3 Things to Know Before Becoming an Airbnb Host
For many, becoming an Airbnb host is a popular way to make extra income. People with spare rooms and second homes are bringing in extra money on short-term stays.

Reports indicate upwards of four million people in the industry generate billions in annual revenue, and that many individual property owners are hauling in tens of thousands of dollars.

Despite how enticing those numbers may sound, it’s important to look before you leap into any entrepreneurial venture. While Airbnb’s seem to promise considerable income, below are three things to consider before hosting Airbnb guests in your home.


1. Air B&B Can Impact Your Mortgage

Given there are reportedly approximately four million Airbnb hosts worldwide, homeowners may be under the impression there are no obstacles when it comes to their mortgage. Yet, there are several things to consider if you have a mortgage, meaning you don’t own your home outright.

One example is how renting versus living in a property as a primary or secondary residence relates to the type of mortgage you acquired. When a person takes out a loan for a home they plan to live in exclusively, the interest rate may be priced differently than, say, a duplex generating rental income. Those mortgage products are also often priced below investment property loans. But the question for the person considering an Airbnb is how that impacts your current mortgage? After all, you are probably paying the monthly premiums on time.

In theory, you may be considered in breach of contract on your mortgage agreement. When you signed the papers, the interest rate and terms were based on one type of use, residency, and now you are changing who resides there and for how long.

But jumping into the Airbnb trend doesn’t necessarily mean you will receive a foreclosure notice. Some loan products allow for a limited number of stay overs without a required change. In other cases, contacting a lender about making changes or doing a quick refinance to an appropriate type of loan for Airbnb operators can resolve the issue. The point is to do your due diligence about potential mortgage implications.

2. Legal Ramifications of Starting an Airbnb

In terms of local housing regulations, there can be significant differences between having friends and family stay over and renting out space. Communities often designate residential-only areas and diving into the Airbnb business without getting town approval could result in you being fined for a zoning infraction. However, there may be remedies.

Before listing your rental space, take the time to contact or visit the town hall and get information about legal property uses in your neighborhood. There may be nothing preventing you from moving forward. In other cases, you may be required to apply for a short-term rental variance or merely pay the local taxes associated with rentals. Some local and state governments may go as far as to require you to secure a business permit. Excluding areas that have been negatively impacted by loud college parties and excessive visitor rentals, local municipalities generally just want to collect a fee.

3. Insurance Claims Could Be Denied

It may not surprise you to know that an accident, injury or damage involving an Airbnb guest may not be covered under your homeowners' insurance policy. Such policies are generally in place to cover the expenses associated with damage and injuries suffered by guests and others, meaning they are not necessarily for renters.

And renter’s insurance policies may also not provide adequate, if any, coverage should you leap into the Airbnb hosting business. That’s because the keyword is “business.”

Launching a business venture such as an Airbnb may be considered distinct from renting out a designated apartment. Should you file a claim, the insurance company could deny you under the “business pursuit exclusion.” Most homeowners’ policies include this little-known caveat. However, given the fact that millions of people are earning money as Airbnb hosts, there are solutions.

Before listing your space for rent, contact your insurance carrier and discuss an additional Airbnb liability insurance policy. This type of coverage considers that you are operating a small business and the premium hike or separate policy will reflect the additional risk associated with paying guests. Insurance carriers just want to be appropriately compensated for potential payouts.


Although there are dangers associated with leaping blindly into the Airbnb business, with a little due diligence you may have stumbled on a little pot of gold. You may be wise first to add up these and other costs and roll them into your rental fee.