When I talk to people about paying off their student loans early, I often hear that they’re having trouble finding extra money to add to their loans. They’ve looked at their expenses, trimmed their budget and are still struggling to pay more than the minimum.
I know what it’s like to be on this scenario. Remember, I started off by only paying an extra $10 a month. But I found that my debt payoff really skyrocketed when I began paying $100, $200 and $300 extra on my loans.
So if you’re stuck between a low-paying high salary and high expenses, how do you find the cash to increase your debt payoff? You make more money.
On this blog, I try to highlight ways to save money and budget responsibly, but I also want to share stories of people making more money. A couple of months ago I featured Harry, who makes $500 a month driving for Uber. Imagine what adding $500 to your student loans would look like.
Today, I’m featuring two friends of mine, Matt and Fae. They decided to rent out their second bedroom on Airbnb and found they could make a lot of extra money. Even though I had extra room in my apartment, I never considered renting out my space (hello, serial killers). But Matt and Fae made it work – and made a ton of money in the meantime.
Here’s their story of how made almost $9,000 in one year off Airbnb.
Why did you decide to start renting a room on Airbnb?
We decided to start renting on Airbnb in order to make extra income. This income generally paid for our rent each month and allowed us to live basically rent free.
It all began because my fiance Fae and I allowed a friend of a friend rent a room in our house for a couple months after she moved to Indianapolis. After she left, we had a room ready to rent out to guests at a moment’s notice and we took advantage of the situation.
Were you nervous having strangers stay in your house?
While we were slightly nervous about having strangers in our house at first, the rating and review system through AirBnB really helped to allay any fears. After the first few guests, it became clear that we had nothing to worry about. Every person that stayed with us, whoever they were, was respectful, kind, and fun to be around.
How much work was involved in setting up your place and dealing with the tenants?
There is not a whole lot of work that goes into renting out a space. The hardest part was cleaning the room and changing sheets between guests when the old guests left, and the new guest came on the same day.
Others may find that meeting guests for check-in is difficult due to the array of times that people arrive. However, I had a flexible work schedule and worked close to home so it was easy for me to accommodate guests.
Can you share how much you made per night?
We charged $69 per night to stay at our place but actually brought it $67 each night someone stayed. Over the course of 2015, we made roughly $8,900 for little effort.
Would you recommend this to someone else trying to earn money on the side?
I would definitely recommend someone else doing AirBnB on the side. I think it is important to think about your location and how attractive it may be for visitors to whatever city you’re renting in. Your location will greatly affect how often you receive bookings.
Do you have any advice for someone trying to make money off Airbnb?
Always be willing to chat with your guests and help with recommendations around I always had multiple guides and maps in the room as well that I would pick up from various cultural destinations for free too. Also, take advantage of the free professional photography service provided by Airbnb.
Nothing discourages me more than crappy pictures when I’m looking to rent on AirBnB myself. Lastly, always be thinking about your tax liability at the end of the year. Be sure to keep a record of expenses associated with renting out the room in order to write off as much as the income as possible later on. I’m not a tax professional, so please consult one, but portions of your utilities, phone bill, etc could be potential write-offs.
Zina’s note: Matt’s right about this. If you buy anything related to your Airbnb business, you can deduct it from your taxes. Wait, taxes, what? Another thing: if you earn money on the side, you’ll probably owe taxes on the amount. Any money you earn outside of a regular day job is taxed at a higher rate, so it’s important to pay attention to how much you earn. But, you can minimize that amount by deducting any expenses such as linens, cleaning supplies and anything related. Save your receipts and track how much you spend.
The Pros and Cons of Renting on Airbnb
I love Matt and Fae’s story. They did something what few people do – rent out their living space while they live there – and used it to make money and live almost rent-free. A lot of people used to do this to make money. If you remember in the movie, “The Iron Giant,” Hogarth’s mom rents out their guest room to the government agent looking for the Iron Giant.
Boarding is less common nowadays, but it’s still a totally viable way to earn extra money. If you have an extra room or even a couch, you can rent it out on Airbnb.
Here are some things to keep in mind before you do:
It Might Not Be Legal
If you don’t own your own home, then renting out a room might be against your lease. Check your lease specifically for any clauses that specify if you can sublet your apartment. Sure, there’s a chance your landlord will never know, but you should be aware of what you’re getting yourself into. A few cities, such as San Francisco and Santa Monica, have strict rules about short-term rentals. Make sure to read those before you publish your listing.
It Could Be Risky
Anytime you open your home to someone, whether it’s a friend or a paying guest, you risk being liable for something happening to them or them doing something to your property. I’ve often thought about renting out our house on Airbnb when we’re away, but since my husband has lots of musical equipment, I don’t want to risk it.
Airbnb hosts do have access to $1 million in insurance, but it might not cover every specific instance. Again, be aware of this before you open your doors.
You Could Owe Taxes
Remember what Matt said earlier about owing taxes on your rental property? These rules depend on where you live, but many Airbnb hosts find themselves with a tax bill at the end of the year. Try to set aside about 20-30% of your Airbnb earnings for taxes, just in case you find yourself in this position.
Great information! Thanks for sharing!
I’ve stayed in a couple of Airbnb rental places in Brooklyn, NY — one was the couple’s entire apartment while they were out of the country. The other was a guy’s basement suite, and he was at home upstairs. Both situations were quite satisfactory, and much cheaper than a hotel room. If I had the space in my home, I might consider renting out myself. I think it’s a great idea, but I guess it does have a certain amount of risk.
Carol (“Mimi”) from Home with Mimi
Yeah, I don’t know if I’ll ever try it (especially since I work at home), but I love the idea of it. I think more people should give it a shot, especially if they need the money!