Emergency Expenses for Airbnb Hosts
The most common crisis that almost every Airbnb host will face is emergency expenses. Whether it is a clogged toilet, a broken lock or a dead TV set, you will be faced with an emergency expense sooner or later.
Such expenses can be small, from replacing the toaster to buying a new washing machine. To make matters worse, such emergencies often come at the worst possible time, like after you paid the bills and you only have $100 in your checking account. Emergency expenses are also most likely to occur right before your Airbnb guests arrive, meaning you have no choice but to deal with them or cancel the booking.
Smart hosts will anticipate such expenses and prepare for them before they occur. Payfully, the startup that helps hosts to get paid in advance, has shared with us the best steps that you can take to prepare for emergency expenses.
Steps you should take to prepare for emergency expenses include:
- Establishing an emergency fund. If possible, have a few hundred extra dollars in a bank account that you can access quickly. Many banks now have offer savings and even money market accounts with debit cards. Such an account can let you save money, earn interest, and have cash you can access quickly in an emergency. A good way to build up such a fund is to put a percentage of payment from Airbnb into it.
- Having an emergency credit card to use. Simply set aside one credit card with a high limit that you can use for emergencies. This will enable you to cover unforeseen bills or expenses without using up any cash on hand. A good rule of thumb is to always use the credit card to pay large emergency expenses.
- Taking advantage of factoring. Payfully will advance cash against future bookings. This can enable you to cover immediate expenses such as replacing an appliance, stocking the fridge or paying the cleaning bill without having to touch your savings or resorting to credit cards. Payfully is a platform that allows hosts to apply for cash advances, that means you don’t need to wait for your guest to check in to get paid!
- Saving money by paying yourself first. Many people get into the habit of paying all their bills or expenses before putting money in a savings account. A good way to have extra cash available is to set a percentage of your Airbnb payout to go to your savings by direct deposit (ACH). You can do this directly in your Airbnb account, you can automatically transfer five or ten percent of your payments into a savings account when you get paid.
- If you are using Airbnb for extra income, consider depositing all the payout in your savings account. This way, you can build up savings that can be used as part of your emergency fund or for future expenses.
- Creating a budget and sticking to it. Budgeting will not prevent emergency expenses, but can help you control your spending and make running out of money less likely.
- Making sure that you are adequately insured. Standard homeowners and renters’ policies may not cover short-term rentals. Airbnb itself offers Host Protection Insurance, and there are some other products on the market. Always check with your insurance agent or insurer as certain companies are beginning to offer Host Insurance. You will have to pay extra for this coverage but the cost can be cheaper than paying for property damage out of pocket.
The most important thing to remember is that emergency expenses will occur no matter what precautions are taken. You can survive them if you have cash, insurance and the proper financing in place to deal with them.
Payfully is a startup that helps hosts to get paid in advance. Why wait weeks for your guests to check-in to get paid for your bookings. You can check out their profile on airhosta at Payfully!