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The Difficulties of Airbnb
I decided to write a column about my own experience putting some of my investment properties on Airbnb, so that you too can learn from my mistakes, understand what a good rental requires, and learn some of the horrors of hosting on Airbnb.
Let me not mince words here. Airbnb can be a horror show. I think we can easily start off by saying that Airbnb will never take your side as a host if it can possibly avoid it. Its priorities lie with its guests, and if you’re OK with losing the benefit of the doubt in most situations, you can still find ways to turn a profit.
Airbnb guests as a whole can be a mixed bag. Putting your property on Instabook is the only way to generate a consistent revenue stream, as most people don’t want to deal with the hassle of the back-and-forth that leads up to a reservation. What this means is that you aren’t able to screen very well, so you get a wide variety of guests at the property.
We’ve had parties in our rentals. We’ve had dark stains all over. We’ve come back to the noxious, heavy smell of weed, which can never be removed. We’ve come back to broken windows. Airbnb guests can be quite the handful. And best of luck trying to get a refund from them through Airbnb – unless you’ve extensively documented condition of items before and condition of items afterward, you’re not seeing a dime. And you’ll never get anything back for something that can’t be captured on film like a horrible smell.
So add those replacement fees onto the maintenance fees that you’ll incur. Whenever someone stays at your property, you’ve got to clean the please until it shines, otherwise your guests will be unhappy. This regular cleaning expense can run you $25-50 a pop, and the deepest of cleans can still see customer complaints.
The other thing you’ll learn is that sometimes guests can cancel reservations with impunity, and no financial reimbursement to you, even if you have a strict cancellation policy. If the guest has anything that could possibly be construed as a safety complaint, they will get fully refunded and it’s on you to bear the costs of cleanup. Not only that, but you’ll have people who book up large swathes of time on the calendar, only to cancel after they get there, making you lost opportunity to have other people book in their spot.
And you know what counts as a safety concern? Next to nothing. You’ve got a lot of folks from the suburbs coming in, expecting a bleached-clean version of a city where everything’s clean and the streets are free of any loiterers. Seeing even one street person loitering on the street can shock their system, and qualify as a “safety concern”.
Add to this the normal humdrum stuff, like calls at 3 am because the tenants locked themselves out of the house, and you can be faced with some nightmare scenarios through Airbnb. Now, imagine that same guest having locked themselves out, getting you to send someone to change the locks for $50 because you don’t have more copies of the keys, the tenant then finding the key, and then refusing to pay the extra $50 when they’re presented with the bill. Yes, it’s all happened before.
So how do you avoid these hassles when you put your place on Airbnb? You can’t. But, if you’re willing to deal with these hassles and go far out of your way to work with some ridiculously-picky guests, you can probably find a way to make money. Part of it is probably the fact that the Bay Area cities that I work tend to fall on the dirtier side of American cities. It’s hard to compare the walled garden of a chain hotel with a house in Oakland, no matter where it is. So if you’ve got a house in a more suburban location, you might fare better. Either way, expect to go above and beyond to meet the needs of your Airbnb guests.
I don't know. I just finished listening to BP podcast 114 which was all about vacation rentals on Airbnb and such websites.
He said that he has rented 4 properties for about 200 days/year for the past 4 years and the only "damage" he has to report was maybe a messy house.
I think it depends on the market. I've never done a short term rental, so I don't know much. I just finished listening to the podcast today so thought I would mention that.
That a shame that you've had such bad experiences. Those people ruin for the rest of us. I had an airbnb property in san diego and fortunately, I only had positive experiences. However, I did screen the tenants thoroughly before accepting them. It takes more time but it helps to have some interaction with the guests beforehand to get a sense of who they are and what they plan to do while they are there.
There were many times that I declined guests based on: 1) poor communication on their end; 2) lack of complete profile/no reviews; 3) them flat out telling me that they are coming to party; and 4) just having a bad feeling.
But I can sympathize with the picky guests -- you can never please everyone, even when you go way out of your way to make them comfortable. I also didn't know about the lack of help from airbnb for hosts -- they should take better care of the people that are providing the service, especially considering all the fees that they collect.
