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5 reasons to look for a new home that’s Airbnb-friendly

Making money on Airbnb

Between putting together your dealbreaker list and your wish list, bookmarking homes on Zillow, contacting a real estate agent, and getting prequalified for a loan, it’s safe to say that you have enough to keep you busy until closing day. And yet, with everything on your plate, there’s a big chance that you’ve forgotten to ask your realtor about one important feature that could turn your home into a quick moneymaker. Extra space that would allow you to list your property on Airbnb. Making money on Airbnb is possible, if you know what to look for before you buy.

Start searching for houses (and check how much you prequalify for) with our free and convenient LoanFly app.

How the Airbnb craze is changing the buyer’s market

If you’ve got any kind of connection to social media, then we guarantee you’ve heard of Airbnb before. This home-sharing-for-profit site started in San Francisco in 2008. It’s seen an unanticipated boom in the past few years as traditional travel options have gotten more expensive. On the website, you’ll normally find cute little apartments, townhomes, and backyard cottages available around the world to rent for about 100 bucks a night. (Of course, the Airbnb options swing widely based on the filters you select. For as little as $30 for a shared room, into the thousands for a luxury home.)

It’s unsurprising that Airbnb was recently valued at $30 billion. Some Superhosts (those who have earned a badge from their stellar reputation on Airbnb) have made as much as half a million a year. And even the little guys, i.e., the regular folks who are listing their property on the weekends they are out of town, can rake in a few hundred dollars of residual income per month.

If you’re wondering how much home you can afford, we can help you find out here.

Airbnb features could affect the home loan you pick

So, what does this have to do with the new home you have your eye on? In a word, everything, if you hope to offset the cost of your mortgage by renting out an extra room or a backyard cottage every once in a while.

Most realtors today are savvy in the ways of Airbnb and can guide you through the specific regulations in your local area. But this is an option to think about as soon as you’re ready to meet with a mortgage lender. Meaning, if you foresee listing a portion of your property on Airbnb, you might consider skewing slightly higher in the loan amount you’re prequalified for. Taking out a larger loan in the bracket you’ve been approved for could allow you to purchase a home with enough space to convert to or rent on Airbnb.

Interested in a mortgage refinance with the potential for Airbnb renovation? Get your questions answered here.

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Making money on Airbnb: Why you should consider Airbnb before you buy

We’ve already touched on the potential for monthly profit that could make the average mortgage a whole lot more affordable. (Estimated between $950 to $1073 for most first-time home buyers from the ages of 25 to 44.)

With that in mind, here are several big reasons to consider buying a home with Airbnb potential:

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1. You’ll make some money.

Making money on Airbnb
ohcaroll/Instagram

This one’s easy and certainly the most obvious. Listing a portion of your property — like a refinished basement, spare room, private floor, or detached garage — on Airbnb could earn you hundreds of dollars a year on the low end. Up to $31,000 a year in a high-demand city like San Diego.

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2. You’ll be motivated to upkeep your property.

Making money on Airbnb
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If ever there was a reason to keep your home updated, well-designed, and clean, it’s this. Good Airbnb ratings come from a good-to-great guest experience. Cleanliness is one of the main points in the Airbnb ratings system. New features and fresh decor are the icing on the cake.

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3. You can finally do those home renovations.

Making money on Airbnb
airbnb.nine/Instagram

Perhaps you’re in the process of purchasing a new home that has a possible Airbnb space. This is the time to do that project you’ve been saving for a rainy day — like building a mother-in-law suite or a guest cottage — that will not only improve your property value but also let you earn some Airbnb income on the side.

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4. You can dabble as a landlord.

Making money on Airbnb
livesphotography/Instagram

If you’ve ever thought of purchasing a second home or buying a local rental property, Airbnb is the perfect place to cut your teeth. As a host, you’ll get to practice in your interactions with your guests. You can determine if the wear and tear, clean up, and communication are worth the money. You’ll also get to feel out the local rental/hospitality market. Using Airbnb’s travel trends tool, hosts get to set their own rate.

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5. You’ll get protection.

Making money on Airbnb
portlandtinyhouse/Instagram

We’ve saved this biggie for last. Of course, there’s a lot of back and forth that goes into using your home as a rental or guest property on a site like Airbnb. But for such a big company that’s quickly turning into a cash machine, Airbnb’s got its bases covered. Hosts get a $1 million Host Guarantee to protect your home and assets, along with Host Protection Insurance to cover the liability on your property.

A word of warning: 4 Airbnb pitfalls to watch out for

As fun (and as lucrative) as this endeavor sounds, renting out property isn’t all roses. Any landlord or experienced host would be inclined to agree. To have a successful Airbnb experience, you need to know what you’re getting into and what to watch out for.

Here are four big Airbnb warnings that most hosts learn the hard way:

  1. Check with your condo association first. Many have deed restrictions or policies about renting out a property to short-term tenants – shooting your best Airbnb intentions in the foot. Airbnb reminds hosts that city regulations may also apply.
  2. Check with your lender. A savvy mortgage lender (like us) can help make sure you don’t have any restrictions on your mortgage note that may prevent you from participating as a temporary renter.
  3. Check with your insurance company. You check in with your insurance provider before renting a car, and you’ll also need to check in before renting out your property. Some homeowner’s insurance policies have short-term rental coverage built in. But if you’re committed to Airbnb for the long haul, you may have to purchase long-term coverage used for hotels and bed and breakfasts, the Insurance Information Institute says.
  4. Check with your bank account. This point may be one of biggest. We always urge our buyers not to buy more of a home than you can handle with hopes that it could be rented out in the future. This has the makings of a financial disaster. Purchase a house you and your family can afford and consider Airbnb as an option.

Ready to start shopping for that Airbnb-friendly house? Our handy (and free) LoanFly app helps make it easy. Find out how much house you prequalify for and start searching for new homes in your neighborhood of choice, with just a few clicks. You can also contact a loan officer directly for more information.

For educational purposes only. Please contact your qualified professional for specific guidance.

Sources are deemed reliable but not guaranteed.