For many, their side hustle is their home. That's right, renting out your place on sites like Airbnb, Homeaway and Vrbo can be a great way to make some extra cash using an existing asset: your home.
Airbnb hosts make, on average, about $924 a month, according to research from low-interest lender Earnest. Of course, that income can vary dramatically depending on where you're based, how frequently you rent out your place, the quality of your home and the services you provide.
That said, being a successful host is about more than just writing up a clever Airbnb listing or buying a new bedspread. It takes some work and there are some start-up costs to consider. "There is a right way to do this," Dan Weber, founder Airbnb Hell, tells CNBC Make It.
"It's very easy to get carried away," says JoJo Fletcher, host of CNBC's "Cash Pad." If you want to turn your rental into a moneymaker, you can't go in having high expectations and break the bank with remodeling, only to rent it out at a low nightly rate. "That's not a smart business model," she says.
Here's a quick guide on how to get started renting out your place to really maximize your earning potential.
Before you get started fixing up your rental space, you'll need to do a little research on the demand in your area. If your home is not located in a Airbnb hotspot, you may be handicapped from the get-go. "Many aspiring hosts do not understand that the earning potential for their property is largely determined by their location and the existing demand for Airbnb travel," Symon He, co-owner of LearnAirbnb, tells CNBC Make It.
Next, double check that your rental can operate legally. Put in some time to find whether it's legal to host in your area and what requirements you need to meet. For example, some hosts will find they need to take a trip down to city hall to fill out some paperwork. "Many times, the city needs to be informed that you're renting out your space," Weber says.
And while you might be able to welcome guests without doing this step, it could save you headaches later. Also be sure to also check rules and bylaws enforced by homeowners' associations, condo boards and landlords.
Last, while it is free to list your home on sites like Airbnb, it's important to keep in mind that the listing site will take a small cut of your booking fee. Airbnb, for example, generally charges hosts a flat 3% per reservation. You'll need to factor that into your ongoing maintenance and operation costs.
Even if your home is perfect for you, it may not be for guests. Some redecorating is usually in order. For the best results, experts recommend first starting from a clean slate and then furnishing the space. "Free it of the clutter," Fletcher says.
Even if you're just renting out a spare room, you'll likely need to invest in a new bed frame and mattress. "You have to realize everything should be furnished and it should be fairly new because you are competing with other Airbnb hosts," Weber says. He pegs the cost at roughly $1,500 per bedroom, plus another $2,000 to $3,000 for the rest of the house and common areas, which is on par with other experts' estimates.
High quality photos of your space is another way "to set yourself up for success," says Danny Rusteen, founder of OptimizeMyAirbnb.com and a former Airbnb employee. "One of the first things you should do as a host is get professional photographs. People are very visual."
It's worth investing in a professional photographer if you're really looking to make serious bank from your rental. Expect to spend $100 to $200, on average, for a comprehensive photo session of your home. Look for a professional photographer who has experience with real estate photography, rather than portrait work.
If your local white pages aren't yielding any leads, you can actually find photographers for this through the Google Street View professional program.
It's also important to have the photos highlight unique aspects about your space, such as funky decor or unusual amenities. In CNBC's "Cash Pad," that included a light fixture made out of a kayak. "You have to showcase what you have to offer," Fletcher says. "The only way guests are going to see your property is digitally first. So that means your photos have to be just perfect."
Before you write up your listing, think about the type of guest that will appreciate your space the most. For example, if you live in a fifth-floor walk-up in Brooklyn, you probably shouldn't market yourself to the retiree crowd.
For the best results, the title of your listing on Airbnb or other rental sites should be attention-grabbing and descriptive, writes He. Your description should be easy to skim and contain relevant, specific details, such as a "55-inch Sony HDTV with complimentary Netflix, Hulu and Amazon Prime."
Be clear with what you're offering and manage guests' expectations. If you live in an area where critters and harmless bugs are common, note it. If your building doesn't have an elevator, make sure you specify that it's a walk-up. "Setting expectations will avoid a lot of problems," Rusteen says. "Negative reviews are 100% of the time related to mismanaged expectations."
