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565. 11 Airbnb Expenses Hosts NEVER See Coming · Thanks For Visiting

1:04
Sarah Karakaian: Hi there.
1:05
Sarah Karakaian: My name is Sarah Karakaian.
1:07
Annette Grant: I'm Annette Grant, and together we are...
1:09
Annette and Sarah: Thanks for Visiting.
1:10
Sarah Karakaian: Most hosts go into short-term rentals knowing the big costs, right?
1:13
Sarah Karakaian: Like mortgage, cleaning fees, furnishings.
1:15
Sarah Karakaian: But what no one hands you is a list of the expenses that show up after you're already all up in it.
1:20
Annette Grant: Yeah.
1:20
Annette Grant: And some of these will cost you a few hundred dollars a year, but some of them will cost you thousands.
1:26
Sarah Karakaian: And none of these are fringe situations.
1:29
Sarah Karakaian: These are operating costs that are part of running a short-term rental business, whether you plan for them or not.
1:35
Annette Grant: Key word there, business.
1:37
Sarah Karakaian: Business.
1:40
Annette Grant: We've been hosting for over a decade, built a multimillion-dollar portfolio, and we work with hundreds of hosts who collectively generate over $2 million in monthly reservation bookings through our private coaching program, Strategic Host.
1:54
Sarah Karakaian: So we're gonna go through the 11 short-term rental expenses most hosts never see coming, and every single one of these belongs in your profit and loss.
2:03
Sarah Karakaian: And if you don't have one of those, or you don't know how to look at it, that's the next step.
2:08
Sarah Karakaian: By the end of this, you'll know exactly where to put them.
2:12
Annette Grant: Number one is short-term rental specific insurance.
2:17
Annette Grant: And we're starting here because this is the one where hosts are most exposed without knowing it.
2:23
Annette Grant: When you operate your home as a short-term rental, your standard homeowner's insurance policy almost certainly does not cover you.
2:30
Annette Grant: Most standard policies exclude short-term rental activity.
2:34
Annette Grant: If something goes wrong during a guest stay, you could be filing a claim on a policy that was never, ever gonna pay out.
2:40
Sarah Karakaian: And for those of you who have hung out with us for a while now, you know how we feel about this.
2:43
Annette Grant: We, we just have to say it again for those in the back.
2:45
Sarah Karakaian: Truly.
2:46
Sarah Karakaian: Air Cover is not insurance, okay?
2:49
Sarah Karakaian: We wanna say that as clearly as possible.
2:51
Sarah Karakaian: It is Airbnb's own damage protection program, not a licensed insurance policy with your name on it, and it doesn't replace your homeowner's coverage.
3:01
Sarah Karakaian: We did an entire video and countless podcast episodes breaking this down, and we'll, we'll link that video, the most recent one, in the show notes.
3:10
Sarah Karakaian: But what you need is short-term rental specific insurance and a broker who understands the short-term rental business.
3:19
Sarah Karakaian: Number two is licensing and permits.
3:23
Sarah Karakaian: Depending on your market, operating a short-term rental legally requires a permit, a license, an annual inspection, a renewal fee, or I don't know, all the above.
3:33
Annette Grant: And a background check.
3:34
Sarah Karakaian: Yes.
3:35
Sarah Karakaian: Yes.
3:35
Sarah Karakaian: That costs extra money here in Columbus.
3:37
Sarah Karakaian: And the regulations in a lot of markets, they're still changing.
3:40
Annette Grant: We've watched market shifts literally overnight on short-term rental rules.
3:44
Annette Grant: The hosts who weren't tracking their compliance requirements had to maybe pause their operations- Oh, yeah while they caught up.
3:50
Annette Grant: The fees themselves, they're not always enormous, but not being compliant has serious consequences.
3:56
Annette Grant: Know what your market requires before you list, not after you get a notice.
4:01
Sarah Karakaian: Okay, number three.
4:02
Annette Grant: Oof.
4:03
Annette Grant: No one plans for this.
4:04
Sarah Karakaian: No one plans for this.
4:06
Sarah Karakaian: Platform fees and OTA commissions.
4:09
Sarah Karakaian: Every time a guest books through Airbnb, VRBO, or any other platform, that platform takes a service fee, and so many of you are not recovering them, so, you know, pay attention here.
4:20
Sarah Karakaian: If you're on multiple platforms, those fees stack up across your full calendar.
4:25
Annette Grant: Mm-hmm.
4:25
Annette Grant: And we talk to hosts regularly who have built their profit projections off the gross booking amount without ever backing out the platform fees.
4:33
Annette Grant: Mm-hmm.
4:34
Annette Grant: Your mortgage doesn't care about gross revenue.
4:37
Annette Grant: You gotta plan around what you keep after every platform takes its cut, and make sure that number is in your P&L from the start.
