Buying an entire home to use as a strictly-rental investment is not the only way to scratch your itch for hospitality. I mentioned rental arbitrage in an earlier post and it can be an option for those trying to get into the game without owning the home. But, what if you own your primary residence and find yourself with a bedroom or two sitting vacant? Maybe you had a long-term tenant move out or you bought the house in anticipation of growing your family down the road. Whatever the reason, an empty bedroom or basement can easily be converted into a cozy home for short-term rental guests. When done right, you may be surprised at how well your business could do with a room-within-a-home strategy. On top of the booking payouts you’ll accumulate, you’ll also be pleased with the tax benefits associated with operating the business out of a portion of the home, but I’ll save that topic for another post. In this one I’ll talk about the specifics of renting out part of your home and how to make the most of it.
Potential guests looking for a short-term stay need a bed, a bathroom, and an area to make meals. Those are pretty much the only necessities for providing accommodations on sites like Airbnb. Many are even fine with sharing these things (well, maybe not the bedroom) with other people, whether it’s the owner of the home or another short-term guest visiting. This, of course, means that spare bedroom or basement in your home could be put to good use with a little bit of set up.
You could definitely go as far as installing a micro kitchen (I like Summit Appliances for small-size kitchen appliances) and walling off sections of the house to allow for a private bathroom and private entrance. These are things that would all add to your space’s desirability and allow you to demand a higher nightly rate. However, you can certainly do without the private amenities. As long as you disclose the living situation in your listing, explaining what’s shared and what’s not with your potential guests, you can set up your short-term rental in any arrangement that makes sense to you, your home, and your budget.
Things to Keep in Mind
First, shared living space means shared filth. This goes for you and for your guests. Cleanliness of a space is the first thing a guest will notice when they step inside and it’s arguably the most important thing to your business. If you’re operating your STR with the intention of having guests share areas like the kitchen and a bathroom, you need to be extra sure that anyone else sharing the areas (yourself, your spouse, kids, etc.), are extra diligent with their cleanups. This could become a problem if the residents of the home begin to feel like they have to walk on eggshells to preserve your business’s reputation, which they may or may not be benefitting from. Be transparent with your housemates to level-set expectations and avoid arguments (especially in front of guests!). This concern goes the other way too…be prepared to share a space with new people, and new levels of messiness, regularly.
Second, remember you’ll be sharing your home with strangers. As opposed to a dedicated rental property, this model will have you sharing walls with new people very often (that’s the goal, right?). Your guests will be in your home even when you aren’t. This means that your valuables, collectables, and family heirlooms should either be hidden away or accounted for after each stay. This way, if anything does come up missing, you’ll know the primary suspect right away.
Third, when estimating your rental income, be sure to compare apples-to-apples. A 1-bedroom unit in your neighborhood with a private entrance, kitchen, and bathroom, will earn more than a unit sharing each of those amenities. You can likely imagine all of the variations of private-and-shared features a rental room could have. So, if you’re looking for a solid idea of your yearly takeaway, be sure to find a unit as similar to yours as possible for comparison.
Fourth, just because you’re only renting out part of your home, it doesn’t mean you should skip out on professional photos. Your listing will be competing with lots of others and, as with any type of listing, better photos will draw in potential guests as the first thing they notice while browsing Airbnb. Be sure to capture all areas that will be available to the guest.
Lastly, unlike Airbnb, VRBO does not allow hosts to rent out a room within their home. They only allow private, full-home stays.
Short-term rental hosting, and hospitality itself, is not just for individuals who can afford second homes dedicated to renting. Your basement, spare bedroom, and even garage can be utilized to provide guests a fantastic short stay. Just remember, to your guests, that garage is not a garage. It’s home, at least for their short-stay.