Home News Making Money on Your Back (Room) — You Really Can Run a Hotel Out of Your House

Making Money on Your Back (Room) — You Really Can Run a Hotel Out of Your House

by Bruce Haring

Some people are making $10,000 a year or more renting out their back bedrooms. You could be one of them.

These mini-Donald Trumps are part of the new flexible economy, wherein people who have time on their hands and are looking for some added income use their available tools to profit. There’s Uber and Lyft for vehicles, eBay and Etsy for artisans, and particularly AirBNB and HomeAway, which allow you to rent out anything from a spare bedroom to your entire apartment or house to travelers.

For purposes of this article, we’ll focus on the short-term lodging sector. These services work like this: you and the prospective tenant use a kind of escrow and rating system supplied by AirBNB and others to reach an agreement on renting your spare space.

The transaction is handled by the online intermediary, and both landlord and tenant get a chance to rate the exchange, providing a guideline to others and ostensibly providing a check and balance on those with malicious intent on either side. Rental rates are decidedly cheaper than most hotel stays in major cities, and provide a level of native experience that hotels can’t duplicate.

Rental rates are cheaper than hotel stays, and provide a native experience that hotels can’t duplicate.

AirBNB certainly has its fans. The company claims lodgings available in more than 30,000 cities in 192 countries, making money by collecting a percentage of the transaction between host and guest. At an estimated 10 million bookings per month, that’s a lotta money.

There’s just one hang-up, and it’s becoming more and more of an issue for local governments and neighbors. There are laws that prohibit running an unlicensed short-stay hotel, which is essentially what you’re setting up with an AirBNB-type service.  The powers-that-be complain that local taxes are lost and regulations are ignored. And neighbors of frequently-rented digs complain that the transient guests, who have no stake in maintaining good relationships with neighbors, are often a nuisance.

AirBNB has denied that their disintermediation of hotels is a bad thing. They claim in a study that benefits to New York City alone from guests of their service total $632 million per year.


As the company grows, so does the volume of complaints from those whose stake in their neighborhoods and tax base is affected by the AirBNB-style revolution.

Los Angeles’s Silverlake area had a riotous meeting in the fall of this year, where some neighbors likened AirBNB rentals to bordellos. The New York City Office for Special Enforcement and the New York State Attorney General have looked into complaints and demanded records (which AirBNB resists), while officials in New Orleans and Sedona, Arizona have passed laws governing renting property for short-term stays.

But trying to stop the activity is difficult, if not impossible. Because it’s a transaction between consenting adults, there’s little to be done beyond the occasional fine, eviction, or other wrist slapping. Some wide loopholes also exist in local laws, which have accommodated bed & breakfasts (and yes, bordellos) for years.

AirBNB is coy, pointing out that its contractual fine print tells hosts to obey local regulations, thereby shifting blame away from the company and towards those who represent in their agreement that they understand local laws.

AirBNB and other services, including  HomeAway and TripAdvisor, have established the Short Term Rental Advocacy Center (STRAC), a think tank that will allow them the fig leaf of proactivity to combat short-term rental problems. Think Captain Renault from “Casablanca,” who noted, “I’m shocked, shocked that there’s gambling,” as he received his winnings for the evening.

For now, it’s the Wild West when it comes to making money off that back bedroom. Which means that hotel prices will need to compete with Joe down the block for your traveling dollars.

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