Making money from your home
Sharing economy is allowing several home owners to let out a part of their homes to travellers & also make money
Hotel rooms are so predictable that many frequent travellers prefer a service apartment these days to break the routine. Then, there are the holiday travellers and frequent travellers who are looking for reasonably priced and less hotel-like options. The proliferation of the homestay industry in recent years has stemmed from two drivers— an increasing shared economy population and a price point which is easy on the pocket. Moreover, a homestay assures an experience of living in a homelike environment.
More importantly—for the renters, the extra space they have can bring in steady revenue. Take for instance, Pune-based engineer couple Sunny Raj and Divya Gupta, who stay in a 3 BHK self-owned apartment in upmarket Koregaon Park Annex. The Guptas have listed their property on Airbnb and the income they make from it, besides their regular day jobs, help them ease the EMI burden. Like the Guptas, lot of people who have spare rooms or apartments are letting out their property on platforms like Airbnb and earning a side income, which is more than what they will get if they rent out the same place. Apart from the money, for many it is a way to meet nice and interesting people from all over the world.
There are many services that let people hire and find homestays. For instance, take the sector leader, Airbnb. Since its launch in 2008, Airbnb has been growing steadily, offering people an alternative to hotels. Arjun Dasgupta has listed his 2 BHK apartment in Kolkata’s prime location Gariahat on Airbnb and also on other platforms like guesthouses.com, booking.com and homestays.com. He stays elsewhere, so the entire apartment is listed.
Dasgupta, as a marketing manager for a US-based company works in the night shift, 7.30 to 4.30, so he can devote time during the day to manage his vacation rental. “I love hosting people and this is something I am really passionate about,” he says. Currently, he is booked till October and his guests include travellers from Australia, Canada and Mexico.
The key is to set a home away from home for travellers. One of the first things to do is to suitably furnish the property and ensure that it has all the amenities guests would expect. Gupta invested Rs 32 lakh in getting the interiors done so that it gave a pleasant ambience to the guests and made their stay luxurious. For Dasgupta, who had a fully furnished property, the initial investments were much less at Rs 1 lakh and include things like an LCD TV, furniture, bedrolls, towels and so on.
While many renters see it mainly as an income generating source, some of them are equally passionate about hosting. For entrepreneur Amulmeet Singh Chadha and his wife Vidya Loganathan, travel hosting is a way of life. They have a 5 BHK villa in the heart of Koramangala, Bengaluru, which is on long term lease. “We have converted it into an urban co-living homestay. Our villa is a two minute walk from Sony Signal. My wife and I are the hosts here and we live on the property. We are listed on platforms like Airbnb, booking.com, Tripadvisor and many more,” he says.
“We designed the interiors of this villa ourselves keeping the comfort of the guests in mind. Whatever luxury my wife and I have access to is the same for the guests. A fully equipped living area, outside seating area, full fledged kitchen and a laundry station for hygiene. Money invested depends on the property but a considerable time is invested in ensuring you have everything a modern home needs,” says Chadha.
However, not all renters opt to enrol in portals. It is also common for renters to directly post ads on Facebook and Google. Kolkata couple Anusreea Paul and Swarnava Mukherjee have converted a part of their own house in Salt Lake into a guesthouse, but have not listed on Airbnb or any other platform. “We only have a Facebook page, and have registered on Google. It runs mainly on word of mouth,” says Paul.
Most travel hosting platforms have certain guidelines that need to be followed for a property to be listed on their website. Guidelines include setting up of an account with the hosting platform, submitting details of your property with amenities available and posting appropriate pictures. Hosting sites like Airbnb will help you in the process and also let you decide what price you should be charging based on various factors like location, amenities provided and so on. One can list the property for certain given dates and block it out on other dates too.
It is crucial that one starts with an undisputed property. If one is taking such a property on rent, it is mandatory that the landlord is informed. If the apartment is in a society, the permission from the society would be recommended. However, when it comes to what legal regulations one has to follow to list property on a travel hosting site, there are different laws for different cities.
In some cities you need to register, get a permit or a license before you can list your property or accept guests. In certain cities there are prohibitions on short term bookings. For example, the Karnataka government has made it compulsory to register all homestays online. Other states do not have any specific legal requirements for subletting a property. It would still make sense to inform the police and the fire authorities of such an arrangement.
The income depends on a lot of factors. First is the kind of property and the rent it fetches per day or for monthly bookings. This will depend on the property size, location and various amenities provided. Once a booking is completed, Airbnb will charge a commission of three to five per cent depending on the cancellation policy and then make a payout to the host. The Guptas make a booking of 15-18 days on an average and earn a minimum of Rs 20,000 per month.
Rates can vary from as less as Rs 600 per room going upwards to Rs 3,000 or more for properties at prime locations and the monthly income would depend on occupancy rates which would go up during holidays and festive season. Regular costs include that of cleaning, laundry, electricity, maintenance, Internet bills and also for buying things like tissues, room fresheners, garbage bags and other essentials.
For Paul, whose homestay charges Rs 1,000 to Rs 1,200 a day, the focus is not just on earning money but to help travellers who want comforts of a hotel at a lower price. “We also offer lunch, and dinner but at an additional cost. Breakfast is free. We generally have people stay for a week or lesser. The money earned is used to pay the maid’s salary, electricity bill, and other repairs, if any,” she says.
Gupta plans to continue with the arrangement till she has a family and needs the other rooms in the house. For Dasgupta, this is a way to save up for education abroad in the future. The Chadhas on the other hand, plan to continue this arrangement. They believe co-living is more of a lifestyle choice and if you are fine with it you will increase the quality of your life by hosting different people from different walks of life. Good hosting skills are crucial to provide a pleasant experience to the guests. Having to deal with an unpleasant guest or host is a risk that one has to take in this case. However, online portals make a point to take reviews from both the parties of each other. Such ratings are crucial as they may affect future bookings.
While homestays may be gaining momentum right now, it is hard to predict whether travellers will choose them over hotels in the long run. Consider the case of Ola and Uber. Though initially profitable for the taxi drivers, with surge in the number of cabs, trips within the city became unbelievably cheap. While this made the customers happy, it did not necessarily play out well for the drivers. Similarly, if the number of homestay options available goes up, renters would have to up their game. As long as you are satisfied with a part of your house being let out, the money you make is good. Let the homestay business be purely a side business and not the main stream of revenue.
Setting up a homestay in India
- Size: You can rent out an entire property, a single room or even a shared space
- Rent: Some online portals have fixed rent depending on your property location and size, there are others where it is the renters who decide the fare.
- Location: The location of the homestay should be accessible easily. If it is too far from the city or difficult to reach, it may be a put off.
- Services offered: Basic provisions like clean towels, bed sheets, toilet papers etc. should be provided. Most homestays also provide light breakfast. Standard of cleanliness and comfort should be maintained at all times. Obviously, the more services you provide, the better your chances of being recommended.
- Getting licences: The procedure is not the same throughout the country. You can get licence through your local district tourist office. While it is easy to get permits, you can expect surprise inspection before your homestay is recognised as one. Since most states do not consider homestays as commercial enterprise, no commercial, luxury or service taxes are levied.