4:45
Sarah Karakaian: P&L, and also when you're doing a pro forma, make sure you have...
4:48
Annette Grant: Yeah, you want to plan for it.
4:49
Sarah Karakaian: Absolutely, a section for, for platform fees.
4:52
Annette Grant: And those have shifted dramatically for Airbnb hosts specifically in the last 12 months.
4:58
Sarah Karakaian: Yeah.
4:59
Annette Grant: Number four is that tech stack bloat.
5:03
Annette Grant: When you start hosting, you are going to inevitably start adding tools.
5:07
Annette Grant: A property management system, a dynamic pricing tool, a guest communication platform, a smart lock system, a noise monitor, a review automation tool.
5:18
Annette Grant: The list goes on and on, and before long, there are eight monthly subscriptions running in the background.
5:24
Sarah Karakaian: And half of them overlap with something else you're already paying for, and half of them you set up and you never fully learned and forgot about.
5:30
Sarah Karakaian: When we start working with a new client, tech audit is one of the first things we do.
5:35
Sarah Karakaian: Know what you're paying for and whether you're using it.
5:38
Sarah Karakaian: Do that review at least once a quarter.
5:42
Sarah Karakaian: And by the way, this is the exact work we do with our private clients inside of our coaching program, Strategic Host.
5:47
Sarah Karakaian: Join us live and see if it's the right next step for your business.
5:51
Sarah Karakaian: All the deets are in the description.
5:55
Sarah Karakaian: Number five is, you guys are never gonna guess this.
6:00
Annette Grant: Credit card?
6:01
Sarah Karakaian: Credit card processing fees.
6:03
Sarah Karakaian: And this one is specifically for hosts building out a direct booking site, which don't let this deter you, but I just, we gotta, we gotta be real.
6:10
Annette Grant: Be prepared.
6:10
Sarah Karakaian: When you accept credit cards directly from guests, processing fees, usually around 2 to 3% per transaction, come out of every booking.
6:18
Sarah Karakaian: We love seeing direct booking revenue, we really do, but here's the part that often gets missed.
6:23
Annette Grant: Yeah.
6:24
Annette Grant: When a guest potentially, unfortunately cancels and you issue a refund, that processing fee from the original transaction, it does not come back to you.
6:35
Annette Grant: The processor has already collected it.
6:37
Annette Grant: So you're refunding the guest the full amount, and you're gonna absorb that fee yourself.
6:42
Annette Grant: And on a high average daily rate, those fees on refunded bookings, those can add up over the course of a year.
6:49
Annette Grant: Decide ahead of time whether you're refunding less the processing fee and make sure that's clearly communicated so there are no surprises for your guest.
6:59
Annette Grant: Number six, this follows directly, it piggybacks off the last one.
7:05
Annette Grant: Credit card chargebacks.
7:08
Annette Grant: If you're not familiar, a chargeback is when a guest disputes a charge directly with their credit card company.
7:16
Annette Grant: The credit card company actually pulls the funds back from you while the dispute is being investigated.
7:21
Sarah Karakaian: It's brutal.
7:22
Annette Grant: And that system is built to protect the consumer.
7:26
Annette Grant: Winning a chargeback dispute as a host, we want to just keep it real, it is a very hard.
7:33
Annette Grant: Heck, for, for most companies, it's a very hard thing to do.
7:36
Sarah Karakaian: Yeah.
7:37
Sarah Karakaian: This is mostly a concern if you're the merchant of record, meaning you're processing the payment directly.
7:43
Sarah Karakaian: So for Airbnb, pretty much Airbnb's, like, the only OTA that I can think of, um, that handles their own chargebacks for now.
7:51
Annette Grant: Mm-hmm.
7:51
Sarah Karakaian: For now.
7:52
Sarah Karakaian: For now.
7:52
Sarah Karakaian: But on VRBO, on a direct booking site, a lot of the other OTAs where, like, they get you the lead, they get you the guest, but then you take care of processing the reservation through Stripe or any other
8:03
Sarah Karakaian: payment processor, a guest can dispute that charge and come after those funds.
8:08
Sarah Karakaian: And talking about chargebacks is a whole episode in itself.
8:11
Sarah Karakaian: Maybe we'll do that another time.
8:14
Annette Grant: And here's the deal, it's not if a chargeback happens to you, it's when.
8:20
Annette Grant: You need to plan for one chargeback loss per year in your P&L.
8:25
Annette Grant: And when you've accounted for it in advance, this doesn't blow up your margins for the month when it lands.
8:31
Annette Grant: And honestly, you should plan, whether it's at a chargeback specifically, you should even plan for a dispute on Airbnb with a guest, even though they don't do chargebacks.
8:43
Annette Grant: Just planning ahead, and I mean, this has happened to me.