First impressions really do matter. And if your guests have to spend an hour trying to get into your place because your lockbox isn't working, the review won't be pretty.
The check-in process actually starts before your guest even arrives at your front door. After they book, make sure to provide contact information in case of emergencies and specific instructions on the best ways to get to your home from the airport, train station, and the local bus or metro stop. "If you don't live in a straightforward area, ensure your directions are rock solid," Rusteen says, adding you should get a friend to test these instructions.
When it comes to getting into your home, Rusteen suggests buying and setting up a digital keyless entry system to make it easy for guests to access your place remotely. If you can't invest in a digital lock, have an easy-to-use portable key lock box near the entry and provide the code with super-clear instructions. Plan to give out one key per guest and do not put your address on the keys in case they get lost.
"It's all about acclimating your guests to their new environment, aka your Airbnb listing, as quickly as possible," says Rusteen, who now manages several properties in the U.S.
If you want that 5-star review, don't skimp on the amenities. At the very least, you need excellent WiFi and, depending on the size of your apartment, a WiFi network extender. "Test the WiFi in all parts of your home," Rusteen says. And make sure the network name and password are clearly displayed for guests. A SmartTV is also a good bet, along with clear instructions on how to use it.
When it comes to bedding and towels, spring for linens that go beyond the basics. Take a towel, for example. Guests will likely shower almost every day they're in your home, so it's something they'll use a lot. "I suggest you get the nicest, fluffiest, most pleasant feeling towels you can afford," Rusteen says.
You should also plan to stock some toiletries such as shampoo and soap, as well as pantry staples such as salt, pepper and condiments. Of course, you could provide many more amenities — from ironing boards to wine openers. You may need to feel it out over time and add items as needed by your guests.
"You never want a guest to show up and say: 'Shoot. I need to go run to the store,' " Fletcher says. Being prepared to help out guests with little can help make your rental really successful.
A common complaint among guests is cleanliness, Rusteen says. That's because your idea of super clean may not mesh with your guests' expectations. "People's definition of 'clean' on planet Earth varies widely," Rusteen says. Err on the side of caution and always go above and beyond with your cleaning standards. And while you can definitely clean the space yourself, especially if you're only renting out sporadically, it can be time-consuming.
Instead, a lot of hosts hire a cleaning service. Yet finding the right cleaning service can be one of the most difficult tasks for a new host. It's best to hire a company or a cleaner who has vacation rental or hotel cleaning experience, which has different challenges than a traditional home cleaning. For example, your cleaner will need to check for damage and possible theft, as well as items guests may leave behind, perhaps refill bathroom or pantry staples. Plus, they'll need to clean on a strict timetable so that your home is ready in time for your next guest to check in.
"Hire local — don't hire one of those big companies," Rusteen recommends. That way, you can talk with the owner and cleaners about what you need. Also, try to get the same cleaner every time to ensure that they know your space and what needs to be done.
For every success story, there are horror stories about terrible guests, broken furniture and run-ins with local law enforcement. One host recently complained about spring breakers who destroyed a Destin, Florida condo after "partying like rockstars for a week."
To protect your investment, make sure your insurance covers your new venture. The big companies such as Airbnb, Homeaway and Vrbo provide automatic liability insurance to every host that covers up to $1 million, but there are restrictions and it can be a challenge submitting claims.
"Anything below $50, just pay it out of pocket," Rusteen recommends. If you're worried about being left with a bill for some expensive accidental damage, purchase short-term rental insurance. And before you start accepting guests, it's a good idea to read through the fine print of your existing homeowners' or renters' insurance policy. Some policies have stipulations that extra renters can negate your entire policy.
Overall, whether you choose to get extra insurance depends on the level of risk you're comfortable with. Miller discovered that, for her situation, getting home insurance for Airbnb rentals was extremely difficult and costly. Instead, she took the approach of minimizing risk by thoroughly screening her guests and asking for a security deposit.
Check out the series premiere of CNBC's "Cash Pad " on Tuesday, July 23 at 10 p.m. ET.
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