How Retirees Can Earn Extra Cash by Turning Their Home into an Airbnb

While staying at an Airbnb in the Hudson Valley last year, Kathy Corby, a retired physician, realized she would love to own a home there and share it as an Airbnb. She soon bought an 1890s Cape Cod with four bedrooms and two bathrooms in Saugerties, N.Y. Corby named it Lilac House after the huge, surrounding lilac bushes. She furnished the home with leftover furniture after downsizing into her Philadelphia condo and bought the rest on Black Friday. In early 2021, she hosted her first Airbnb guests and quickly earned the coveted status of Superhost. Lilac House is not only paying its own way, from mortgage to utilities, but also generating income. In her first nine months, Corby, 72, earned about $1,500 per month after expenses but before taxes. She spends about a week there every month. “I have my cake and can eat it, too,” she says.

Airbnb is an online home-sharing reservation service that connects hosts and guests. The site offers advice and tools to create and manage a listing, whether a house or a single room. According to an annual survey of Airbnb hosts, about 25% are retirees. They use their earnings to pay for living expenses, home improvements and extended travel, like the host who shipped a Volkswagen bus to Europe and used it to tour the continent for five months. But make no mistake: As a host, you are running a business with all the risks and rewards that go with it. “Expect that this will be more work than you anticipate. It’s NOT a get-rich-quick scheme! There is a lot of emotional, physical and financial labor that goes into hosting,” says host Laura2592 in an online post.

Creating a listing is free, but Airbnb deducts a 3% fee from the proceeds of every booking. Airbnb charges guests as soon as you confirm their reservation, and you generally receive payment 24 hours after check-in, usually by direct deposit or PayPal. The interactive tool What’s My Place Worth at estimates your earning potential. Actual earnings will depend mainly on the demand for accommodations in your area, your nightly rate and availability, positive reviews and any municipal restrictions.

After each stay, guests can rate hosts with up to five stars and post reviews, or vice versa. Airbnb says the key to keeping guests happy is warm hospitality and an accurate listing that tells travelers what to expect. The company asks that you respond to inquiries and requests within 24 hours, accept them whenever you’re available, avoid canceling on guests and maintain a high overall rating. The Superhost status goes to those who rate at least a 4.8 from 5.0 overall for the past 365 days of reviews, with minimum cancellations and rapid response times to guest questions or requests, among other requirements. Superhosts can charge higher nightly rates and earn more as a result.

During the pandemic, Corby and other nonurban hosts fared better than urban hosts, as cooped-up city dwellers looked for space where they could work and play. As travel rebounds, guests still want pet-friendly listings with wireless internet and remote workspaces.

The Legalities of Running an Airbnb

Before you begin shopping for luxury bedding, though, make sure you can create a short-term rental legally. Many cities have introduced tougher restrictions for short-term rental properties to protect their community’s quality of life and housing market. Once you accept Airbnb’s terms of service and activate a listing, you agree to comply with its policies and follow your local laws and regulations. Don’t overlook the covenants, conditions and restrictions of your homeowner’s association. If you violate those, the HOA could fine you or place a lien on your property, says Stephen Fishman, a lawyer and author for legal publisher Nolo Press.

Local governments typically require you to register your Airbnb, obtain a permit and a business license, pay fees ranging from $100 to several hundred dollars, and renew those annually. You may be required to pass an inspection and notify your neighbors of the rental. If you have unruly guests, you could incur citations, fines and the enduring wrath of your neighbors.

Make Your Airbnb Comfy

Carla Reissman, 65, of Arlington, Va., began hosting an Airbnb in her home after her husband, Ted Kennedy, 65, retired unexpectedly early. With two kids in college, the couple needed to supplement her income. They outfitted a spare bedroom on their first floor with furniture they bought on Craigslist (bed, beside table, lamp, reading chair, dresser and mirror) and reserved a nearby bathroom for guests in residence. With their master suite on the second floor, the couple preserved their privacy and that of guests. The kitchen was offlimits to guests, except to store their provisions in the fridge. Reissman provided guests with towels, bath soap, a Wi-Fi password and a cup of tea or coffee in the morning. “It was safe, clean, comfortable and not ugly,” says Reissman, who has since stopped hosting to travel with her husband.