8:45
Annette Grant: I've had ran so many businesses over my career.
8:49
Annette Grant: Chargebacks are a part of every single business, from food and beverage, to apparel, to hospitality.
8:58
Annette Grant: But planning for it will just make it easier.
9:00
Annette Grant: Make it so much easier when it happens.
9:02
Sarah Karakaian: Should we get t-shirts that say, "Chargebacks happen?"
9:04
Annette Grant: No.
9:04
Sarah Karakaian: Oh, okay.
9:05
Annette Grant: No.
9:05
Sarah Karakaian: Okay.
9:05
Annette Grant: Chargeback happens and I got the T-shirt.
9:09
Sarah Karakaian: Number seven is the utility spike.
9:13
Annette Grant: Ooh.
9:13
Annette Grant: Sara, Sara's husband, Nick would...
9:15
Annette Grant: This one really gets him.
9:17
Sarah Karakaian: This really does.
9:18
Sarah Karakaian: This is where I, like, actually could take my own advice here 'cause I'm like, "Yeah, whatever."
9:22
Sarah Karakaian: A full calendar is the goal, and a full calendar means full-time usage.
9:26
Sarah Karakaian: Guests run the AC around the clock because they're not paying the bill.
9:29
Sarah Karakaian: The hot tub runs continuously, and turnover day puts the laundry through multiple cycles.
9:34
Sarah Karakaian: Most hosts don't model what a high occupancy costs to run, and the utilities are usually the first place it shows up.
9:41
Sarah Karakaian: And I don't, I am, I am still not a fan of us making the guest operate the thermostat within boundaries.
9:49
Annette Grant: Mm-mm.
9:49
Sarah Karakaian: I'm just not.
9:51
Sarah Karakaian: You can't convince me otherwise.
9:54
Sarah Karakaian: So plan for it.
9:55
Annette Grant: Let it go.
9:55
Sarah Karakaian: Yeah.
9:56
Annette Grant: And if you offer pool heat, this is especially important to model.
10:00
Annette Grant: Pool heat is very expensive to run, and if you didn't build that in the operating cost into, or into your pricing woo, it swings your bottom line significantly on a heavily booked month.
10:12
Annette Grant: As occupancy goes up, utilities go up with it.
10:15
Annette Grant: That relationships needs to be on your forecast from the very start.
10:20
Annette Grant: Number eight is photography, and specifically the fact that a photo shoot, one of them is often not enough.
10:31
Annette Grant: We get into Airbnb accounts every week with million-dollar homes and photos that are doing nothing for the listing.
10:41
Annette Grant: This is something that we have been talking about constantly for years.
10:46
Annette Grant: But here's what most, most hosts, they really haven't considered.
10:51
Sarah Karakaian: If your property sells a specific experience, you need photos that match the guest you're trying to attract at that moment.
10:59
Sarah Karakaian: A property marketing a fall experience, you need fall photos.
11:03
Sarah Karakaian: Okay?
11:04
Sarah Karakaian: Drone shots, everything, the view.
11:06
Sarah Karakaian: A property selling summer on a lake, well, you need summer shots.
11:10
Sarah Karakaian: A daytime and evening photos can look like two completely different experiences and properties.
11:16
Sarah Karakaian: Lifestyle and still shots serve different purposes.
11:19
Sarah Karakaian: If someone in your market is investing in seasonal content and you're not, they're getting bookings you're not getting because their listing matches what that guest is searching for in that moment.
11:29
Sarah Karakaian: Like, it's evoking an emotion, like, "Oh, I'm so excited to go and see those leaves.
11:33
Sarah Karakaian: I'm so excited to be in front of that, that indoor fireplace with the snow falling outside."
11:38
Sarah Karakaian: Right?
11:39
Sarah Karakaian: Drone shots have also changed the game for properties.
11:42
Sarah Karakaian: Um, the views, the location is all part of the sell, and you need to plan for it.
11:47
Sarah Karakaian: You need to market it accordingly and have the budget to do so.
11:51
Annette Grant: And do not let AI make up photos for you.
11:54
Sarah Karakaian: Don't do it.
11:55
Sarah Karakaian: Don't be that host.
11:58
Sarah Karakaian: Number nine, buy nice or buy twice.
12:01
Sarah Karakaian: And I mean, and this is saying, but I, I believe this saying.
12:04
Sarah Karakaian: I've lived it.
12:05
Sarah Karakaian: The saying for a reason.
12:05
Sarah Karakaian: I, I believe it.
12:06
Sarah Karakaian: I, I know it.
12:07
Sarah Karakaian: Short-term rentals put heavy use on furniture in a way a personal home never does.
12:12
Sarah Karakaian: Your bed frame, your mattress, your sofa, your patio furniture are cycling through, not just cycling through guests constantly, but different kinds of guests who treat the furniture differently, right?
