Savanna Hoffman
International students face a variety of accommodation options, including dorms, off-campus apartments, homestays, and shared accommodations. The demand for student accommodation is ever-growing, with an increase of 276,110 international students between 2019 and 2022 in the UK alone. This presents an opportunity for landlords to monetise their properties on platforms like Airbnb. By renting out their properties during term breaks, landlords can boost their income and capitalise on the growing student market. However, it's important to note that renting a room on Airbnb may not be allowed for those who are not the owners of the property, as per the platform's guidelines. Additionally, Airbnb charges a foreign transaction fee of 3% for currency conversions, which can impact the overall cost for both hosts and guests.
| Characteristics | Values |
|---|---|
| Location | Choose a location that attracts visitors all year round, such as Edinburgh or London. |
| Target Audience | International students, who often seek accommodation for their first year of university. |
| Marketing | Advertise on multiple booking platforms and market frequently to stand out from the competition. |
| Lease Agreement | Ensure compliance with lease agreements and landlord permissions. |
| Legal Compliance | Abide by local, state, and national laws, including safety standards and accessibility requirements. |
| Finance Management | Set up a system to manage finances, including income, expenses, and taxes associated with short-term rentals. |
| Guest Experience | Regularly review guest feedback and make improvements to enhance their experience. |
| Currency Conversion | Be mindful of Airbnb's foreign transaction fees and offer payment in the listing's currency if possible. |
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What You'll Learn
Investing in long-let properties in university towns
When investing in university towns, there are several factors to consider. Firstly, research the university and the town or city it is in. The reputation of the university is important, as better-respected institutions tend to enhance local property values. Russell Group universities, such as Cardiff, Cambridge and Oxford, are a good place to start as they attract students from around the world and have a significant economic output. The presence of a large student population can drive housing demand and property value appreciation. Additionally, consider the safety of the town, the local amenities, and the proximity to the university campus.
The type of student you are targeting will also influence your investment decision. Young, UK students often prioritize affordability and proximity to the town, campus, bars, and shops. They may be less concerned about the decoration and condition of the property. In contrast, wealthy foreign students may be willing to pay more for accommodation near a top-class university.
It is also worth noting that investing in student accommodation may provide more stable rental payments than you expect. Many students' rents are paid by their parents, so rents are consistently paid and on time.
When it comes to marketing your property, you will need to advertise it on multiple booking platforms and market it frequently to stand out from the competition. During term breaks, you can utilize Airbnb to rent out your property to travellers and boost your income further. However, be mindful of the laws and regulations surrounding short-term rentals, and be prepared to put in the time and effort to manage guest turnover and maintain guest experience.
Some recommended locations for investing in long-let properties in university towns include Nottingham, Newcastle, Liverpool, Cardiff, Southampton, and Belfast. These cities offer a combination of reputable universities, high student populations, and attractive property investment opportunities.
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Advertising your property on multiple platforms
Choose the Right Platforms
Select platforms that are popular among international students and travellers. Sites like Airbnb, Booking.com, VRBO, and Zillow are commonly used for short-term rentals. Additionally, consider social media platforms like Instagram, Facebook, and TikTok, which are excellent for visual storytelling and reaching a wider audience.
Create Compelling Listings
Craft detailed and attractive descriptions of your property, highlighting its unique features and amenities. Use high-quality photos, floor plans, and even 3D virtual tours or video walkthroughs to showcase your space. Make sure your listing stands out and provides all the necessary information a potential guest might need.
Sync Your Calendars
To avoid double bookings, remember to sync your calendars across different platforms. Most sites allow you to link your booking calendars, ensuring that when a reservation is made on one platform, the same dates are automatically blocked on others. However, be mindful that there might be a slight delay in syncing, so always double-check and manually block the dates if needed.
Utilize Automation Tools
Take advantage of automated tools and apps, such as Lodgify, to manage your listings across multiple platforms efficiently. These tools can help you handle reservations, payments, and communication with guests, making it easier to stay organised and avoid errors.
Market Across Channels
Don't rely solely on listing platforms. Explore email marketing, reaching out to local newsletters, or partnering with vendors to expand your email reach. Consider outdoor advertising with QR codes on yard signs or local billboards that link to your digital listings. Additionally, streaming platforms like YouTube or Hulu are great for short video ads that showcase the lifestyle and appeal of your property.
By advertising on multiple platforms, you increase your property's exposure to potential international student guests, ultimately boosting your chances of generating bookings and revenue.
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Managing finances, expenses and taxes
Managing finances, expenses, and taxes is a crucial aspect of hosting on Airbnb, and it involves several steps and considerations. Firstly, it is essential to set up a comprehensive system for financial management, encompassing income tracking, expense monitoring, and tax compliance. This system should include a general ledger or a similar tool to record all financial transactions accurately. Separating your Airbnb income from personal funds by using a dedicated bank account can greatly simplify this process.
