How to Make Money and Friends from Your Spare Room

Have you heard of the “sharing economy”? An alternative to the big business-consumer paradigm, it started as an Internet-enabled phenomenon for tech-savvy types who wanted to circumvent big business by turning consumers into providers. But New York Times columnist Thomas Friedman’s recent opinion piece about the site Airbnb put the sharing economy on the mainstream map (click here to read it).

By now, if you haven’t heard about how people are renting their spare rooms and apartments short-term through free websites like Airbnb.com or 9flats.com, you may be living in a cave. And by the way, you probably could rent a cave. The site 9flats.com has a shoe house available, and Airbnb has a gypsy caravan.

We wrote about how to use airbnb as a traveler (click here to read about that.) This week, we’ll explain the ins and outs of using the site to host visitors from around the world.

Why Rent Your Spare Room?

The appeal of hosting for money is mainly just that – money. As Friedman points out, “More than 50 percent of Airbnb hosts depend on it to pay their rent or mortgage today.” However, before the dollar signs start spinning in your eyes, understand that it may take a while to actually see a profit.

But there are other incentives besides cash, especially for seniors who suddenly find themselves with more space than they need or who feel that the silence of living alone isn’t so golden.

“I needed something to bring life back into this house,” says 70-something airbnb host Teresa Payne. Her active life offering free room and board to foreign students and visiting professors at her Lake Tahoe home came to a halt when her husband, Bob, became ill.  Teresa cared for Bob at home with help from a caregiver, for whom she turned a downstairs space into living quarters. After Bob died, Teresa decided to make over the space, turning it into a cozy two-bedroom suite and listing it on Airbnb.

Making Money Takes Money

Teresa’s makeover investment was costly: new carpets, additional furniture, wifi, and fresh bed linens and towels. Some of the pricey initial improvements increased the value of the house. Not everyone invests so much – as we said, you could rent out a cave; but the nicer the place, the more you can charge. Plus, Teresa understood that comfort and a cozy décor, along with a gourmet breakfast menu, were likely to bring good reviews, which would then attract more bookings.

Her money appears to have been well spent. Teresa’s Incline Village, Nevada guest quarters on Airbnb is booked continually. It’s too soon to tell if it’s profitable, but Teresa has thoroughly enjoyed the experience, and her desire for more life in the house has been fulfilled. “The young French Canadian couple I just hosted brought so much cheerfulness to the house,” she says.

To learn more about what’s involved in being an Airbnb host, click here.  To see how 9flats.com hosting works, click here.

How to Host Safely 

Security is a big stumbling block. When I texted my brother that I was hosting my first couchsurfing guests (click here to learn more about its free home stays), he responded: “Headline of the future: Couchsurfer Bludgeoned to Death in Bizarre Sex Den.”

Yes, bad things do happen to good people, but serious crime appears to be rare. There are, however, a scattering of Internet reports of theft. To minimize risk, Airbnb.com suggests taking these steps:

• Read reviews of the guest requesting a booking. Yes, guests are reviewed, along with hosts.
• Check references. These will appear on the profile page.
• Do you have any mutual friends? The profile will allow you to check social networking sites, like Facebook and LinkedIn, to see if you have friends in common. (Click here for details. The fine print in the “Terms” is well worth reading.)
• Is the guest “verified.” There is a procedure for becoming verified, which basically attests to the fact that the potential guest is who they say they are.
• And there’s always Google.

Airbnb does offer “Host Guarantee” (click here to learn more) for up to $1,000,000 for damages, but the insurance does not include theft. However, it’s perfectly acceptable to ask for a security deposit if you have valuables, such as fine art or antiques, that you don’t want to remove.

9Flats.com, offers a free insurance policy to cover roughly $750,000 in damages. The site extends the same verification procedures as Airbnb and also offers a detailed list of safety tips, including the excellent advice to ask for a copy of the guest’s passport.

Read the Reviews

One host who didn’t read the reviews was dismayed when her guest left the hot tub looking like an oil slick; it required professional cleaning. The same guest from hell also arrived noisily after midnight and drank the expensive Kona coffee in the pantry along with all the alcohol in the fridge.

Stuff happens, but if you rent only to those who have received positive reviews, you’re lowering your risk.  And the bottom line is always: Trust your instincts. Declining a request to stay in your home will not count against you.

A Note on Legality 

This year, New York City made airbnb news by using a 2010 law to fine a host $2400 for renting his room to a visitor for 3 days. The Hotel Law makes it illegal to rent privately for less than 30 days if you are not actually hosting – ie: if you have left town and rented out your entire apartment or house. But if you’re home and just renting a room – which means you’re also reaping the benefits of interesting company – you’re in the clear.

Airbnb is reportedly working with NYC officials to try and work out a Hotel Law exemption for absent short-term renters.

Wherever you live, before you rent on airbnb it’s worth finding out what your state or municipal law says about it.

Happy hosting! Let us know in the comments below if you plan to try it.