Costs of hosting?

[Ben205]

I'm wondering if any of you have figures to share for the financial cost to you of hosting?

It's a slow morning, so I thought I'd work out how much it costs me to do the laundry each change-over - £2.22! That's 4 loads at home, covering electric, soap, water, ironing and depreciation of the machine. Drying I do outside on the line. Doesn't sound much, but 40-50 times each year and it adds up.

Broadband is £336/ year. Insurance £152.

Have you done any calculations? Replacing linens? Heating/ electric? I know all properties are different, but it may be interesting to share - please do!

[Rebecca181]

@Amy38 Most add ons will not cover short term rentals; the one I found (SafeCo) allowed only 30 days for the year, and I was not allowed to serve food or beverages (or wine, etc). My situation required me to have more than a landlord rider; I needed commercial combined with residential. Only two companies do this in the U.S., that I am aware of: CBIZ and Proper Insure. I went with Proper Insure because they cover more, including some of the more bizarre things that could happen with a guest.  With that said, I am always open to learning about insurers who cover commercial / residential; I'd love to save a bit of money on my premiums!

[Amy38]

@Rebecca181  I have my home ins  through Tn Farm Bureau and the add on for commercial was only 140.  On another thread someone just mentioned that NC Farm Bureau had a special policy just for Abnb.   There must be a CA Farm Bureau.....check them out.

I have used them for decades for my car insurance and just recently changed all my home and rental to them and saved about 1500.  I have a million in liability as well as all the fire and theft.

that my home is adjacent to my Abnb rental may be a difference, but I previously had what was called an Umbrella policy for the abnb which cost $240 through my insurance agent.

last week I got a mailer from State Farm offering to insure the Abnb but it looked like it was just theft orwaterdamage, not liability.

And are you shopping for insurance with an agent or are you going the internet route?

a good agent can pull in isnsurance from a lot of companies.

[Rebecca181]

@Amy38, Yes, I used an agent, a very reputable one. I appreciate the information and I will put on my detective hat and start doing some research and look into these other options you mention. I also live on the same property as my rental and the two homes (once completely separate) are now connected by a breezeway. When I read various forums, other owners have said that Proper Insure and CBIZ were the only two that gave them full commercial and residential coverage. So I will look into Tri Farm Bureau and see if could work for me and if I can access it in my area. Thanks so much!

[Jessica-and-Henry0]

@Ben205

Henry and I are entering our 2nd year of hosting, and we host a single occupancy private room and private bath in our home. We moved in and lived here about 8~9 months before we started hosting. We had to buy all new furniture and appliances moving in and to be honest we did not consider hosting at first. We had left one bedroom unfurnished because we weren't sure what we wanted to do with that room and furnishing it was not a priority at the time 🙂 Once we did decide to host, it was furnished with IKEA or similar style/price furniture and we looked for good deals online and and did a bit of bargain hunting at the local dollar store and clearance sales for bedding and other stuff needed. We recovered the full cost of setting up our private room listing in about 2 months. 

If we compare utilities and overall cost of living before and after hosting, there has been minimal impact. About a 5~10% increase in the water and electicity bill with the most significant increase in July~August. We already had a pretty good internet service pack set up so no additional cost there. 

Then there is the cost of the labor related to hosting which is hard to calculate exactly - mostly cleaning and extra housekeeping, a bit of extra laundry (we handle laundry for guest towels and sheets), and minor efforts for managing the listing and communication with guests. We host mostly long-term (exchange student) guests staying anywhere from 1 to 4 months, so we do not have frequent turnovers which helps keep the cost of hosting down. We have a separate budget set aside (a rainy day fund of sorts) to cover the costs of replacing sheets or anything in the guest room or in case there is minor damage. As we enter our 2nd year of hosting, Henry estimates our net profit at a stable 80~85% of the payout we recieve. 

Also, since we host from home Henry and I like to have some down time between guests (usually during school vacation months) where we have our home to ourselves. Our occupancy rate for the past year was about 80% and we want to keep it at this level this coming year. 

