We stumbled into this Airbnb side business three years ago, while looking for affordable rental housing in Orlando. Three bedrooms right in Downtown Orlando, wonderful school boundaries, and extremely reduced rent! The only catch? We had to run the Airbnb listing out of the 4th bedroom for the owners.
After nine months, we had saved enough to afford our own down payment. But instead of moving on from the Airbnb rental idea, the ability to have short-term renters became a requirement of our housing search. We had seen the financial benefits from renting out a room, but now those benefits would be going to us. Three months after moving into our home, our Airbnb listing went live and it's been a ride!
Our Airbnb Setup
Our house is three bedrooms/two bathrooms, about 1300 square feet in Downtown Orlando. We live in the front two bedrooms, and then rent out the back bedroom and bathroom in the Airbnb listing. We installed an interior door between our kitchen and the Airbnb space to create two separate living units. The back bedroom is converted garage space, so it has obvious separation from the main living area. With it previously being a garage, the rental space already has an exterior door, so guests come and go as they please. We share all outdoor spaces, except for the driveway.
Wonderful Benefits
Reduced Mortgage, or Even Paid For
Our Airbnb has been running for about 15 months, and our monthly income from hosting Airbnb stays has ranged from $1500 to $2500. Due to insurance changes, our mortgage has ranged from $1900 to $2200. So on average, we have only been paying a few hundred dollars a month from our own work paychecks! And some months we actually make a profit on renting out one bedroom and bathroom!
Sign up here to create your own Airbnb listing! Get an extra $25 when you host your first Airbnb stay!
Tax Write Offs
Running an Airbnb is considered a business, so some household expenses are considered tax write-offs. This helps reduce your tax liability on the rental income, meaning, you won't have to pay as much tax on the money you are making from the rented unit. This can include a portion of your mortgage and utilities, housing upkeep and repairs (roofing, landscaping, pest control), housing upgrades (landscaping, furniture for the unit), toiletries for the rental unit, etc.** Pretty much anything that will improve the rental unit, as your business is making the unit more functional and welcoming for your guests.
**Please talk with an accountant to ensure you are filing taxes appropriately.
A Guest Room That Pays You
Since it's your rental unit, block out the nights you need to use it! When we have family coming to town, we make the room unavailable on Airbnb for those nights. Then our family doesn't have to rent a hotel room, or stay on the couch. We use the space when we need it, and rent it when it's unnecessary.
Obnoxious Concessions
Rule Breakers
Although it's a rental property, it's still YOUR property! Create any rules you would like guests to follow. As with any rules though, sometimes they are ignored. But you can also create consequences for when the rules are broken too - like extra fees or requiring them to leave the property.
For example, we don't allow smoking or vaping of any kind. We had the rule written in more of the "fine print" area of our listing, so every once in while someone would smoke in the unit. Since we share an interior wall and the same air conditioning system, it's obvious. We added a warning about the no smoking rule to our check in instructions, and we haven't had an issue since. But it's obnoxious that we had to.
An Example
There was one guest that blatantly disregarded the smoking rule, which prompted the more strict and obvious notes from us. It was about 11pm and the strongest marijuana smoke smell came through our house as Brandon and I were finishing a movie. Heading around the house to the unit, smoke smell hit us in the face, and we called through the open sliding glass door that we needed to talk. After a minute of rustling around, someone opened the door -- someone not listed on the reservation, another violation of Airbnb policies. We try to be generous with our guests and give second chances, and reminded them that smoking was not allowed in the unit. His response was, "It's just tobacco, not marijuana."
Welp, that wasn't the point. My house, my rules. And they weren't even trying to pretend to respect the rules. Past guests at least denied it, or agreed to cut it out. We announced loudly that they were required to leave. Immediately. We turned on all the lights, I called Airbnb and explained the situation, and we changed the door code. We stood outside as they gathered their items, and watched them leave, getting in the guy's car to destinations unknown. Our official guest still had a few days left on the reservation, but since she broke the rules, she forfeited any refund. That's when we added the rules more obviously to the check-in instructions about smoking.
Cleaning The Same Bathroom
The longer Airbnb stays don't bother me as much. Long periods of time that we can't access that room, but also more income. It starts to get overwhelming when there are many back-to-back short-term stays though, like single nights. There was a two-week period of single-night stays when we first started, and it exhausted me having to re-clean the same space every day between guests. Enough where I started looking to outsource to a local cleaning company. We ended up raising our daily rental price the next month which pulled us from the radar of most one-night stays, so I didn't hire out the work, but it's something to keep in mind!
Extra Legal Requirements
Even though it's your home, there may still be some extra legal hoops to ensure you're protecting your home. I was talking to our insurance broker about another situation, and mentioned the Airbnb. She informed me that our current homeowners insurance didn't allow for rental property on-site, so we had to find another policy. It is more expensive, but we're covered if something happens. Airbnb also provides insurance coverage for property damage and liability claims, but our homeowners insurance still required the upgrade.
I talked to a few different homeowners insurance providers, and while most would allow for longer-term renters, the daily rental option was an issue. We eventually found Kin Insurance, and I highly recommend them. One of the easiest insurance companies I've worked with.
Also be sure to check your local rules about hosting short-term rentals in your community. Orange County, Florida requires an annual permit and inspection for home-sharing. The permit is $275 the first year, and then $100/year for renewals. The inspection was simple, looking to make sure there were safety items in place, like fire alarms and windows. The county also restricts what is allowed for home sharing. Hosts are required to live on-site, and the rental unit must be less than 50% of the house.
When You Go Out of Town
Finding a sitter for the dog for vacations, sure. But finding someone to come clean your house while you're gone? You can always make your listing unavailable for the dates you are out of town, but sometimes that extra money is too good! Talk to local cleaning companies for their one-time fees, or maybe ask your neighbors if they are looking for some extra money. This summer we are out of town for a few weeks, so we made an agreement with our friends. Instead of blocking possible dates, we will split any rental income with them in exchange for cleaning services while we're gone. We won't be making as much money if we cleaned the unit ourselves, but we will be making more than if we blocked it out completely.
Will We Continue?
100%, yes. We planned to keep the Airbnb running until the house improvements had been paid for, but the financial opportunity is too large to ignore! Although we could really use the extra bedroom for our kids, it's freeing and exciting to have some passive income. I was able to drop to part-time work last summer, which allows me more time to be around the kids. Brandon was able to switch jobs to one that he enjoys more, even though it doesn't pay as much. And even with those decreases, we still have money to visit family, join extra-curricular activities, and pay off those never-ending house repairs. So even though we have less physical space, we have more financial freedoms.
So, yes, we will be keeping the Airbnb rental going as long as possible!
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