Some areas definitely are easier to rent in than others. It can be hard to tell which is which, unless you live in the house yourself. For instance, we never had any problems at this one house, but people complained all the time about issues with a street person being around.
Interesting points @Juan Diaz. This is why I feel like people should use a property manager. They handle most of this damage and have multiple sources of putting better bookings in place with larger security deposits. I'd rather profit a bit less and my property not be abused and destroyed than book every last night with whoever is willing to stay there at whatever rate I can get. It doesn't make sense in the end. Also, I think certain areas are definitely more prone to wild tenants than others. In Orlando, it's mostly families traveling together so not a lot of wild and crazy parties but I would imagine places like Miami or Vegas get a lot more of the party scene and probably some really weird stuff going on.
@Erica Muller what has your experience been with a property manager/cleaner? I'm curious, because it didn't seem to me when I briefly looked into it that we would sufficiently be able to cover our costs if we did it that way. Would love to hear your insight into that
thanks!
Juan
Hi Juan,
My personal experience is that it's been fantastic but I also vetted over 25 companies before finding the one I felt was the right choice. For all of my clients that own VR's, they all use a PM and have zero issues. The bottom line is much higher because they secure higher end bookings through other sources than VRBO and Airbnb. A good management company has connections with travel agents and larger travel sites that can drive better leads than an owner alone so in the end it all works out. It also depends on what area you're in. In Orlando it makes complete sense, I don't know what the market is like in CA.
Interesting. Thanks for the reply Erica!
I think it is beneficial to discuss the strengths and weaknesses of these programs so people can be aware of the potential pitfalls. However, my personal experience with Airbnb has been very different from yours. We currently have two nightly rentals listed with Airbnb and have been extremely pleased with our guest pool to this point. We have had our moments with guests, but on the whole our guest pool has left our properties cleaner than most of the guests that are using management companies in our town based on our discusions with our friends who own a couple of the management companies in town. I do believe that Airbnb serves its purpose but if you are experiencing negative results I would switch to a management company and take less on the back end.
Originally posted by @Kyle H.:
I think it is beneficial to discuss the strengths and weaknesses of these programs so people can be aware of the potential pitfalls. However, my personal experience with Airbnb has been very different from yours. We currently have two nightly rentals listed with Airbnb and have been extremely pleased with our guest pool to this point. We have had our moments with guests, but on the whole our guest pool has left our properties cleaner than most of the guests that are using management companies in our town based on our discusions with our friends who own a couple of the management companies in town. I do believe that Airbnb serves its purpose but if you are experiencing negative results I would switch to a management company and take less on the back end.
I think our demographics are extremely different. You're renting (presumably) in a rural vacation location in the middle of the Appalachains, I'm renting in Oakland in the heart of the city. Different groups of people--you're dealing with the Benzes of the renting world at your location in people who can afford a vacation, I've got a lot more across the spectrum.
I respect that your experience has been different, but I don't know that what works in western North Carolina would work very well in Oakland, and it's not very often that we get the type of perspective from Oakland, at least with what I could see looking around.
@Juan Diaz & @Erica Muller I have to disagree that Airbnb always takes the side of the guest. I've had hundreds of Airbnb guests, maybe a dozen or so situations/issues that had to be escalated, but only one case out of all of those that I felt the guest got an unfair judgement by Airbnb.
Millennials, the primary users of Airbnb, account for 40% of travel, despite being 25% of the population. It's a shift and demographic worth catering to, for sure, and Airbnb is the primary vehicle for that at the moment. VRBO/HomeAway are making huge shifts towards being guest orientated as well though, so it's an overall shift in the STR industry.
Originally posted by @Juan Diaz:
I decided to write a column about my own experience putting some of my investment properties on Airbnb, so that you too can learn from my mistakes, understand what a good rental requires, and learn some of the horrors of hosting on Airbnb.
Let me not mince words here. Airbnb can be a horror show. I think we can easily start off by saying that Airbnb will never take your side as a host if it can possibly avoid it. Its priorities lie with its guests, and if you’re OK with losing the benefit of the doubt in most situations, you can still find ways to turn a profit.
