Airbnb, which matches travelers with property owners who have a couch, a room, or an entire property to rent, has become powerful force in the real estate market. The company began in 2008 as an online platform matching budget travelers with people looking to make money from renting unused space in their homes.
Today Airbnb is a $25.5 billion business. It lists 1.5 million properties in 190 countries. Originally, most listings were offers to share a space with the owner, but now 65 percent are for an entire property, some available 365 days a year.
While the short-term rental business has been a flourishing niche, well, since the advent of the vacation, Airbnb, along with sites like HomeAway, VRBO, and Flipkey.com, make it easier and cheaper for consumers to book vacation properties. (Airbnb’s niche is travelers seeking low-cost and off-the-beaten path alternatives to the generic hotel experience, VRBO—which owns HomeAway and Vacationrentals.com—is targeting popular destinations for vacationers traveling in groups.) Meanwhile, property owners or managers can get lodging information in front of millions of potential customers in minutes. Airbnb collects a fee (usually around 3 percent of the rental price) only when an accommodation is rented.
The income potential is luring both home owners and investors to try their hand at being vacation rental entrepreneurs or “hosts,” as Airbnb calls them. In fact, HomeAway says its average listing generates $28,000 in bookings each year and more than half of the owners on HomeAway cover 75 percent of their mortgage by renting out their home. For owner occupant buyers if it is a stretch to buy a home you’re considering, short term rentals are an easy way to make extra money without a permanent tenant. For homeowners working to sell a home, Sites like Airbnb and VRBO can be a good place to “park” a property and earn income while a market rebounds or until a buyer surfaces.
5 Things Airbnb-Minded Buyers Should Consider
1. The property must be in an area zoned for short-term rental. Residential neighborhood zoning restrictions may prohibit all rental property or running a business. Airbnb is considered a business.
2. Homeowners associations or condo boards must approve short-term rentals. Condo boards commonly ban renting out individual units, which may also extend to renting rooms in owner-occupied units.
3. Mortgage lenders may require additional insurance coverage for properties that the owner intends to rent out, even when the owner is only renting a part of an owner-occupied home. Lenders will likely not consider potential income from Airbnb when evaluating qualifications for a loan.
4. Not only are property taxes often higher for second-home properties and non–owner-occupied properties, even renting out a room in an owner-occupied property may result in the property being reclassified as a commercial property and taxed as such.
5. In many areas, owners must have licenses or permits and pay occupancy, hotel, or sales taxes to offer short-term rental accommodations.
If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please contact The Opland Group. We offer professional real estate advice and look forward to helping you achieve your real estate goals!
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