12:21
Sarah Karakaian: A couch that lasts 10 years in a personal home might last two in a busy short-term rental.
12:26
Annette Grant: Hosts who think they're saving money on these items end up replacing them more frequently and spending more over time than the host who invested in quality from the start.
12:37
Annette Grant: And the wear shows up in your reviews before it shows up in your replacement schedule.
12:40
Sarah Karakaian: Yeah.
12:40
Annette Grant: You know, you don't wanna have the saggy mattress or the worn out outdoor seating getting mentioned in your reviews.
12:46
Annette Grant: Invest in these items guests are going to interact with the most.
12:51
Annette Grant: And number 10 is your financial team, your CPA, a bookkeeper, your attorney.
12:58
Annette Grant: These aren't expenses most hosts think about when you're setting up your first property, but they are the people who will save you the most money over the lifetime of the business when you use them well.
13:10
Sarah Karakaian: An attorney gets your business structure right from the start, reviews contracts, and protects you when something goes sideways.
13:17
Sarah Karakaian: Like, your attorney has, if they're good, has seen a lot.
13:21
Annette Grant: Mm-hmm.
13:21
Sarah Karakaian: And so they can help you not be a part of all those stories that they've been a part of, right?
13:27
Sarah Karakaian: A CPA who understands short-term rentals finds deductions most hosts never knew existed and keeps you out of tax situations that come from not understanding how short-term rental income is treated.
13:39
Sarah Karakaian: A bookkeeper keeps your P&L current, so you always know where you stand.
13:43
Sarah Karakaian: You don't need all three on retainer, but find them early and build the relationship before you need them urgently.
13:52
Sarah Karakaian: Okay, number 11 is the most expensive one on this list, and it's one that never shows up on a statement, hosting without a pricing strategy.
14:00
Sarah Karakaian: You know we'll die on this hill, you guys.
14:02
Sarah Karakaian: Without understanding your numbers, without knowing what to do when bookings slow down or when demand spikes, costs host thousands of dollars, you guys.
14:11
Sarah Karakaian: We see it time and time again on hosts that don't deserve to not make money.
14:15
Sarah Karakaian: It's happening, um, without them ever seeing it, uh, leave their account.
14:20
Sarah Karakaian: It's just...
14:21
Sarah Karakaian: I wish I could save all of you, and so...
14:24
Sarah Karakaian: don't do this.
14:25
Annette Grant: And the version of this that we see most often is a host who has Price Labs, they have it connected, and they assume that that investment in the dynamic pricing to software is the strategy.
14:39
Annette Grant: They don't understand the settings.
14:41
Annette Grant: They don't know how to read their data.
14:43
Annette Grant: So when the bookings slow down, the only move they make is to panic price and drop the rate.
14:48
Annette Grant: They drop it, if they get a booking, and it feels like it worked, but they never find out if that guest would have paid more.
14:56
Annette Grant: And they do the same thing on every date, on every weekend, on their highest demand nights of the year.
15:03
Sarah Karakaian: Now, that pattern across a full calendar is tens of thousands of dollars left on the table, and that's just one property.
15:10
Annette Grant: Mm-hmm.
15:10
Sarah Karakaian: Okay?
15:10
Sarah Karakaian: Now, when you compound it, if you are a co-host, you own multiple properties, this is just a system or a, a, a situation that just is...
15:18
Sarah Karakaian: goes on repeat, and it's no, not good.
15:20
Sarah Karakaian: Not because the market was bad, and it's not because your property isn't strong enough, it is because you don't know what you don't know, and it had a price tag attached to it that you never calculated.
15:31
Annette Grant: And that is all 11, and that last one is the one that we would actually fix first because once you have a strategy and understand your numbers, every other expense on the list gets easier to manage.
15:45
Sarah Karakaian: The hosts who struggle financially are almost never struggling because the market failed them, even though they'll blame the market.
15:52
Sarah Karakaian: Something on this list caught them off guard, and most of the time it was something they could have planned for.
15:58
Annette Grant: Now you know what's coming.
15:59
Annette Grant: Get your insurance sorted, know your numbers, and build the right team around you before you need one urgently.
16:05
Sarah Karakaian: Inside of Strategic Hostess, we help hosts get more nights booked, charged what their property is worth, and stop leaving money on the table.
16:12
Sarah Karakaian: This is the exact work we do with our private clients inside Strategic Host.
16:16
Sarah Karakaian: So we want you to join us live.
16:17
Sarah Karakaian: We show up live, see if it's right, if it's the right next step for your business.
16:21
Sarah Karakaian: All the information is in the show notes.
16:25
Sarah Karakaian: And with that, I am Sara Karakaian.
16:27
Annette Grant: I'm Annette Grant, and together we are...
16:29
Annette and Sarah: Thanks for visiting.