Airbnb guests as a whole can be a mixed bag. Putting your property on Instabook is the only way to generate a consistent revenue stream, as most people don’t want to deal with the hassle of the back-and-forth that leads up to a reservation. What this means is that you aren’t able to screen very well, so you get a wide variety of guests at the property.
We’ve had parties in our rentals. We’ve had dark stains all over. We’ve come back to the noxious, heavy smell of weed, which can never be removed. We’ve come back to broken windows. Airbnb guests can be quite the handful. And best of luck trying to get a refund from them through Airbnb – unless you’ve extensively documented condition of items before and condition of items afterward, you’re not seeing a dime. And you’ll never get anything back for something that can’t be captured on film like a horrible smell.
So add those replacement fees onto the maintenance fees that you’ll incur. Whenever someone stays at your property, you’ve got to clean the please until it shines, otherwise your guests will be unhappy. This regular cleaning expense can run you $25-50 a pop, and the deepest of cleans can still see customer complaints.
The other thing you’ll learn is that sometimes guests can cancel reservations with impunity, and no financial reimbursement to you, even if you have a strict cancellation policy. If the guest has anything that could possibly be construed as a safety complaint, they will get fully refunded and it’s on you to bear the costs of cleanup. Not only that, but you’ll have people who book up large swathes of time on the calendar, only to cancel after they get there, making you lost opportunity to have other people book in their spot.
And you know what counts as a safety concern? Next to nothing. You’ve got a lot of folks from the suburbs coming in, expecting a bleached-clean version of a city where everything’s clean and the streets are free of any loiterers. Seeing even one street person loitering on the street can shock their system, and qualify as a “safety concern”.
Add to this the normal humdrum stuff, like calls at 3 am because the tenants locked themselves out of the house, and you can be faced with some nightmare scenarios through Airbnb. Now, imagine that same guest having locked themselves out, getting you to send someone to change the locks for $50 because you don’t have more copies of the keys, the tenant then finding the key, and then refusing to pay the extra $50 when they’re presented with the bill. Yes, it’s all happened before.
So how do you avoid these hassles when you put your place on Airbnb? You can’t. But, if you’re willing to deal with these hassles and go far out of your way to work with some ridiculously-picky guests, you can probably find a way to make money. Part of it is probably the fact that the Bay Area cities that I work tend to fall on the dirtier side of American cities. It’s hard to compare the walled garden of a chain hotel with a house in Oakland, no matter where it is. So if you’ve got a house in a more suburban location, you might fare better. Either way, expect to go above and beyond to meet the needs of your Airbnb guests.
Hi Juan - thanks for the insights, definitely some pitfalls to look out for!
I certainly agree that location may be a factor in the tenant pool but I also wonder about management practices. It sounds like the root cause is the tenant screening process, or lack there of, as you mention. It makes sense that proper screening on your own or through a Manger would go a long way to help with the problems you mention.
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Sad to hear your story. I've had the exact opposite experience.
Here's a tip: install digital locks and/or keyboxes and eliminate your lock out issues.
I figure I'll chime in here as an frequent Airbnb renter. My wife and use it about a dozen times per year.
A lot of owners have no business renting on Airbnb-either in terms of business sense or effort. We had one place with horribly uncomfortable furniture, empty bottles of soap/shampoo, uselessly thin toilet paper, and a million inane house rules. Another place neglected to give us the street address after numerous requests and we ended up having to stay in a hotel that night at Airbnb's (and probably ultimately the owner's) expense.
Part of me thinks that landlords need to realize there's no such thing as a free lunch. Vacation renters are going to be much harder on your place than long term renters... that's just reality. It doesn't make it OK for them to trash things with no recourse, but to expect the same maintenance expenses on Airbnb isn't a realistic business plan.
Just my two cents. Sorry to hear you've had bad experiences though.
I'm not surprised that you've had these experiences in Oakland. I'm from the Bay Area, and my folks grew up in Oakland, dad was an Oakland cop, my daughter lives in Oakland now.
There aren't many people who go to Oakland for vacation. So, I'm guessing your guests are people who are coming to the Bay Area looking for jobs, or to interview. They're probably young techies. And this population can be really difficult. Heck, go read reviews for Uber users in the Bay Area, to get a feel for how incredibly difficult and picky that population is.
