Things to consider before becoming an Airbnb host

Two years ago, Anirudh Rajan and his wife Hardika, both 34, left their full-time jobs in Mumbai and decided to settle in Goa and start an Airbnb. “If the property is done up, an Airbnb can get you twice what a standard rental will get you,” said Rajan. They let out three rooms of their house.

Airbnb has been around for a decade and has become a popular alternative to hotels around the world, but Indian homeowners have started opening up to the idea only recently. As of 2018, the platform claims to have over 30,000 listings across India.

The concept is simple: list your property on Airbnb to be rented out for short spans. While you are not required to provide a full-service facility, you do have to pay for upkeep and be willing to interact with the guests. If you are among those who would want to put your property on Airbnb, here’s how to go about it.

List what you offer

Any property can be listed on Airbnb, whether it is located in the heart of a city or in a remote, quaint town with idyllic settings. To list your property, you need to upload photos, mention the rooms and facilities on offer and set a rate.

You will have to provide basic identification and property-related documents to Airbnb along with your bank details to receive payments. It does not charge you money directly—it takes a cut out of every booking (typically 3%). It also charges GST on your behalf, which can range from 0-28% depending on the price. Airbnb also takes identification documents from guests before allowing them to book.

Remember to mention details like whether it’s shared or the entire apartment can be let out and the facilities your property offers like having a caretaker or a functional kitchen or free breakfast. “Putting up pictures of the food we grow in the garden and offer our guests and, of course, free Wi-Fi has made all the difference,” said Mayuri Dongre, who lets out her property on Airbnb in Orchha, Madhya Pradesh.

You can also mention location-specific facilities you may have added. Bhushan Manchanda, 65, a professor at Jagannath International Management School, has listed his apartment in Vasant Kunj, Delhi. Apart from other facilities, he has got air purifiers installed to combat Delhi’s air pollution.

“Comfort and hospitality are key to this concept, just having a vacant place is not good enough. The place must be properly serviced almost at par with a full-fledged hotel,” said Girish Shah, executive director, residential services, Knight Frank India, a property consultant firm.

The portal lets you fix your own rate, but the pricing needs to be in sync with the location and amenities. If you are unsure, it will suggest prices based on similar properties with similar demand. You can outsource the price entirely to Airbnb—it allows an algorithm to set prices dynamically based on prevailing demand.

The ratings edge

Airbnb thrives on user ratings just like apps such as Uber and Ola, which means one bad review can tip the scale against you. But then even a house tucked away in a remote corner could become popular if the ratings are consistently positive.

Shahabaz Patel, a 28-year-old who is pursuing a medical degree, saw his colonial bungalow in Belgaum, Karnataka, take off soon after he listed it on Airbnb in March 2018. “We were the first Airbnb listing in Belgaum at the time and we got great reviews. We have hosted over a hundred guests now, including Bollywood musicians and even scientists,” he said.

The smaller scale of Airbnb properties and the absence of brands makes ratings crucial to a customer’s selection process.

What to watch out for

Choice of guests: Airbnb gives you the option of screening your guests before approving the booking. More often than not, it is important to do so.

Shiv Sharan, a 45-year-old photographer based in Mumbai, was in for a bit of a shock when he let a “family of 12” rent his Kerala-style bungalow in Puducherry for a birthday party. “My caretaker told me that close to 60 people showed up at the house instead of 12,” said Sharan. His house is listed as one that can host 15-20 people. “I had to pay for professional cleaning after the party cleared out,” he said. Fortunately, Sharan was able to recover the cost from Airbnb, which addresses such issues.

Permissions: There other permissions you need to run an Airbnb, depending on the state you live in. However, there is no clarity on that as Airbnb is still a new concept in the Indian commercial and legal environment.

Renting out your home, whether through traditional channels or Airbnb, typically requires “police verification”. If you have foreign guests, you will need to send Form C to the Bureau of Immigration of the home ministry. This form can be filed online. In addition, if you operate a multi-room commercial establishment through Airbnb, you may need permissions from the fire department, pollution control board, gram panchayat or municipal corporation and the state tourism department, as well as a shop owner’s licence.

Taxation: Depending on how you run the Airbnb property, you may have to pay tax on it as “income from house property” or “income from business and profession”. “If it’s just one or two properties that you are letting out through Airbnb, then income from them will be treated as any other rental income. But if there are multiple properties, the owner is actively engaged in it and it becomes their primary income, then it is considered business income,” said Amit Maheshwari, partner, Ashok Maheshwary and Associates, Llp, a chartered accountancy firm.

Is it for you?

If you have an unused property or even a few spare rooms that you want to put up for rent, consider going the Airbnb way, since it can fetch you quite a bit of extra revenue. “On average, rental income from residential properties is 1.5-2.5% of property value per annum in metros, and 3.5-4% in tier 2 and tier 3 cities. But Airbnb can give a much higher return, especially if the property is in a city that is a tourist destination, is at a good location and is well-managed,” said Samantak Das, chief economist and executive director, research, JLL India, a property consultant firm.

However, unlike a property you rent out, you have to maintain your Airbnb property, invest in repairs and facilities and vet and interact with guests regularly. List on Airbnb only if you have the time and inclination to meet new people and help them make their stay or vacation comfortable. If all goes well, it can be quite rewarding.