FYI, because we host only 1 foreigner at a time in the home we reside in and the total income per year is under the min taxable income level we do not pay additional taxes and are not required to register as a small business so this also helps our bottom line immensely, especially because this also means our guest is covered thru our existing home insurance as a "house guest" (and is not seen as a tenant or renter). 

[Ben205]

@Jessica-and-Henry0Interesting analysis, thanks. Different situation to ours (we have a whole house, usually rented for 3-4 nights), but the net profit figure is something to compare. I'm hoping to get to the point where I can say what ours it - not there yet! Thanks.

[J-Renato0]

Hi Ben

It is another good topic!

I think that having a holiday apartment or house to let is kind running a small business.
Every business must have insurance and some fund for maintenance and also self insurance.
It is not practical to get into lots of details to reach some figures. It can be useless and may depend on statistics and probabilities.

I see some costs are regular expenses, such as soap, electric energy, fees and whatsoever is in the same category.
To form the price we must include such items, of course considering our own reality and particularities.
If we do that, It will give as certainty that, in the short run we are doing well.

I think that the approach for depreciation and maintenance can be different.
I usually consider that I have to save separately about 4% of the lucre to be a kind of self insurance fund for maintanence and to replace things such as equippaments, pieces of furniture, linens and towels, (worn out things or things that broke due to some incident). It can be used even to repair other damages to the property or to paint the walls when it is necessary.

I have heard that, hotels save apart about 4% of the lucre for the same reason that I have described before.

By doing that we can be sure, that we are not wasting money along time or in the long run.

We can also be sure that, we will have money for maintenance and to invest or spend money (once in while) on something to make the property better and up to date.

[Alex790]

That is incredibly good Value! I spend about £10 per bed per stay to wash and dry at the launderette not including my time!!

Due to the highly eratic weather we have here in Blighty I could not be as brave as you and risk drying on the line do you find that works even when you are bsy and when you have a quick turn around?

Alex

[Ben205]

@Alex790Hi. Yes, we're in Englnad and I manage to dry the laundry without a dryer (well, have since we started last April). It's surprising how things dry even in January, though I do have to hang sheets up inside every now and then.

We're also fortunate that because our minimum stay is 3 nights, I don't have to wash/ dry and get the linens back on straight away. Usually there's a good day (like today, we call it a '4 wash day' in the our family!). It does save us lots of money.

[Ben205]

@Alex790Had to revise down my forecast, only a 3 wash day!

[Alex791]

Haha! What happened? It’s still sunny and bright down south!

[Todd88]

They way I looked at it, how much would it cost me to hire someone to do it, round up, then do it myself.  That way if I, ever decide to hire someone, the cost is built in.

[Ben205]

@Todd88Hi. We do our turn around and I see the profit from hosting as my payment (I have to declare it as earned income on my tax return). We once paid somebody to do it and it cost me £60+ (it's a whole house). This is a big chunk out of my income, so for now I'm doing the ironing!

[Brett3]

Hey @Ben205,

I have a couple of apartments on the Gold Coast in Australia. Unfortunately the council rates for land and water are amongst the most expensive in the country. Electricity is pretty rude here too. My last quarterly elec bill was $505 for just 1 apartment. Then you have tax, land rates, water rates, body corp, internet etc, etc, etc.

It would absolutely cost me money if I followed the so called 'Smart pricing'. The best I have seen on my listings is a suggestion to rent my 2 bedroom, 2 bathroom apartment about 5 minutes walk from the middle of Surfers Paradise for $47 per night. 

I know my numbers because like you, I sat down and worked out my costs to a tiny margin. You have done the smart thing and now literally run with the old adage: "Make hay while the sun shines". You should find the busy times more than cover the quiet. 

[Jennifer2297]

Hi Ben I’ve been looking on here for an Australian to ask about calculating costs ..we have a studio in the sunny coast and have just started on here ..I’m trying to work out how to calculate all the costs like washing all the bedding etc ..for tax purposes do you have any tips for me? Ta jen

[Lilian20]

That's the point, each accomodation is different.