I also think it's really smart to rent your Oakland property out as a short-term rental, though, in order to avoid the rent control in Oakland.
I wonder if you might have better luck renting to working people (preferably not techies) who need short term rentals? Like traveling nurses, for instance.
Anyway, if you're looking for another short-term rental avenue in Oakland, I'd look into seeing if there was a way to just advertise to traveling nurses.
I managed a building in Santa Clara and I was approached by a company that hires traveling nurses, and they asked if they could rent a unit in my building as corporate housing, where they could put their traveling nurses. We chose not to do that, because we were concerned about not vetting tenants as they come and go, etc. I don't think it would be a good idea for you to rent for corporate housing, because that would put you under rent control, I think.
But, my point was that there is a need for short term housing for traveling nurses. So, if you could just advertise to them (so you didn't have to deal with Craigslist, etc.), you wouldn't have to deal with fees or reviews - or the entitled techie mentality :-)
I did some Googling, and this website looked interesting, and it's free:
Otherwise, I think I'd call the HR Depts for Kaiser and Highlands and any other hospitals nearby your property for ideas on how to market just to their traveling nurses. I rented to several nurses over the years, and they were all great tenants.
It looks like it's hard for them to find housing that will let them have their pets, so that might be something to consider, too.
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Originally posted by @Al Williamson:
Sad to hear your story. I've had the exact opposite experience.
Here's a tip: install digital locks and/or keyboxes and eliminate your lock out issues.
I also put a backup lockbox with keys at each property for the lockout issue, since I don't have electronic locks on every gate (preferable), like Al said. This has to be one of the most common issues...
Also, it seems that smaller apartments and room rentals tend to have less of the "group" issues, like parties, people being loud, etc. I have been very fortunate on this side.
Also, setting it up more friendly for business travelers (like documenting fast wifi upload/download speeds, having a good desk space, possibly wired internet also, an inexpensive printer, etc.) And renting to longer term travelers (weekly, monthly.)
Not sure many of these are feasible in West Oakland and North Oakland where I think you have most of your stuff Juan..
@Raquel Pea, how about you..?
Experiences will definitely vary by location, as with any property. As both a renter and a host on Airbnb for several years I've had quite the opposite experiences as well.
Renting out a place in Boston funded trips to Italy, Austria, and other counties renting as a guest for 1/2 the price of what I could charge back home (like a house swap with income). More importantly choosing Airbnb over hotels offers authentic, local experiences utterly missed in chain hotels.
Were there issues as host? Absolutely. One couple on their anniversary spilled wine, leaving a huge stain on the carpet. Another locked himself out. Yet others signed a guestbook with appreciation of how much going the extra mile for them mattered. Hosting runners during the Boston Marathon bombing and ensuring they had a safe place to come home remains something that will stay with me far longer than a silly carpet stain.
Having managed both LT and ST rentals I might just take ST 8/10 times. You get paid up front. The ST platform is far more flexible than LT leasing. You build value on providing unique experiences. You capitalize on how well you design your own space (if renting out primary residence). You meet world travelers. You become an ambassador to your metro. These are things beyond mere profitability, intangibles that (for many) have opened the door to making travel affordable and real cultural exchange possible.
While not necessarily exclusive to ST rentals, and certainly not for everyone, the distinctions between traditional LT landlords and ST hosting/rentals are distinct, tangible, and worth comparing against long term goals.
@Juan Diaz, there is one solution that pops into my mind when I hear your horror stories. The key, IMHO, is to find one quality and trusted tenant for each of your AirBnB properties. They will stay in your property long-term, may pay discounted rent, and will serve as a "presence" in your property. Having this presence in each home has REALLY made the difference for me. Even if this individual is not at the property throughout the day, guests will see that they come in and out, and will respect the space much more than when no eyes or ears are on the property.
I've gone the distance to find long-term tenants who are also willing to clean and generally manage the property. This is not necessary, as I could still hire cleaners with the guest's cleaning fees, but it definitely minimizes my operating expenses month to month!
