The initial cost of starting Airbnb in Cape Town

Having an Airbnb listing can be a good way to make extra money, but being a host comes with its own set of problems. Offering a short-term rental comes with several expenses. It may affect your mortgage, as well as taxes and cleaning fees.
It is a good idea to consider all these prospective costs and real estate variables before diving in. We’ll go over some of the most typical and surprising expenditures associated with being an Airbnb host, such as:

Airbnb service fees

Airbnb hosts share the first cost you might expect. Once you get a reservation, Airbnb charges a 3% service fee. This may not seem like much, but if you rent your house on Airbnb many times a year, this cost can add up.

Supplies Needed

Your rented property will need fresh bedding, towels, linens, toilet paper, soap, and other amenities. To make your rental feel more like home, you’ll want to stock the fridge and pantry with at least a few foodstuffs.

It’s a good idea to secure your property with external cameras such as a video doorbell and hardwired or Wi-Fi weatherproof exterior cameras. Installing four higher-quality video cameras will set you back roughly $1,200.

Cleaning expenses

Cleaning is, of course, required when renting your house on Airbnb. While cleaning supplies are inexpensive, expect to spend several hours cleaning, vacuuming, mopping, and tidying up. You’ll need to use a cleaning service if you don’t want to do the work or won’t be available to do it. Each cleaning session might cost you more than $200.

You can pass these costs on to your guests in the form of an increased rental price or by adding a separate cleaning fee to your rental listing.

Insurance protection

Insurance coverage is the most expensive component of renting your house on Airbnb. You may be able to rent your house without having to buy extra coverage or incur extra costs if you have existing home insurance. But, you must notify your insurer in advance and get approval. For an extra fee, you may need to add a rider or endorsement to your existing policy.

The Airbnb Host Guarantee covers you for up to $1 million in damages to your home caused by your visitors (besides the security deposit). Yet, this coverage isn’t comprehensive. Wear and tear, personal liabilities, jewels, securities, cash, pets, collectibles, and rare artwork are all excluded.

Expenses of starting a business

For tax advantages, some experts tell incorporating your company. You may be able to protect your assets if sued by forming a corporation or limited liability company (LLC) as well as receive tax benefits from doing so.
But, depending on the state you live in, the charges of incorporating might be quite significant.

Mortgage expense

If you plan to refinance your home’s mortgage, renting out your home via Airbnb may cost you money. Because of this, your rental income may not be taken into account when refinancing your home. This would have an impact on your debt-to-income ratio, which could lead to a higher interest rate on your new loan.