If you are already in the rental business, or are considering a property for Airbnb, here are some ways you can get the best rates and maximize your income.
In the early days of Airbnb, it was a very different market, and hosts only really competed with the ‘CouchSurfer’ website (people renting out their couches for short stays) and hotels, so carving out your own niche was easy. Today, hosts are rated on everything from a stylish space, to business and child-friendly amenities and personal touches. A short browse on the site will show everything from a basic room to a boutique hotel. Guests will rate you on accuracy, so present your space as best you can, but ensure all pictures and descriptions are realistic.
When reviewing your rate against the competition, note what they are providing and focus on the most important metric; location. For example, if you are in a desired location, you may have to do a lot less than those hosts further outside the city. Bathrobes and slippers may be a nice addition and make your listing look good, but if they aren’t needed to get your ideal occupancy rate, then you may as well save the laundry costs and time these extra items add. Make sure you adjust your rates for the season and events; the new rule setting ability in the Airbnb calendar is a great tool for this. If you have not yet purchased a property for rental or Airbnb, we can help you assess the potential rents so you ensure your mortgage and all running costs are covered and you can make money from the investment.
Saving money while providing a good service
One of the main ways hosts lose money is by treating Airbnb like a hobby and not a business. This means you are providing a fantastic service with incredibly satisfied guests, but could end up subsidizing their vacation. Get into good business practices early by tracking your expenses and comparing these to your earnings over a one, three and six-month period. Buy the essentials like toilet tissue and toiletries in bulk and when on sale, and consider getting a Costco card.
Other ways to lower your Airbnb expenses:
- Lock your thermostat, invest in a Nest for remote monitoring (or simply hide the remote control!). Guests on vacation are more relaxed about things like leaving windows open and not lowering the heating etc. It’s good for your wallet – and the environment.
- Add pumps to all toiletries, this will stop people over pouring, particularly with shampoo and shower gel.
- Change all light bulbs to LEDs; this will save on energy costs and guests will also appreciate your efforts towards environmental sustainability.
- Consider the weight of your sheets if you are paying by the lb for a laundry service.
- If renovating, install showers instead of tubs to lower hydro costs.
Tax and the changing Airbnb rules
Any stays under 31 days are subject to 13% HST, which may make long-term guests more lucrative in the long run. This may not be possible if you are not set up for long-term stays or simply do not want them (more on that in a future blog). If you intend to stick to shorter stays, consider bumping your rates to lessen the impact of HST on your income. The newly introduced 4% accommodation tax is covered by the guest, and Airbnb shares this with the province. For any readers outside of Ontario, Airbnb offers guidance on where you can find your local rules.
If you are considering expanding your property portfolio or buying your first investment, please get in touch firstname.lastname@example.org. Our experienced team are ready to help.