Charleston is one of the country’s hottest markets for Airbnb investors. But knowing the pitfalls that arise within the short-term housing industry is a must for those who want to be successful at it
Airbnb and similar vacation rental portals have changed the game in real estate investment. The benefits of renting a Charleston investment property on Airbnb are many, and it’s a trend conscious property managers and owners are jumping into headfirst.
But knowing the risks that arise within this industry is a must for those who want to be successful at it. Here are a few tips to help your clients avoid the common pitfalls associated with renting out Charleston investment properties on Airbnb.
Know municipal restrictions
Make sure you know your local laws. For example, Charleston’s City Council recently finalized a new set of rules that allows short-term rentals citywide, but only under strict circumstances. It bans whole-home rentals and requires property owners to stay home whenever they host guests.
While this new ordinance only affects the City of Charleston, for many who have already invested in downtown’s short-term rental market, this is a crushing financial blow. As such, if you are considering an Airbnb type investment in downtown Charleston, do your homework first!
Be aware of taxes
Income earned from short-term rentals is taxable income. The City of Charleston is now charging short-term rental investors additional fees and taxes, namely business license fees and accommodations taxes. Knowing what taxes and fees to expect in your locality is a must prior to engaging in the short-term rental business. Again, do your homework!
“If you vet your prospective guests correctly and manage expectations, you will have a positive experience,” Heatheran Kristopher, SRCI Group International consultant, said.
Things get riskier when an incoming guest has never tried Airbnb housing before, and he or she doesn’t know what to expect from the process. She stresses that “giving those guests attention upfront is a must to ensure that they have a pleasant experience.”
Beef up insurance
Before renting out property, homeowners need to check in with their insurance agent. “The insurance industry has not caught up with the latest trends in technology and real estate,” James Steele of S&T Insurance Agency explains. “Nine out 10 times policies have strict exclusions for short-term rentals.”
Most homeowner’s insurance policies carry a business pursuit’s exclusion, and liability falls on the homeowners.
While Airbnb and other hosting sites offer trip protection to their users, make sure to consult with your insurance provider. Remind your clients that insurance is complicated and that waiting until they actually have a claim is not the best time to sort out their coverage.
Check condo rules
Chances are, your client’s condo bylaws or rules and regulations prohibit short-term rentals. Make sure your client reviews his or her condo documents carefully.
It is typical for a condo association to require a minimum lease term for any renters, and a requirement for association board approval is also typical.
Paint your interior for favorable Reviews
The success your Airbnb investment is inextricably linked to the quality and favorability of your guest reviews. A cross-sectional study of Airbnb reviews sites dirty walls and chipping/cracked paint as the 4th highest “interior” guest complaint (behind kitchens, bathrooms & home furnishings).
While kitchen, bathrooms & home furnishing renovations often run into the tens of thousands of dollars, painting your interior surfaces is a cost-effective way to make your guests feel more comfortable and far more likely to leave favorable reviews. Charleston Realty Painting specializes in “quick turn” painting projects for real estate professionals. Contact them today at 843-640-5892 to improve your Airbnb reviews.