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6 Reasons to List Your Primary Residence on Airbnb and When It Might Be a Bad Idea

Updated: May 9

Airbnb forever changed the hospitality industry when it was launched. In a few years, short-term rentals became a lucrative option for people who wanted to invest in real estate. However, not everyone interested in becoming an Airbnb host could buy an entire property for their business. The obvious option was to use the property they already had, their primary residence. In this article, we will look at whether doing so is a good idea and the Airbnb pros and cons for hosts.

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Can I Airbnb My Primary Residence?

You might have already heard that Airbnb can be a lucrative option for homeowners, but the first question we have to answer is, can you Airbnb your primary residence? The answer is, yes, in most cases. However, things can get quite complicated and come down to your local laws.

Some jurisdictions allow you to use your primary residence as an Airbnb regardless of whether you live there for the majority of the year or not. Some require that you spend a set number of days out of the year in that residence before claiming it as a primary residence and leasing it out as such.

Once you check the laws regulating Airbnb in your jurisdiction, you should also check what other requirements you should meet. These typically revolve around licenses, insurance, tax, zoning restrictions, and approval from your neighbors and homeowner’s association.

Checking of requirements for Airbnb rental space
When requirements are met and regulations are considered, you may transform your residence into an Airbnb space.

Pros and Cons of Airbnb Hosting on Your Primary Property

Using your primary residence for Airbnb comes with upsides and downsides. There are several benefits to doing it, while there are several reasons why people do not want to let people rent their primary residence. Let’s look at some of the pros and cons of Airbnb hosting.

Airbnb Is Very Lucrative

Perhaps the most obvious reason for using a primary residence as an Airbnb is because this option is very lucrative. If you use the right strategies to find the right tenants for short-term rental arrangements, it is possible to generate more revenue than you would by renting it to long-term tenants. The main reason is that you can charge more per night than you would if renting it out monthly.

The amount of money you can make doing this will depend on various factors, the most important being location, occupancy rates, and the property itself. If the property is located in an unattractive and unwelcoming area that doesn’t have much happening, you will struggle to find people to book the property.

Occupancy rate is the percentage of a property occupied at any time, but in this case, it refers to the number of nights booked out of the year. A higher occupancy rate translates to higher revenue.

If you are struggling with your occupancy rates, you can talk to property and Airbnb management companies like Upperkey so they can provide you with solutions that will help you generate more income.

Collection of coins as part of payment for rental services
Owning an Airbnb property will guarantee a good revenue when conditions are considerably met by the owner.

It Provides an Opportunity for Passive Income

If you live in an area frequented by many people, Airbnb allows you to make money using a passive income model. Doing so works even better if you live in a jurisdiction that doesn’t require you to be home when you have guests book the property through Airbnb.

You can just list the property and use various solutions, including an Airbnb management company and a key management service to ensure the property is always occupied.

Do note that you will need to manage the property in some ways because you need to talk to guests and ensure the property is maintained and remains attractive when you are away.

Less Stress About Occupancy Rates

If you buy a property that you use solely for Airbnb, you will always be stressed about occupancy rates. You must ensure that it is attractive, exciting and offers something different so visitors can easily find and book it. If your occupancy rates drop, you will be losing money, which is very stressful as you wonder whether you will be able to meet your obligations or make a profit on it.

If you use your primary residence for Airbnb, you do not have to worry about any of this. Since you are already living in the house, you are already taking care of all expenses whether you list it or not. Leasing out becomes a way of making extra money or helping with the mortgage without worrying about occupancy rates.

Letting one or two rooms in your home remain empty for a month or two will not have the same financial impact the way it would if that happened in a separate property that you have invested in.

It Can Come with Some Tax Benefits

Tax regulations vary between countries, so hiring an accountant to advise you on what you need to know about tax and reporting tax in your specific jurisdiction is a good idea. Renting out your primary residence could lead to tax breaks in some countries, with some even allowing you to claim business costs, such as new furniture and fittings so you pay lower taxes.

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Securing the payment of taxes for the properties you manage can help you avoid unnecessary charges.

Diversified Tenant Portfolio

If you use your property for long-term rentals, you rely on a single tenant to generate revenue. Such an arrangement can work out if the tenant has a stable income and stays for many years. However, your finances will take a massive hit if they miss a payment or decide to move out before rent is due.

Airbnb allows you to diversify your tenants to reduce the risk of this happening. Every tenant contributes to a small percentage of your income, so if one doesn’t pay, you do not receive a massive hit.

You can minimize your risk further by working with UpperKey, which has a list of international clientele ready to occupy your property. They also have a guaranteed income arrangement, so you receive revenue whether the property is occupied.

It’s an Excellent Opportunity to Meet New People

Another excellent reason to Airbnb your primary residence is that you get to meet different people. These could be people from all over your country or the world and of different ethnicities, ages, and backgrounds. Doing so lets you learn about different cultures, cuisines, lifestyles, and differences.

The Downsides of Using Your Primary Residence for Airbnb

The pros of using your primary residence for Airbnb are compelling and can make you want to lease your property on their platform. However, before doing that, there are some downsides you need to know about and circumstances under which doing so would be a bad idea.

Using Airbnb as Your Primary Source of Income Can Be Dangerous

If you own other priorities or have a regular income, you do not rely on your primary residence listing on Airbnb to make money. A less-than-ideal situation can arise if you are using your primary residence as your only source of income.

It is possible to make a livable income using one property for Airbnb. But what happens if the occupancy rate falls, or something happens that makes the area or the property undesirable? It is crucial to consider what that would mean for you before listing your property and using it as your sole source of revenue.

Depending solely on Airbnb as your primary income source lacks diversification and can pose risks.

You Might Need to Change Your Decor

Everyone paints and decorates their house to look and function exactly how they want it to. However, some changes might be required to make it attractive to many people. Not making these changes might mean that your property is not the most attractive in your area, which could mean low occupancy rates.

Sometimes the changes you need to make are so extensive and expensive that they are not worth it, especially if you are not sure if you will recoup your investment through short-term leases.

The Higher Expenses Might Be Unmanageable

Long-term rentals have relatively low expenses because the tenant pays for things like utility and internet use. Of course, the landlord or property owner must still take care of regular and emergency maintenance in such arrangements.

You will be required to handle all expenses associated with the property once you list it. You will need to pay various bills for various amenities, pay to ensure the property is cleaned between guests, and get amenities your guest expects, such as faster internet.

You will also need to invest in sheets, towels, blankets, pillows, and everything else a guest will need to make their stay as comfortable as possible.

Too Many People Passing Through

If you decide to use your primary residence for Airbnb, you will essentially be living in a shared space. While this is fine for many people, what is not okay is the number of people who will come through the house. You might have hundreds of strangers living with you for different amounts of time every year, which many people are not open to.

Airbnb gives property owners an excellent opportunity to make money, meet new people, and get into real estate investment. However, using your primary residence for it has serious downsides you should consider before listing. Some have to do with how you use the property, and others with how many people will come and go or live in the house when it is listed on Airbnb.

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