When it comes to expenses, it's important to understand which ones are deductible from your Airbnb income. These may include rent, mortgage, cleaning fees, rental commissions, insurance, and other expenses directly related to hosting. Keeping meticulous records of these expenses is vital, as they can significantly reduce your taxable income. Additionally, if you share your property and rent out only a portion of it, you may be able to deduct a portion of the expenses for the days the space was rented.
Tax compliance is a significant aspect of managing your Airbnb finances. It's important to note that Airbnb income may be subject to various taxes, including income tax and, in some states, sales tax or lodging tax. Sales tax, which is separate from income tax, typically amounts to about 12% of gross rental income, and hosts are responsible for collecting and remitting it to the state or city. To ensure compliance, consult with a tax advisor or accountant familiar with the regulations in your jurisdiction. They can guide you through the special rules and exemptions that may apply to your situation.
To streamline the financial management process, consider utilizing Airbnb property management software with built-in financial tools or accounting software designed for rental property management. These tools can automate many tasks, such as income and expense tracking, and help you generate the necessary financial statements for tax authorities. However, even with these tools, accurate record-keeping and a basic understanding of Airbnb accounting practices are essential to avoid raising red flags on your tax returns.
Lastly, remember that managing finances, expenses, and taxes for your Airbnb listing is an ongoing process. Regularly review your financial statements, guest feedback, and market trends to identify areas where you can improve the guest experience while optimizing your income and expense management strategies. This proactive approach will help you maximize your earnings and ensure compliance with tax regulations.
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Compliance with local, state and national laws
Local Laws and Zoning Regulations
Local laws and zoning regulations vary significantly across cities and counties. These regulations outline how you can use your property and may include restrictions on short-term rentals. For example, in New York City, rentals of fewer than 30 days are typically prohibited in apartment buildings unless the host is present. In contrast, Colorado's short-term rental laws differ by municipality, with each city setting its rules. It is crucial to review your local zoning codes, planning codes, or city ordinances to ensure your listing complies with current zoning requirements.
Permits and Licenses
Many jurisdictions require special permits or licenses for short-term rentals. For instance, most cities mandate hosts to obtain a local permit, especially in tourist hotspots. In Florida, all vacation rentals, including Airbnbs, must be licensed through the Florida Department of Business and Professional Regulation (DBPR) if certain conditions are met. Hosts in most cities in California need to obtain a business license, and some areas have additional registration requirements. Check with your local government to understand the specific permit and license requirements for your location.
Taxes
Hosts are generally responsible for collecting and remitting various taxes, including state and local taxes, hotel occupancy taxes, and sales taxes. These taxes vary by location, so it is important to consult your local government or a tax professional to understand your tax obligations. In certain jurisdictions, Airbnb may automatically collect and remit specific taxes on your behalf.
Landlord-Tenant Laws
When hosting longer stays, you may be subject to landlord-tenant laws, which can vary by jurisdiction. These laws could grant tenants' rights to guests staying for an extended period, and you may need to follow legal eviction processes to remove them. Consult a lawyer specialising in landlord-tenant law to understand your rights and responsibilities in this area.
Contracts and Rules
Understand and comply with other contracts or rules that may apply to your listing, such as leases, timeshare ownership rules, condo board rules, homeowners association (HOA) rules, or tenant organisation guidelines. If you rent your property, review your lease agreement and check with your landlord to ensure you are permitted to sublet through Airbnb.
Remember, failing to comply with Airbnb regulations can result in fines, lawsuits, negative reviews, decreased bookings, or even a ban on your property listing. Being proactive about compliance ensures a positive relationship with your local community and the long-term sustainability of your business.
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Foreign transaction fees
To avoid this fee, you can use a credit card that doesn't charge foreign transaction fees. Many banks cover these fees for their customers. Additionally, you can try paying in the local currency of the listing. By switching the currency to the local currency, you can save up to 3% on the cost of the booking.
It's important to note that Airbnb may not always allow you to pay in the local currency, especially if your bank or credit card is registered to an address in a different country. In such cases, they may force you to pay in the currency of your home country, and then they will handle the conversion themselves, charging you a fee for it.
To minimize these fees, it is recommended to use a travel-friendly credit or debit card that doesn't charge foreign transaction fees. Additionally, when booking on Airbnb, go to the individual listing and change the language and currency to the local ones. This can be done by going to the bottom left corner of the listing and selecting the appropriate options.
By being mindful of these strategies, you can effectively reduce or eliminate foreign transaction fees when making international bookings on Airbnb.
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Frequently asked questions
International students can save money on Airbnb by paying in the local currency of the listing. This is because Airbnb charges a 3% foreign transaction fee to book based on location.
If you are an international student, you can make money on Airbnb by renting out your property when you are away. However, you need to be the owner of the property. You can also invest in long-let properties in university towns and let out your room or property to students during term time and to travellers during the holidays.
Renting out a property on Airbnb as an international student can cause problems with your landlord and their insurance. It could potentially result in the termination of your lease.