Airbnb shows hosts how to create a guest-friendly space, and new hosts can ask questions of Superhosts on Corby, however, felt that she learned more from two books: Airbnb for Dummies (Wiley, $19.99) and Optimize Your Bnb (OptimizeMy LLC, $14.99). Her many amenities include five ways to make coffee, a burr grinder and a supply of high-end beans. It’s smart to test-drive your space by staying overnight in it yourself.

Lack of cleanliness is a top reason for a negative review. Airbnb requires a five-step cleaning and sanitizing process, which was developed in response to the pandemic and the standards of the pickiest guest, for whom one stray hair may be one too many. Corby once drove five hours in a snowstorm to clean her house between guests when her maid service couldn’t make it.

Establish Rules for Your Airbnb

Decide how you’ll check in guests. Reissman receives guests in person or hides a key when she can’t. With a lockbox or electronic lock, you can have contactless check-in and change the combination or code between guests for security. Corby uses an Apple smart lock with a keypad at the front door.

Add house rules to your listing to avoid misunderstandings that could lead to poor reviews. Rules can address times for checking in and out; any restrictions for smoking, parties and pets; and health and safety reminders, such as masking and social distancing requirements. In the U.S., Airbnb performs background checks on hosts and guests, and you can also require that guests provide a photo of their government ID for verification prior to their stay.

For the inside skinny on anything Airbnb, visit Airbnb’s Community Forum (, Airhosts Forum ( and the Reddit Airbnb Subreddit (

How to Price Your Airbnb

You can charge whatever nightly rate you want but be realistic. Many guests choose Airbnb because it’s cheaper than staying in a hotel. Reissman researched Airbnb prices in her area before charging $60 per night. Her rate attracts guests with modest budgets, including retirees, international students, as well as businesspeople living on a per diem. She figures she earned about $20,000 over 80 bookings in two years.

Airbnb suggests starting with a lower-than-average nightly rate until you glean a positive review or two. Airbnb’s Smart Pricing Tool helps you match your price to demand, and you can set custom prices, such as a lower rate during the week and a higher one on weekends or during special events. Corby uses a subscription tool from AirDNA ($20 to $100 a month) that automatically optimizes pricing for her market. It recommends daily rates for up to a year in advance; rates rise with demand or fall to maximize bookings as the date of a special event nears. Corby’s nightly rate has ranged from about $320 to $750.

You can add fees for cleaning and additional guests beyond a number you set. Airbnb also charges most guests a service fee of up to 14.2% of the cost of their stay (excluding Airbnb fees and taxes).

Pay Taxes on Your Airbnb Income

In many cities, Airbnb will collect and remit some of the local occupancy taxes for you.

If you rent out part or all of your home for more than 14 days during the year, you must report your rental income and expenses on Schedule E of your 1040, with income taxes owed on any profit. Airbnb will report to the IRS how much rental income it collected and paid you annually. You can deduct mortgage interest, property taxes, maintenance and other ownership costs for the portion of the property rented out. Because that portion of your state and local property taxes won’t count toward the $10,000 cap on state and local taxes, you may be better off itemizing deductions.

As long as you don’t provide substantial services to your guests — such as breakfast, fresh linens and room cleaning during their stay — you won’t be considered self-employed and won’t need to pay the 15.3% selfemployment tax. For more information, see Every Airbnb Host’s Tax Guide, by Stephen Fishman (Nolo Press, $19.99). Consult your tax adviser, too.

Check Your Homeowners Insurance Coverage

Airbnb provides up to $1 million of Host Protection Insurance to cover liability claims for injury to a guest or property damage to their belongings. Its Host Guarantee ostensibly provides protection for every booking at no additional cost, of up to $1 million in property damage. But don’t rely on those protections alone.

Ask your home insurer about what property damage and liability coverage it offers for short-term rentals by paying guests, which could be excluded as a business activity. “Make clear how often you plan to rent out your home, whether you’ll be at home while renting, and how many people you’ll be hosting,” says Fishman. Your insurer may cover home-sharing up to certain limits as a standard endorsement or you may need to buy a supplement. Corby purchased home-sharing coverage from Proper Insurance for her home, its contents as well as the business liability and income it generates.

