a bit of research yourself. Read their previous feedback, check them out on Google or Social Media sites, speak to them via the messaging system, or on the phone, or both.
It’s simple, if you’re not happy or you’ve got a bad feeling, you don’t have to go ahead with it.
3. Don’t leave anything in your home that can’t be replaced
If you’ve got treasured artwork, family heirlooms or anything with sentimental value, take it out of there. Put it in a friend or a family member’s house or in storage.
That way if the worst should happen (and I should reemphasize that cases of burglary or malicious damage are as rare) you can just replace the damaged items.
NEVER leave any personal documents (such as bank statements or medical records) in the house – that includes computers. If you do leave a computer there for guests to use make sure it has nothing personal on it.
4. Keep the place meticulously clean (and always clean between bookings)
The last thing you want is bad feedback about cleanliness. Get spare sheets so that you don’t have dead time between bookings and can have a quick turnaround.
If you don’t fancy clearing those mysterious short hairs from the bathroom yourself, hire a professional cleaner. I have a friend who has a trustworthy cleaner to do this for them and to handle any day-to-day issues with guests – and they find it works great.
5. Really sell the place in your listing – take lots of clear pictures and include as many details as you can (but don’t exaggerate)
Put yourself in the buyer’s mindset. You wouldn’t rent out a place that leaves sparse details and has wonky, blurry pictures that don’t give a clear idea of what’s on offer.
If you’ve got a mate with a fancy camera get them to help you do a little photo shoot. Take pictures during the day so that you get the maximum amount of light and take pictures of every room and facility (including the outside).
When you write about your property think beyond the property itself. Are you near any good restaurants, bars and museums? What are the transport links like?
6. Leave lots of info for guests
You only have to do the work for this once (because you can simply reprint the info for future guests) but it will pay massive dividends.
Sophie and I once stayed at a place in New York where the owner had left print outs of everything on offer. She’d put reviews of her favourite restaurants, left maps and instructions on finding local transport, cab numbers, take away menus, instructions for using the tele and shower – you name it. We gave her a glowing review.
You could even think about leaving out thoughtful accessories like shower gel, disposable earplugs, toothpaste etc. Inexpensive little touches like these can mean the difference between a good review and a great review.
7. Be very clear about what’s included in the price
Most people offer just the room and that’s absolutely fine (and to be expected) but be clear about check in and check out times.
Are you going to be in the property? (i.e. if you’re just renting out a spare room) If so, let them know.
If you plan on offering breakfast tell them. Some people go the extra mile and offer airport or bus station pickups. Again, if you’ve offering that in the price, let them know!
You can find out more here:
(You can sign up free and start having a look around using a Facebook account or by signing up with your email address).
Did you enjoy this article? Maybe you’ve had experience using Airbnb as either a renter or a guest? Please feel free to leave a comment below.