By Dan Baker
As you can imagine, everywhere Angie and I go, we find ourselves being asked about the experience of running Airbnbs and short-term rentals. Whether people are positive or negative on the idea, everyone wants to know. Some of this is probably just by virtue of the fact that it is still new and everyone views it with some curiosity. What always fascinated me, though, is the disparity between what people THINK the reality of running an Airbnb must be and what those realities actually are.
One thing that I always reiterate is that short-term rental is not like traditional real estate investment. In fact, you will quickly realize that you are much less of a landlord than you are an inn keeper! I’ve never worked in the hotel industry, but I can imagine we face many of the same issues and challenges. With this shift in mindset comes a different set of issues we have to look forward to. I’ve compiled a list of the common things people seem to be scared of that aren’t an issue, followed by a list of the things that do keep an Airbnb host up at night.
The Fears that Aren’t:
“Guests are going to trash your house and destroy your things!”: No, they really aren’t. This is a holdover from long-term real estate where tenants have a legal right to your property and do consider it their home. When people are at home (especially when they don’t own the place), they will act in ways they never would in someone else’s property. Second, there is immediate recourse if they were to do damage. Airbnb, just like Uber, Lyft, eBay, and every other app is a “review-based ecosystem” wherein, a guest who receives a poor review will almost immediately be barred from any other listings. The efficient part of this is that Airbnb is not the one doing the barring; other hosts will refuse to rent to them. Right now, I know that all of my baby-boomers are rolling their eyes and feeling their blood pressure go up at the complete insanity I just spouted, but you guys have to learn to trust this. It works. The type of individuals who log onto Airbnb want to be a part of the sharing economy and generally have no problem following the rules to get a good review. Well written house rules and doing some basic filtering before accepting reservations will save you from 99.999% of bad guests. Your house and belongings are safe.
“What if the house doesn’t book???”: This fear is entirely in your own hands. Research your market before hand and price it to sell once you go live. There are a lot of ways to get really good market research and a solid pricing plan before ever spending a dime to create a listing (one of the best ways would be to contact The Reagan Group and let me do my analyst magic!!! HINT). Even simpler than that, just spending half an hour searching your local area for listings will give you a great idea about the market price and what your house could fetch. (CAVEAT: This is a time to be really honest with yourself about how nice and convenient your property is. Real Estate tends to be very emotional and everyone loves to believe they own the Taj Mahal. Let’s save the passion for later and keep a cool head while we’re making big decisions). Once we have determined we have a viable Airbnb, how many nights we sell is a matter of price, which we get to control. I could write a book about pricing strategy (hmmmm that’s an interesting idea), but the short and dirty of it is, set your auto pricing to the price you want and then aggressively discount your very near-term days until they sell. You will end up with an average price in the middle and a well occupied house. Problem solved!
“I’m not very creative. I wouldn’t know how to design the ad or market myself!”: This is easier than you think. One of the best things you can do is to hire a real estate photographer. For less than $150, you can get extremely well done pictures of your listing that will make the place look great. Best money you are going to spend. After that, it’s simply a matter of calmly and factually representing the property as it is so that guests know what they are buying. We have found, time and time again, that transparency and honesty sells more nights than the slickest listing. Airbnb is far more price-sensitive than ad-sensitive. (see previous paragraph).
All three of these concerns are real concerns…. They just aren’t very real problems. Please don’t let them be what holds you back. Now, let’s chat about what monsters DO keep a seasoned Airbnb host up at night.
The Fears that ARE:
Finding, training, and keeping good housekeeping staff: Angie has a great blog post in the works about the importance of finding good staff. Unless you are planning on handling every bit of cleaning, inventory, and maintenance yourself, you’re going to need to build a team. Specifically, you are going to need to build a team that is ready to react quickly and reliably. The window from Check-out to the next guest checking-in can be less than five hours, So an air conditioning repair man who can’t get to you until Tuesday or a cleaning service that is running late can be GAME OVER. When we live and die on 5-star guest reviews, the margin of error is VERY narrow on this issue. Fortunately, there are ways to mitigate these risks and build in safety margins. Being proactive in scheduling, anticipating cleaning, and maintenance needs, and regular inspections of the property can help you stay active instead of reactive. Once again… there may be an entire book hiding in this topic.
Maintenance Issues: In the previous paragraph I mentioned broken stuff in your house. It’s so scary that it gets its own shout out. An air conditioner on the fritz in August (in Florida), a shower handle that comes off in a guest’s hand, or a roof leak which starts a rainstorm in your kitchen are nightmares that even Stephan King couldn’t conjure to an Airbnb host. It’s no coincidence that I listed those issues. They are actual crises that we have been through in just the last year. In any maintenance crisis it is essential to remember the most important thing: guest perception! More important than fixing the issue is making sure the guest knows that you are doing your absolute best to provide superior customer service. (True story: We once had an air conditioner go out at 9:30 PM for an entire extended family in August. The inside of the house was 85+ degrees F and no air conditioner technicians were available for more than 24 hours…. We were able to engage the issue so effectively and quickly that we got one of our best reviews ever from them, despite a sweltering house.) An ounce of prevention is worth a pound of cure, certainly. For every maintenance issue you find ahead of time and fix in a leisurely fashion while the property is being turned over, you save yourself a boat-load of stress and trouble during a guest’s stay. Inspect early, repair often.
Negative Guest reviews: This is the most gut wrenching of them all. A bad review from a guest. I am here to tell you, you are absolutely going to receive them. No matter how well you manage your property, eventually the perfect storm will hit and a guest is going to leave a scathing review. It is a part of the business. Learning to pick yourself up and move on is imperative. While it feels deeply personal, crushing and embarrassing to see your shortcomings and wrongs written on the internet for the whole world to see, it’s important to remember that recovery is very possible. Read the review entirely, take some time to calm down, and see if there is anything to be learned which can indeed make your listing better. Pain is an outstanding motivator. Use that motivation to make sure that you never make that mistake again and rest assured knowing you are smarter and better for it. It’s worth noting that there are some guests (VERY RARE… but they exist) who are not interested in offering constructive criticism. This is almost always a matter of disappointed expectations and speaks to what I said earlier about honesty and transparency in your listing. The guest did not receive what they expected to receive in return for their money. It does not matter how nice an Airbnb is, if you were expecting the Marriott. When this guest strikes, there is absolutely nothing you can do to make them happy. They decided the second they arrived that they were angry and going to take it out on you. We affectionately call this type of guest “Alan” in honor of our worst review of all time. We had a gentleman reserve a property (Alan) who sent three angry messages before ever entering the house. You can imagine how the rest of the stay went. The review was at least two pages long and scathing in tone. Alan took time to research me and take personal shots at me just to do as much damage as possible. I’ve never wanted to quit anything so badly in my life. You MUST remember that that is Alan’s problem, not yours. Pick yourself up and move along.
So there you have it, the monsters (big and small) that live in the Airbnb market. I do hope that you picked up on the fact that every one of these issues can be foreseen, mitigated, and fixed. Just as in any business and even in life, we do not take council of our fears. We observe the issue for what it is, see if there is anything we can learn from it, and we move along smarter and braver than we were yesterday.