Investors are beginning to pay more attention to the fees and costs of running an Airbnb. Although putting your home on online travel agencies like Airbnb yield profit, it also comes with some costs. This begs the question: Is it expensive to take care of an Airbnb? Well, factoring in management fees, maintenance, and Airbnb service fees, Airbnb does take a good bite out of your money. Whether or not you feel the impact depends on how much you make from your vacation rentals. Your rental income might just be enough to make up for your expenses and so much more. Here are some expenses that might be incurred while taking care of an Airbnb home.
Airbnb service fees are structured in two different ways: Split fee and host-only fee.
- Split-fee: This type requires deduction of service fees from hosts and guests. Upon payout, the host pays their service fee of 3% while clients are charged with the fee when paying for the Airbnb home.
- Host-only fee: In this type, the host is charged with all the service fees while the guest pays no service fee. The rate for host-only is about 15%. This method is only required for hotels, and some hosts primarily based upon the location of your properties.
As an Airbnb host, you should be prepared for random repairs and periodic maintenance. Because a good number of people are coming in and out of your home, equipment around the house is likely to get used more, and as a result, worn out. To give guests the satisfaction they deserve, you will want to make sure that things are in great working condition. The Air conditioning and heating systems need to work properly as well as kitchen equipment, television, toilets, among other household amenities. Aside from routine maintenance, set aside some money in case something in the house becomes faulty.
While some hosts carry the burden of advertising, maintenance, and cleaning, others hire property management services to handle those tasks for them. This is particularly the case when you have more than 5 properties. If you’re a property manager or a homeowner that is managing the properties yourselves, Lodgable is a very cost-efficient management service that does an exceptional job. It utilizes a reverse API system that allows property managers to upload their properties from Airbnb to directly Lodgable. It’s also an all-in-one software that has everything a property manager needs in one place, reducing cost and an increase of revenue.
Since the law considers rental homes as a business, rental income will have to be filed on tax returns, and taxes should be paid adequately. But there are conditions to be met before your Airbnb home can be taxed. If your home is rented out for more than 14 days in a year, then you would be required to pay tax. If it is rented for less, the tax won’t be required but you would need to back up your claims to the IRS. Tax from rental income can also be deductible. It is a good idea to save around 30% of your revenue for taxes at the end of the year.
Airbnb homes can cost a lot to take care of but with enough income from your rental home and the correct maintenance and management, you should be able to handle the costs and enjoy the profits. Ensure to put all possible fees and expenses into consideration and keep in mind the possibilities of random repairs so you won’t be caught off guard.