Overall, hosting has been a positive experience for Corby and Reissman, who have met people of different nationalities and even made new friends as a result. “If you think about hosting only as a monetary transaction, you might be disappointed,” Reissman says.

Corby recalls a couple of guests who disobeyed all the house rules, smoking inside and leaving debris on the floor, the child who drew tic-tack-toe and his initials into a new leather couch and the guest who texted constantly while Corby was vacationing four time zones away. Reissman had guests who left hair dye in the bathroom sink and sex toys under the bed. You may have to be available at the most inconvenient times and sacrifice your use of the property to guests. Corby hoped to spend leaf season in the Hudson Valley, but by mid-August, guests had booked every opening. Christmas week at Lilac House, however, has been reserved just for her family.


Good End of the Year Deals To Look Out For

The end of the year can be a time of profligate spending, but it can also be a time where you can find some pretty good deals. If you’ve managed your budget or your sinking funds so you still have extra money left over in November and December, there are a few things you might be on the lookout for. Remember, just because something seems like a good deal or is on sale, it doesn’t mean that you have to buy it. Consider your needs and your wants in the context of your whole budget before buying any of these items at the end of the year.

Buying a car

Traditionally, the end of the year (November and December) is considered the best time of year to buy a car. This is true for a couple of reasons. First of all, many salespeople and manufacturers are trying to hit their end-of-quarter and end-of-year quotas. That gives them extra incentive to try and make a deal. In their enthusiasm to close the sale, you can often find deals that you wouldn’t find earlier in the year.

The end of the year being a good time to buy a car doesn’t apply only to new and leased cars. Each year in the fall, most manufacturers release the new version of each of their car models. When the 2022 models are introduced in late 2021, that means that all 2021 models have to be cleared out to make room. Similarly, as people lease or buy new cars, they are trading in their old cars. This combination can lead to excellent savings on used cars as well.

Electric car and other tax breaks

Speaking of cars, there are also many tax breaks for purchasing electric cars. These tax deductions and credits can be available at the federal, state and local levels, and often change each tax year. So if you’ve been saving towards an electric or hybrid car, you should make sure that you know what credits you might be eligible for.

Electric cars aren’t the only thing that sometimes have tax breaks — many types of renewable energy qualify for tax benefits. This can include buying or installing solar panels or taking advantage of wind or geothermal energy. And if you’re expecting a new child, one thing to consider is that a child born on December 31st is considered to have lived with you the whole year for tax purposes. That could mean an additional tax deduction and child tax credit as compared to having a New Year’s baby.

Starting a new rental lease

While moving in the middle of the winter and holiday season might not sound like the most fun adventure possible, it may be worth your while. This is because nobody ELSE likes to move in the middle of the winter, so landlords and management companies are often experiencing higher-than-average vacancy and more willing to give good end of year deals.

If you’ve been considering moving across town or across the country, take a look at the leasing listings and see if there are any move-in specials that you might take advantage of. You might get a discount on your first month’s rent, or a lower security deposit. Even if you don’t really want to move, you might be able to take advantage of this phenomenon if your lease is up or you’re on a month-to-month lease. Show your current landlord the other options you’re considering and see if they will cut you a deal.

Post Black Friday deals

As most people know, the weekend after Thanksgiving (Black Friday and Cyber Monday) is probably the biggest shopping weekend of the year. But while there are often very amazing Black Friday deals, most of the truly great sale prices are extremely limited in quantity. Unless you’re one of those precious few, you can often still find some of the same deals in the runup to the Christmas holidays.

It’s somewhat of an open secret that many of the Black Friday sales are not all that fantastic. There may be one or two “doorbusters”, intended to get you in the door of the store or to the website, but most of the other things included in the listed sales will still be available on Cyber Monday or throughout December. The end of the year is a great time to get deals on electronics, appliances, headphones and entertainment, among other things.

The Bottom Line

For many people, money is tight during the holidays and at the end of the year. But if you’ve done a great job budgeting and still have extra money leftover, the end of the year can be a great time to look for deals on certain things. Buying a new (or just new to you) car, signing a new lease or deals on electronics and appliances are just a few things that you can get deals on in November and December. Make sure to stay within the confines of your budget and make smart financial decisions, and you’ll be well on your way to a successful holiday season.

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