Have you considered using Airbnb for trip accommodations

or becoming an Airbnb host?

 

Perhaps you should look carefully at some of the facts concerning use of this service or listing your home while you are traveling. Helpful information and advice can be found in the online articles of Investopedia and Forbes. I credit them with much of the information in this article. For additional information and copies of related articles, see links below.

 

What is Airbnb?

According to Investopedia, “Airbnb is an online community marketplace that connects people looking to rent their homes with people who are looking for accommodations. A diminution of "air mattress B&B,” Airbnb has grown from appealing to both couch-surfing budget-conscious tourists and to business travelers seeking a more memorable experience that allows for a different level of collaboration amongst colleagues….”

 

How large is it?

Airbnb has over 1,500,000 listings in 34,000 cities and 190 countries. New York City alone has more than 16,000 listings, in spite of the fact that many or perhaps most DO NOT meet the city regulations. (See below)

 

How it works.

Travelers can look through databases of available locations and reviews any time, but must input their personal Airbnb profile information to book reservations. Contact information for hosts is found on online forms attached to each listing page, and reservations are requested by clicking the "Book It" button and entering payment details. Investopedia explains that Travelers pay a guest service fee of 6-12% on top of the reservation to cover Airbnb services

Once the traveler pays and the host acknowledges the reservation, Airbnb holds the payment until 24 hours after check-in before releasing the funds to the host. Available payout methods and currencies differ by country, but in the U.S. and Canada, hosts are paid via automated clearing house (ACH)/Direct Deposit and several other methods. Airbnb takes a 3% service fee from the host for each reservation to cover the cost of processing the transaction. This fee is in addition to the 6-12% paid for guest service fees. For more information click here to see the Investopedia article.

 

 

Caveats

 

Risks to Hosts:

 

• INJURIES OR DAMAGES TO TRAVELERS

One of the greatest risks is that guests will sue you because they’re injured, they become ill or their property is damaged in your home. The best way to protect yourself is to make sure you’re properly insured. Airbnb offers a liability coverage policy of up to $1 million. But even if the policy covers you as Airbnb says, you’d probably be better off buying your own insurance due to numerous disclaimers and other information that make you responsible for many aspects of renting out your home. Airbnb's fine print is also not an easy read

 

•   A NEIGHBOR’S PROPERTY IS DAMAGED

You also can be liable if a guest damages a neighbor’s property, especially if your home is in a multi-unit building. Guests causing a flood or starting a fire, could result in injuries to your neighbors or cause substantial property damage. In those circumstances, the $1 million limit of Airbnb’s liability coverage may be inadequate. So, obtaining your own insurance with an “Umbrella Policy” is the best option.

 

If you rent out your home on a single occasion, your homeowners or renter’s insurance may cover you, according to the Insurance Information Institute. But even then you may be required to notify your insurer in advance. You also may have to add an endorsement, or add-on, to your current policy, or obtain commercial insurance that covers you as a business, especially if you plan to rent your home repeatedly. It’s important to contact your insurance agent before renting, to find out exactly what your insurance covers, what the exclusions are and what you must do to make sure you’re fully protected. Airbnb claims that their protection and insurance is now primary to your own policy, but there are many exclusions, limitations and exceptions, not to mention that their protections appear to be less than replacement cost which is carried by most homeowners and renters.

 

Some states, cities and towns prohibit or regulate home rentals, either directly through their municipal code or through zoning rules. Unless you’re present and the guest has access to the entire dwelling, you could be in violation if you rent out a room in your New York City house or apartment. (Despite this, a recent report by the New York State attorney General estimated that Airbnb rentals in New York City, most of them illegal, would generate more than $282 million for Airbnb and its hosts in 2014.) If you break the law, you could face thousands of dollars in fines.

 

 

•  YOU’VE BROKEN THE LAW

If you enter into a contract that’s deemed illegal because it violates a local law, you may have trouble enforcing the Airbnb contract. The Airbnb fine print says that it’s the host’s responsibility to comply with any local law. So cann’t assume that renting your home in your area is legal just because Airbnb permits you to use its service. If you’re tempted to proceed anyway, believing that the authorities aren’t likely to find out, consider that your neighbors, seeing strangers going in and out of your home, may be all too willing to file a complaint, especially if there are noisy parties or other annoying behavior.

 

 

• YOU VIOLATED AGREEMENTS

Along with local laws, renting your home could violate your lease or housing authority or association rules, whether you’re a renter or a condo or coop owner. So check the rules before proceeding so you don’t end up with an eviction notice or other penalty.

 

• YOU OWE TAXES

Some jurisdictions charge occupancy taxes on home rentals. Massachusetts, for example, imposes a room occupancy excise tax of 5.7% on rooms rented for $15 or more each day. And the state’s cities and towns can add another 6% (6.5% in Boston). Airbnb collects the tax for you in some cases; in other instances, you’ll need to collect it yourself.

You will also owe federal and state income tax on the amount you earn from your rental. Airbnb requires hosts to submit tax information and at year’s end, you can expect to get a federal tax form 1099, reporting the amount you received to the government. Check with your tax advisor about your obligation to report the extra income on your tax return or about how it will affect your tax situation.

 

The above summarizes the Investopedia article, "5 things Airbnb host can be liable for".

 

 

Risks to Guests:

 

While Airbnb has no protections similar to traveler’s insurance, it has certain provisions in place to try to ensure guest safety and satisfaction. As the quality of hosts is based on their reviews, guests are encouraged to only book with highly-recommended providers. Once the lodging has been booked, Airbnb offers a 24/7 customer service line to resolve any disputes and will provide refunds if one of the following three categories are met: (1) the host cancels the reservation shortly before check-in or fails to provide access to the listing booked, (2) the listing booked is misrepresented or lacks promised amenities or items or (3) the listing is not generally clean or as described. The listing lacks an amenity promised in the listing’s description or photos.

 

Other risks include:

• The room type incorrect.

• The number of bedrooms or bathrooms is wrong.

• The listing location is not what was booked.

• Inadequate clean bedding or towels.

• Condition is unsanitary, unsafe or hazardous.

• Animals are in, or at the property, undisclosed.

• You become injured on the property

• Your personal property is damaged while in the rental unit

• Locks don’t work or the windows are not secure

• Neighbors object to your being in the property

• You or your children accidentally cause damage to the property.

• There is a failure to a major appliance or property component.

 

For more suggestions see Ten Tips for Renting a Vacation Home on Airbnb