Should I Airbnb my house?

Question

Hello BP,

Today I would like to strike up the Airbnb conversation. I live in Davenport, IA and just recently purchased my first property (My primary SFR). It's 3 bedrooms (I'm calling it 2 and and an office). The upstairs attic portion of my ranch house is finished, and my girlfriend and I spend probably 75% of our time at home upstairs. I bought my house with low money down, and I have a legal obligation to live there for another 9 months. Anyone in the area ever done this before? Any regulations I should know about? I know if you rent for more than 2 weeks out of the month, you can have the IRS trying to collect taxes from you. What's your input on this? Any Airbnb horror stories? The stairway to our room is in my office on the first floor across from our guest room. I would probably end up putting a lock on my office to keep our personal belongings and safety in order. I live in an old but updated home in a desirable area. The only potential flaw I could think of is distant parking and the fact we have a dog and cat in the house. Looking forward to hearing from everyone on this!

Meghan McCallum · Answer

@Alex Bock So, my history w AirBnB goes back to one of the first City's regulating AirBnB in their policies. Look up Evanston IL and I'm sure my name and picture are everywhere still talking about all the "transients" in and out of my place. (It was a duplex so we weren't the only ones living there...doubt anyone knew that...and God forbid we had friends over for our engagement party). Fox news showed up at my doorstep and I had to go to court. But, I don't believe there is much out here (QC) regulating its usage. I did reach out to the "officals" in Davenport already on your behalf to get some finite answers for you...in writing...time and date stamped...

I happen to be working on a public/private partnership with the city for investors that we will hopefully introduce in 6 mos.

James Carlson · Answer

Hi @Alex Bock . If you're up for a little bit of work, I say go for it. I am Airbnb's biggest fan, and if you're in the right area, it can help you pay some or all of your mortgage. A couple items to consider:

Yes, you definitely want to check your local laws. These are never easy to find. Google will not help you much. I'd go direct to the source. Call the planning department or zoning department at city hall and ask them what their regulations are on Airbnb or short-term rentals (STRs) less than 30 days. Even if Davenport does have a law or is considering a law, you could very well still be okay. Most municipalities passing laws are allowing STRs only in your primary residence, so you should be fine.

Also, you definitely want to check out short-term rental insurance. If you're relying on your homeowners policy, and something happens to a guest during a short-term stay, your carrier WILL deny the claim if they discover the purpose of that person's stay. Check out CBIZ or Slice.co for insurance.

About the dog or cat, don't worry too much about them. There are very few issues that are deal breakers for everyone. (Hairs on the bathroom floor are one, for instance.) The biggest thing I tell my Airbnb class in Denver is: Just be up front in your listing about what your space includes and does not include. Do you have a dog? Fine. A lot of people are dog people and will either be neutral about or excited about your dog. Do you only allow access to that downstairs space and NOT the kitchen? That's fine. Just be sure to say that in the listing.

Good luck with everything!

Alex Bock · Answer

Thanks @Meghan McCallum! That had to be a good time.. I feel like the only cities that care are in the pockets of hotels. I've been talking with @Rose Davis lately and she speaks very highly of you. I hope to meet up with both of you soon.

Alex Bock · Answer

Thanks @Elizabeth Wilson. We live at the house full time, I would basically just leave the 1 guest room and main level open for access to our guests. My dog is friendly and well-manured, and worst case scenario could be kept upstairs if a guest didn't want her or the cat around. The cat is.. Well, he's a cat. :)

Has anyone ever caught any grief from their insurance company about this?

Meghan McCallum · Answer

@James CarlsonYou are so right. The neighbors to my property (one specific crazy person next door) was the one leading the charge (squeaky wheels...am I right?!) I would talk to your neighbors ahead of time, let them know how excited you are to have such "top notch, quality individuals" come stay with you. Explain your selection process (have a process), talk about how you mandate pictures of DL's and the background checks you perform or how you only rent to people who have local family, affiliations, or a good reason to be there. Tell them about how much you value staying in a "neighborhood" when you AirBnB. Then let them know you'd be happy to help them set up their home to do so too if they have any interest. Its unlikely they will want to. It just removes the "shroud of secrecy" or any jealousy they may have.

Also, I am happy to speak more about our pub/priv part. a little further along the line. It so new and in its infancy to say too much, but I have @Rose Davis working with me on it and between the two of us...if it can get done, it will. Once we have some success here I would be happy to speak with others about how to go about doing the same in your area with a proven strategy. The bigger the city, the harder it is to garner their time. But, I believe once we have a proven and systematized product...every city should create one.

James I was just in Denver for Joe Fairless's RE Investing Conference. If he does it again next year in Denver, get it on your calendar. Also, I'd love to come back to vacay a little...I had no time to see much so, if I do we should sit down for a beer and I'll tell you all our trials an tribulations. You have a really great group of investors out there. Have you gone to @Dan Mackin's meetups that he organizes?

Ryne V. · Answer

@Alex Bock  I am an avid Airbnb user and now airbnb property manager in Dallas. I'm not sure about your area or how the demand is in your area but I suggest being as upfront as possible in your listing. Mention the parking situation and pets and believe me you won't have any complaints about it. Airbnb users are very understanding in that every home has its pros and cons and it's usually overlooked. What they don't like is surpirises. If something is not mentioned in your listing they tend to assume its provide until they show up and realize it's not. That's when negative feedback happens in reviews. Best of luck!!

James Carlson · Answer

@Meghan McCallum. Great info! Thanks for sharing. Your partnership has me intrigued. Can you tell us any more about what you're planning?

And @Alex Bock. A lot of people think it's the hotels that are driving these law changes. In certain areas, this may be true. (I know New York City's hotels, for instance, have made no bones about their dislike of Airbnb.) However, at least here in Denver, and it sounds like in Evanston where Meghan was operating an STR, it's more often the neighbors and neighborhood associations that are the more strident opponents.

Here in Denver, hotels have had record revenues each year for a couple years, so their incentive to push out possible competitors is not as strong. At all the townhall meetings I attended, it was the neighbors who literally screamed about "the transients." (Funny, Meghan, how opponents use similar rhetoric across the country.) And neighborhood associations have a lot of sway with local city councils.

Valentina Naumenko · Answer

Hi @Alex Bock

I have been working with AirBnb since 2012. If you need any help, please let me know

Elizabeth Wilson · Answer

@Alex Bock - you wanting to rent out the entire house or just rooms?  We've done it with our home for Thanksgiving a couple of years ago and it was a great experience and paid for our vacation.  We do have a large closet that we deadbolted for things we didn't want out for guests.  I use Airbnb all the time and think it is a great way for folks to make money and provide a service.   You may have trouble getting folks to stay if you have a dog inside - especially if you aren't there.  But you never know.  I'd also talk with your homeowners insurance too.

Good luck!

James Carlson · Answer

@Meghan McCallum. I'd love to grab a beer if you're out here again. This city is the best. And getting better every day. (Unless you're a moderate income buyer, then ... well, start looking for a co-signer or look for house-hacking opportunities.)

Yeah, I go to the meetups. I know @Dan Mackin from those meetings and through a broker he used to work with and that I currently work with. A month or so ago, we both showed up at the same quadplex open house along with several other BPers. It was like our own BP meetup.

Keep us updated on this project of yours. I'm interested.

Should I Airbnb my house?

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