Airbnb hosts sometimes make mistakes that hit them where it hurts the most: their wallets. If you have listings on Airbnb, you should read about these three common money mistakes and learn how to avoid them.
Mistake #1. Not Preparing for Emergency Expenses
You never know when something will go wrong with your rental. You should always be prepared to pay for an urgent repair.
Set up an emergency fund to help you cover these types of expenses. With a substantial emergency fund, you can withdraw the necessary savings to manage the problem right away.
Without an emergency fund, you may need to look to alternative methods for covering an urgent repair in a short amount of time, like a credit card or a personal loan. If you’re considering a personal loan as a solution, you should look for options that are specifically available to your state of residence. So, if you live in Detroit, you’d want to search for personal loans in Michigan to get financial help. With an approved personal cash loan, you could use borrowed funds to pay for the emergency expense and then follow a straightforward billing cycle afterward.
What else can you do?
Another step you should take to protect yourself from emergency expenses is to get insured. Airbnb offers coverage for up to $1 million USD in host damage protection through their AirCover for Hosts plan.
Mistake #2. Setting the Wrong Prices
Are you not getting many bookings? You could be setting your prices way too high. Or are you overbooked and stretching your budget thin? Then, your prices might be too low to make a good profit.
Setting the price for rental bookings is a delicate art. Going too high or too low can lead to consequences that you’ll want to avoid.
What can you do to set the right prices?
Check to see what similar rentals are posting for their booking prices. Choose rentals that are clearly showing signs of success. You don’t have to match their prices exactly, but you should keep your rates close to those numbers.
Your prices should vary based on the day of the week and the season — just like hotels. Your weekday prices should be lower than weekend prices. Your prices should be higher during peak travel seasons (for instance, if you live in a beach town, the peak season would be summer).
Anytime your local area sees a spike in tourism, you should consider setting higher booking prices. So, do your research on the following events taking place in your area:
- Business Conferences
- Sports Events
Mistake #3. Hosting Full-Time
Many entrepreneurs have made hosting Airbnb rentals their full-time jobs.While this is entirely possible for you to do, it also comes with a major difficulty. If you put all your eggs in this basket, you risk major financial instability when you don’t rent out your space as much as you’d like.
The Covid-19 pandemic presented this flawed plan. Throughout the pandemic, hosts contended with mass rental cancellations due to quarantines, travel restrictions, financial issues and general fears over contracting Covid-19.
Hosts that used Airbnb as a side hustle were upset about a loss in extra funds, while hosts that depended on their rentals as their main mode of income were financially devasted. You don’t want to put yourself in such a vulnerable spot if you can help it.
Don’t make these major mistakes when you’re hosting. Protect your finances.