Do you worry about all the things that could go wrong in your Airbnb like parties, smoking, and unauthorized guests? Do you wish there was a way to feel more confident about protecting your investment?
If so, Episode 17 of the Host Coach Airbnb Investing Podcast is for you! Today we’re discussing nine different ways to safeguard your Airbnb both physically and financially.
Tune in to learn about the best insurance, tech, and teams you can use to protect your investment and lower your stress levels!
Topics discussed in this episode:
- 3 solutions to physically safeguard your short-term rental
- The best tech tools to detect parties, noise, & smoking
- 5 key questions to ask insurance providers about Airbnb coverag
- The easiest way to mitigate financial risk as an Airbnb investor
Host Coach Airbnb Podcast Episode 16 Show Notes:
It's true. The fear of bad guests, wild parties, and damage is something we get asked about a lot. No one wants to buy a property, make it beautiful, and then have that perfect listing disrespected and damaged. Fortunately, there are many ways to keep your Airbnb and your cash flow safe as an investor. And we're going to touch on some of our favorites today.
The first step is just insurance. Airbnb and short-term rental investment properties are still new, and so most regular home insurance policies will not cover them or not cover the things that you would like them to cover. This means you need to actively search out short-term rental insurance to protect your investment.
Insurance is regulated at the state level. So be sure to do your own research. Don't just listen to somebody on YouTube. Make sure to end up with a policy that will be effective if something bad does happen.
Five Questions to Ask About Airbnb Insurance Coverage
So what questions should you ask your insurance company when you're looking for a policy to specifically cover your Airbnb?
First off, does this policy specifically cover business use as a short-term rental property? Two: Am I covered by this policy if I own multiple Airbnbs? This is important because many policies will only cover your first investment. Number three, does this policy provide coverage if a guest is injured while renting my property?
Four: If something happens like a water leak while the property is vacant, does this policy cover that specific damage? And finally, what is the policy coverage for rebuilding the home or Airbnb in the case of total loss? If that sounds overwhelming and like a giant research project, it is.
If you'd like to push the easy button, we suggest Proper Insurance. They're a company that specializes in short-term rental and arbitrage insurance. They started as a company formed to meet the insurance needs of traditional bed and breakfasts, and while their policies are not inexpensive, they do cover all the needs of an Airbnb investor.
Airbnb Air Cover
So what if a guest does damage to the property? This is a big fear for new hosts. Fortunately, Airbnb's got your back. They have a service called Air Cover for hosts. It's free, and it comes with all Airbnb bookings. And this is the protection. This isn't really an insurance, it's a guest damage reimbursement policy.
Policy is still a bad word - program. So what if the pet that you allow peas on the floor or chew off a leg of a chair or burst through a screen door? These are things that we've had have happen. True story. First we just ask the guests to pay for the damage. Most guests are good people. Pet owners, particularly, are responsible for their pets, and you can just ask for reimbursement through the Airbnb platform.
If they pay, no problem. If the guests don't pay, that's when we invoke and involve Airbnb Air Cover. Airbnb's going to want some documentation, so make sure you have your housekeeper take photos and videos of any damage before they start cleaning. You can then submit those photos and videos to Airbnb with the claim for the pet damage, the new chair, or the new screen door.
Air Cover will also reimburse you for extra cleaning costs. If the guests were extra dirty, threw a party, made a big mess, and the housekeepers needed to spend an extra four or five hours, you don't have to go out of pocket for that. First, ask the guest to pay for it. And again, if the guest doesn't reimburse you, you involve Airbnb.
I have found Airbnb/Air Cover support to be extremely helpful, easy to deal with, and quick to respond. We've hosted over 4,000 guests and the amount of times that we've had to actually invoke Air Cover is probably less than 10.
I believe most people are good, and that has been our experience, so don't be so freaked out about potential damages. We've even had Air Cover reimburse an emergency septic pump out when a guest used too much toilet paper. So, they're really better than you would expect when it comes to coverage, I think it's come a long way.
The other thing about Air Cover is it will also reimburse you for lost income. So if a guest damages something and it's going to take a week, or several days to affect that repair. Airbnb's aircover will reimburse you for that lost income while you cannot rent out your Airbnb.. So that's all pretty awesome.