The only issue that arises is... this method can not be used with studio apartments, or small one bedroom properties. Sorry @J. Martin! Haha ;)
In our larger properties, 2+ bedrooms, the long-term tenant is sometimes comfortable with staying in a shared AirBnB bedroom (shared female or male only rooms). This minimizes their monthly rent, and also increases our net profit as we don't have to give up an entire bedroom for the tenant, and shared AirBnB bedrooms have typically turned more profit for us.
I stand behind J. Martin regarding renting out room by room, rather than the entire property. When many travelers share one roof, there seems to be this atmosphere of camaraderie! You also avoid the typical "group issues", that are inevitable when a bunch of friends are traveling the world together. lol
Last tip! I find that when you allow the tenant who is serving as a "presence" to weave her/his story and personality into the property's listing description, you will receive higher quality requests, and avoid the shady individuals looking for a place to go unnoticed. Along with this, J. was on point when he advised you setup and display your property as business-friendly. The quality of photos and atmosphere you create on your property's profile will definitely set the tone for your entire AirBnB experience.
...I also manage booking requests by hand because I find that the benefit outweighs the trouble. :)
Hope these tips help in some way or another!
Juan Diaz I've been an Airbnb host since 2011, and I disagree with some of the blanket statements you made about the company. Like others who have responded to your post thus far, I have had quite the opposite experience with both my guests (280 total reservations) and Airbnb as a company. Airbnb has gone to bat for me more than once. The income is good, and guests respect my property. I love everything about hosting on Airbnb.
I have had only one bad experience with Air BnB. The renter was supposed to be him, wife and baby. He was running a cable canvassing business out of our upscale home. They overloaded the septic, cigarette buds by the thousands, boxes (with puke covered left by the 50,s. They even disconnected our dining room light. We guess they were packing them in and kept hitting the light that was over the table.
Air BnB came through big time. They reimbursed all my expenses.
We do also have monthly renters and rent quite a bit to travel nurses. These are condos, so the numbers work. A more expensive single family home will probably not give you a good return. Travel nurses get a per diem and like to keep a little for themselves. So they are budget minded, but excellent tenants.
Every Airbnb hosts experience will vary, 4 years, limited trouble...
Some fabulous replies! I will say that we do still have two properties that are currently on Airbnb, and those two properties in particular we haven't had much of an issue with.
Compare that to the nightmare rental we had in Pill Hill (which was the source of probably 2/3 of the horror stories, yet identically furnished), and I think the consensus through this thread is that it's all about location. My takeaway is that you can't really rent Airbnb's in locations that are marginally unsafe, and long-term rentals are preferable there.
But, if you're in a 100% safe, upper/middle class area, short term rentals can be preferable and more lucrative.
--- I thought this posted days ago. I guess not
We have 2 rentals in Cambridge, MA, which is a city that is very similar to Oakland. We rent both apartments during the academic year by the semester or full year term. Then during the summer, we rent one on the "sublet" market for 3 months because it is in a condo association building and we don't want to be annoying to the other residents. We generally have to take a hit on the rent during the summer because there is a glut of summer sublets available in Cambridge. The other one is on the first floor of our 2 family house. So we rent it as a vacation rental on Airbnb and VRBO/HomeAway. We have had great experience with vacationers but I think it has helped that we are here to greet each guest as they arrive and it doesn't hurt that we live upstairs. We pay $70 to have the apartment thoroughly cleaned between each visitor and we add this fee to the reservation total. We also put out fresh flowers and a high end chocolate bar on each pillow.
I was very concerned originally that we'd have guest who weren't happy with our busy urban neighborhood. But perhaps because we emphasize we are in the midst of a hopping urban environment, we've had no complaints from any of our guests. We generally get 5 star reviews from our visitors.
@Juan Diaz BTW, We live in a gritty neighborhood with tons of character, definitely not an upper/middle class area. Some people relish this kind of urban environment. We do and our guests seem to love it, as well. Then again, we do pitch it such, that those who are drawn to bustling city environments are the ones who are likely to book our apartment. The apartment and the garden outside the door are delightful retreats. It really is an oasis in the midst of a bustling urban neighborhood.
@Carolyn Fuller I think you're right, being able to be there personally brings in a different sort of clientele. It also allows you to reassure them if they're feeling a little jumpy.