Today’s REI Classroom Lesson
Duncan Wierman breaks down the protection and safety that Airbnb provides for free. From liability insurance to managing security deposits, there are benefits with using them.
REI Classroom Summary
In addition to the safety they provide, there are additional strategies you can do to protect your property and yourself.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the flipnerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Duncan: Hello everyone. My name is Duncan Wierman from duncanwierman.com, and I am hosting today the REI Classroom. We’re going to be talking more about Airbnb.
Mike: This REI Classroom real estate lesson is sponsored by theinvestormachine.com, FlipNerd’s private investor coaching program and your blueprint to investing success.
Duncan: One of the questions I get asked a lot is what about safety. Well, I tell you what. Airbnb provides a lot of safety. If you have your own house, I always suggest you have insurance on your own property, and also having tenants you should have renters insurance. Airbnb gives you a lot more additional types of insurance and it’s free.
They have, first of all, a million dollar host guarantee that coverages for theft and vandalism. When you host a guest that’s booked through Airbnb you are automatically provided with this million dollar host guarantee. That covers all theft, all vandalism. Of course, you do have to make a report to Airbnb within 48 hours if something is broken and get an estimate for that replacement, but that’s covered.
The next thing is a million dollar liability insurance coverage that they provide. Let’s imagine you have a two story house and somebody slips and falls coming down the stairs and they break their leg. Normally your homeowners insurance would cover that, and that’s good to have a million dollars coverage there. But, why not have that free policy giving you another million dollar liability insurance from Airbnb? Again, you’ve got to make a claim for it.
Also on the other thing I mentioned, don’t forget to file a police report if somebody falls and also for theft and vandalism. You’ve got to make sure it’s legit.
The other good thing Airbnb does is they have a security deposit. This is charged over and above what your guest will pay. It covers any damages that could occur. When you set up under your listing in the pricing section, you add a security deposit. This is an additional charge as I mentioned. You can recommend an amount between $100 to $200, and that’s held by Airbnb. If you don’t make a claim against it in 48 hours, it gets refunded to the guest.
That’s like when you go into a normal hotel and they put a hold on your card for any amenities, the minibar, that sort of stuff. For the small breakages, the security deposit is better than you going to the host guarantee for theft and vandalism.
The other thing they have is the resolutions tool. This is quite new. It’s a tool that Airbnb works with like the honor system. Say for an example your guest has lost their key and it costs $10 to cut a new key. Well, you simply send your request of $10 to the guest through Airbnb’s resolution tool. When the guest accepts the request, Airbnb processes the payment, handles the transaction without charging you any additional fees, and the deposit is collected into the host account on file. The benefit is that it allows the guest to receive their security deposit back within the 48 hours at the end of the day with no further delays. The resolution tool is really cool.
Just one little tip that we do is a lot of people ask are there safety in the house. Of course, you should have with burglar alarms, fire alarms, all of that. You know a panic alarm, that’s a good safety measure. One of our cash cows is we actually have an onsite host who lives there, who actually pays us to live in the house, and they pick up extra cash for greeting and cleaning, but they also keep the house safe. It’s a very, very safe way to increase your income by doing short-term rentals to both vacationing guests and to corporate guests.
I invite you to really look at using Airbnb, putting it into your portfolio of tricks. It’s the highest and best use of your real estate investment. Once again guys, check out what I’m doing at doubleyourrentalincome.com. Again, my name is Duncan Wierman. I’m the host for REI Classroom, and I look forward to speaking to you again. Thank you very much and have a great day.
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