Physically Safeguarding Your Airbnb
Let's move on to the next point, which is physically safeguarding your property. Physical key locks in Airbnb rentals are just a nightmare. People get locked out, they lose the key endlessly!
It happens so often, that we use digital locks. They are the best way to safeguard both the property and keep guests safe. There are a multitude of different smart locks out there. You can pick the one that best fits your needs. We always buy the Schlage locks. We have had zero issues with them across 10 Airbnb properties.
Depending on the digital lock that you buy, you can generate new codes for each booking so old guests can't let themselves back in, and new guests cannot enter the property ahead of check-in time. This keeps the house and your housekeeper safe.
Also, if a guest locks themselves out, you can message them the code and they can let themselves back in. You can also give the housekeepers and your handy people their own access codes if you want to get that fancy with it. This way you can keep track of the authorized people accessing the property. And, if you let your housekeeper or handyman go, you can also change the code so that they can't come back.
Pro Tip: Consider your level of internet connectivity when purchasing digital locks. Certain brands require a solid wifi, some have no wifi requirements. Just make sure that you match your wifi reliability with the needs of the lock, because the last thing you want as a host, especially a new host, is to have your first guests show up to your amazing place and they can't get in, and you can't get them in. If you live remotely you've started a major problem with something that was supposed to safeguard the property.
The next things to think about are really straightforward: smoke detectors and fire extinguishers. We have smoke detectors on each floor of our Airbnbs, and we also have them combined with carbon monoxide detectors. These are actually safety items you check off on your listing on the Airbnb platform to show that your property is safe.
The other thing is with fire extinguishers, the more the merrier! We have them under our kitchen sink. We have them outside by fire pits, and we have them mounted to the wall near any place we have an outdoor grill.
A $20 fire extinguisher saved a $300,000 property from burning down. The guests had left the grill unattended. I believe the grease pan caught on fire, and when they came back to the grill, part of the house was aflame. They grabbed the fire extinguisher, extinguished the wall fire, and during turnover we were able to put stain over the side of the house and have it guest ready for the next people.
But without that fire extinguisher, that could have been a much scarier situation. Could have been using that insurancen to rebuild a burnt down cabin. Oh my gosh. Can't even imagine!
The other thing to consider related to safeguarding your Airbnb, are surveillance cameras. Why would you want them as a host? A camera lets you see the number of cars in your driveway, and the number of guests entering the property. You can also check the weather conditions for us with mountaintop properties. How much snow is there and has snow removal happened? You can also know when your housekeepers come and go.
Many hosts use Ring doorbells for their camera function. Guests typically are familiar with that function - they have them in their own home and aren't overly freaked out about them. Just remember that ring doorbells have to be hardwired. So, if that's not in your skillset, you're looking at hiring an electrician and pulling to the correct power source.
The camera we have been using recently is called Blink. These cameras use a two year battery and then they have this small link module that you just plug in inside the house and it connects to your wifi. They cost around $65. We're using the Blink Outdoor 4, and it's fantastic. You don't have to hardwire it, so you can put it anywhere on the property. So for us, getting just the right stair and driveway angle to see both guests and the conditions for snow is easier. Blink has been awesome, and we've had zero issues with it.
Also, if you do decide to use a camera on your property, you must disclose that in your listing. Airbnb has incredibly strict policies about cameras, which makes sense for the safety of guests. So, you must make sure cameras on site is in your listing. And don't be surprised if guests ask you, "Hey, I see that you have cameras." When you tell them you have one pointed towards the driveway, they get it. But be very open. Do not install it, forget about it, and then have a guest ask about it because your listing could be shut down.
Tech Solutions to Safeguard Your Airbnb
All right. Smoke detectors and cameras: those are bread and butter. Let's get into some of the really cool stuff that you might not know existed. How would you know how many people are in your house if you're worried, maybe you got a weird vibe, that there's a party going on?
We've got a technology called Party Squasher, which is a smart occupancy sensor that connects up to your internet and it can count the number of cell phones present in the property. So if you've got a two person booking and the party Squasher detects six cell phones, you can message that guest and find out what's going on.
But what about noise? There's a product called Minut that monitors and detects the level of noise within the property, or you can put it outside the property. I had a coaching client that had a really nice fire pit, but they had a neighbor next door that was really trepidatious about them being a short-term rental.
