How to Pay for Your Vacation Home’s Mortgage with Airbnb

How to Pay for Your Vacation Home’s Mortgage with Airbnb

Many people who own second homes or vacation properties pay very little of the mortgage on their own. Instead, they use home-sharing services like Airbnb to rent out their home when they’re not around, and they use the rental income to pay off their mortgage. Depending on where your home is located and how often you rent out the property, you may even find that there’s money left over. In addition, you’re still able to use the home when you want. While this may sound too good to be true, it’s entirely possible, and it’s likely easier than you think. Here are a few tips and tricks that’ll help you begin to make money on Airbnb from your vacation property.

Make sure you don’t need permission

Before you think about listing your home as an Airbnb, research the laws pertaining to your specific city and state. In some regions, you must have a license before you can rent your home out for short-term guests. As well, some HOAs have restrictions or rules about short-term rentals of Santa Clara real estate. It likely won’t be an issue, but it’s an important box to check before moving forward. If you produce an unauthorized listing, you may be subject to fines, and your future access to the Airbnb platform could be limited.

Understand the tax ramifications

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Before you dive headfirst into the home-sharing market, it’s important to understand how this will affect your taxes. Tax laws require you to report rental income if you rent out the property for more than fourteen days during any given year. If you do this, you can also write off certain housing expenses on a prorated basis. This means you can claim deductions for your utilities, home upkeep, and repairs. If you rent your home for less than fourteen days, you don’t have to report the income, but you also can’t write off any home expenses besides your mortgage interest and your property taxes. Regardless of how many nights you rent out the property, you’ll be capped at how much property taxes and mortgage interest you can write off each year between all of the properties that you own.

Determine a nightly price

As you think about where you might price your home on a nightly basis, it’s helpful to understand what you’re up against. Take a look at different vacation rental properties to see what kind of rate they’re charging per night. Remember that demand increases and decreases based on the season and the day of the week. Consider what demographic your property might attract. Are families on vacation more likely to book a stay in your home, or could you attract military families in transit or professionals in town for a job interview? Keep in mind that the list price is more than what you’ll earn. Airbnb typically keeps 3% to keep the platform going, and the percentage may be higher if you have a strict cancellation policy.

Think about what travelers want

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This will affect how you set up your property and how you market your home. You’ll learn a lot from reading through other listings. Pay attention to what rooms they include pictures of and how they take these pictures. Read about the amenities they include and the services they offer. If most homes in the area have washers and dryers that guests can use and your property doesn’t, you’ll be at a disadvantage. Also, if you’re only renting out a section of your home, or a guest house on your property, make sure guests can utilize their own private entry.

Hire a property manager

Having one home to maintain is already plenty of work. Having multiple homes in different locations can feel overwhelming, especially when you frequently need to have your home ready for paying guests. If you’re serious about making your property frequently available to travelers on Airbnb, consider hiring a property manager who can help with repairs and maintenance while you’re away. The property manager can make sure the home is always ready for guests, and they can ensure the home’s ready for changing seasons or inclement weather. You can write this expense off on your taxes as well.

Some hosts will also hire an assistant to help with communicating with guests. You’ll probably have some information to share before your guests arrive about property rules and how they’ll access the home. Many Airbnbs have keyless entry that prohibits you from having to supply each guest with their own key. The assistant can remain on call whenever you have someone staying at the property to handle urgent maintenance requests or answer any questions that come up.

Build your ratings

After you have someone stay at your property, they’ll have a chance to rate your home. They can also provide feedback on what kind of host you were. Most Airbnb guests prefer to stay in homes where the host responds quickly to questions and issues. This is a great way to keep your ratings high. In addition, your guests will rate you based on the cleanliness of the property, the efficiency of check-in, and the overall experience and value of their stay. As you receive more positive ratings, your home will have a better chance of rising to the top of search rankings as guests look for homes in a certain area. Many hosts will also charge a higher price after they accumulate several positive ratings.

Martin Quintana is an expert when it comes to Santa Clara real estate. He provides friendly top-notch service to each of his clients, and he uses his strong negotiation skills to get the best deal in every transaction. If you’re looking to buy or sell property in the area, make sure Martin is one of your first calls.

*Header photo courtesy of Shutterstock

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