Airbnb is an online community where you can list your home or apartment for rent so that people looking for accommodations in your area can have a place to stay. You can rent out your living space when you are traveling or you can rent out an unused space in your home. What started out as a small venture has now mutated into book service that is available in 192 countries. Everyone from couch surfers to business travelers are seeking unique lodging experiences by renting spaces that are listed on Airbnb. It is a company that is now worth $25.5 billion and growing.
Exactly What is Airbnb?
According to Airbnb's own claims, they provided a trusted community for people to list their rentable spaces and also book interesting accommodations around the world. They are more or less the hosts for the property listings which can range from single rooms and entire homes to houseboats and yachts. If there is a space to rent, you can count on it being listed.
It's completely free to create a listing and it is the host, or person listing the space, who decides how much it costs per night for someone to stay in their room or other space.
Travelers then search the database for properties that fit their needs and budgets. They can look at pictures and descriptions posted by the hosts. They can search by room type, price, room size, amenities, type of property, the host's language, and can enter specific keywords into the search.
How Does Airbnb Work?
By this point, you know that a person can list their space for rent and the travelers can conduct a rather advanced search. When a traveler finds a property they want to rent, they can contact the host using an online form that is associated with the listing. They can also make a reservation request by clicking the “Book It” button and then entering payment details through the secure payment interface. They accept major credit cards, Google Wallet, and PayPal. The traveler isn't charged unless the host accepts and confirms the reservation.
Because Airbnb is the vehicle in which these reservations are made, the traveler pays 6 to 12% more than the reservation in order to cover Airbnb's role in the transaction. They provide customer support to hosts and travelers.
When a traveler arrives at the destination, Airbnb hangs on to the payment for 24 hours after the traveler checks in. Once 24 hours has passed, the money is released to the host. Hosts are paid through direct deposit, PayPal, international wire or bank transfer, paper checks in the U.S. and Canada, Payoneer, and Western Union. Airbnb keeps 3% of the transaction to cover the transaction processing cost.
There may also be a fee when booking in a currency that is different from the currency the host has specified in their listing.
The Ins and Outs
Now it's time for the ins and outs of Airbnb.
Both travelers and hosts can benefit from this service. Hosts make money because travelers spend it in exchange for being able to stay in their space. How much money a host is going to make will depend on location, frequency in which they'll rent their space, and even the type of space they have. Nonetheless, it is still a way to pull in some extra cash once in awhile. Travelers get to stay for less than the cost of a hotel room in most cases. The personalized service travelers receive also appeal to them.
Airbnb also has great customer service for both hosts and travelers. That way, if you have a question or a concern, it is immediately addressed.
While there are many benefits for both parties in a transaction, there have been concerns since Airbnb really took off. The first is the risk for the host. If you want to rent out your living space or part of it, there is the risk for property damage. Fortunately, Airbnb offers the “Host Guarantee Program” that provides hosts with up to $1 million in damages to covered property. They state that the incidence of property damage is rare and so far that has proven to be true.
Hosts should also know state and local laws in regards to renting property. For instance, New York says that it is illegal to rent a property for fewer than 30 days if you aren't living there. In other words, New Yorkers are limited in renting rooms for fewer than 30 days when they aren't there.
You should also keep in mind that, as a host, you may be responsible for rental income taxes. Airbnb will collect your taxpayer information so they can send you 1099 and 1042 forms to file with your income tax return.
The Big Conclusion
All in all, Airbnb can be a good way to make extra money if you don't mind someone you don't know staying in your home with or without you there. While there are risks, you are mostly catering to thrifty tourists or business travelers looking to save money. It may be something you want to try to see how it works for you.