I advised him to put one of these noise sensing devices, the Minut, out by the fire pit so that if it did get a little rowdy, he would receive a message from the device and he could reach out to the guests and get ahead of any annoyance, any complaints, from the neighbors. This client go so much peace of mind knowing he can monitor the noise level inside or outside the house, receive an alert from the device, and then be able to respond to the guest to avoid any party damage or annoying his neighbor. This is super important. If your neighbors are unhappy with you, it's not going to be a pleasant hosting experience for sure.
Another really fun tech product is called FreshAir, and this is a sensor that plugs into an outlet in your Airbnb anywhere. And what it does is it detects smoking of any kind in your listing. As soon as fresh air detects smoke, it connects to your wifi and sends you an email report. What's really interesting is it emails you, whether it's cigarette smoke or marijuana smoke, and you have a physical record of this detection. So you're able to ask your guests to stop doing what they're doing in your home, and if for some reason you need to do additional cleaning or remediation for the smoke you can ask the guests to pay for that and have proof that they did indeed smoke inside your property.
That's a great point. We had a guest just a couple months ago that obviously smoked in the house. I think there were cigarette butts in the house and it was wretchedly stronstssmelling. When we confronted the guests, they were like, "no, we smoked only outside." But, our housekeeper had photos of the ashtray inside.
So, a device like FreshAir that gives you documentation can really ensure that Airbnb Air Cover reimburses you. You can also use this device to nip a situation in the bud. Message the guests, "Hey, we noticed you're smoking inside the house. Please remember that our house policy is no smoking whatsoever." You can hope that they will go right outside after that.
Another thing to use to deal with smoke remediation is an ozone generator. We actually bought them on Amazon when it was Covid time period, because everyone was obviously very concerned about airborne germs. Now we keep them in the cleaning closets in case, and it is very rare, that someone does smoke inside our short term rentals.
This is the technology that hotels use. So when you see the smoking fee sign in hotels, they have a giant ozone generator that they put in the room. What it does is it neutralizes all of the odor atoms in the air, and it smells super fresh.
The one thing to note about ozone generators, is that it's unsafe to be in the house breathing while the generator is running. So, let your housekeepers know to run it for 30 minutes while they're not inside the house and then tuck it away, so guests, children, et cetera, don't play with it.
Team Protection
Beyond technology, humans matter. Having a great team, which we talk about a lot on this podcast is really important. So while Air Cover is great about paying for guest damages, they're not there to make the repairs for you. So having a great housekeeper and handyman to triage situations as quickly as possible is really critical to being ready for your next guest, even if there's been an issue.
These are the people that can run to Walmart for replacement wine glasses, unclog toilets, mend broken chairs. Actually, our handyman, had a spare toilet in his shed and replaced it on the fly for guests, so we didn't lose a five day booking. Keith is amazing! Look for the Keiths in your life, and hang on to them. We also suggest having extra linens, duvets, and duvet covers in the cleaning closet. Again, just because some of those can't be replaced quite as quickly.
Mitigating Airbnb Financial Risks
When the Covid epidemic first happened, our county shut down the majority of our cabins, and banned short-term rentals as a security measure for spread of Covid. Luckily, we were able to pivot and do some 30 day rentals as a workaround, but it was a scary time. We had mortgages to pay and guests were basically outlawed. And this is what we do. Airbnb investing is how we generate income.
So an easy way to hedge against some unforeseen disaster affecting Airbnb bookings and in turn affecting your cash flow, is to build a financial cushion. As your properties start to make income, save a percentage that could create a fund to cover your Airbnb's mortgage.
I recommend a cushion of 2-3 months mortage payments. If disaster strikes and you don't have any guests booking, you can still pay the monthly mortgage and hang on your property until guests begin booking. Again, it's just peace of mind and you don't have to save it all at once. You can simply set aside a percentage over time that fills that financial cushion.
So there you have it. You now know the right questions to ask to ensure that you get an insurance policy that specifically covers short-term rentals. You also learned about five different tech solutions to keep your property safe and alert you to potential issues.
Finally, we shared how important creating a cash cushion is as an Airbnb investor. Keep listening to the Host Coach Show. We're here every week to go over actionable steps to investing so you can get started and create your own financial freedom.
Remember, our joy is in your success. Should you need personal online Airbnb coaching - that is what we do! Sign up for a free 30 minute Airbnb coaching call to explore your needs and how we can help you succeed as an Airbnb investor.
