How to rent out a room in your home to make extra cash

In seven years of renting bedrooms in her south Minneapolis home via Airbnb, Jan Korbel only had one experience that made her question her side hustle: when two of her guests hooked up in her home's only bathroom.

She shrugs off the incident now because the majority of her guests behave respectfully, and she grosses $12,000 to $13,000 a year from renting two of her house's bedrooms for short-term stays. After expenses, she nets about 75% of what she considers as easy income, plus she loves meeting guests from around the world, like Prague, Czech Republic, and Singapore most recently.

"You can put up with a lot when it's just a short stay," she said. "But most people, it's not really like putting up with them."

Korbel is an Airbnb "Superhost" who advises others who want to convert a bedroom, basement or other space at home into a short-term rental.

"It's a definitely a different traveler that books an Airbnb room," said Haven Thorn, an Airbnb spokesman. "Typically, affordability is top of mind for them."

Many of Korbel's visitors are in town for school or other business at the University of Minnesota, and Korbel prices one bedroom at $45, the other at $57 per night.

She and other Airbnb hosts in the Twin Cities say the most consistent bookings and highest rents are from April through Thanksgiving. An Ely, Minn., host says winter recreation there also attracts travelers.

If you're interested in turning a spare room into extra cash, here are some tips to follow:

The basics

There are several apps that can help connect you to short-term renters, with the main ones being Airbnb and Vrbo. Airbnb allows renting shared spaces, while Vrbo doesn't.

Airbnb, which took its name from the combination of air mattresses and the acronym of bed and breakfasts, generally charges a service fee at booking, and hosts can also charge a cleaning fee. The platform suggests you seek tax advice and contact your local municipality for renting regulations before starting your listing.

Minnesota's Department of Revenue has online information about taxes on short-term rentals. Cities like Minneapolis and St. Paul also have short-term rental ordinances with certain requirements, including registering your unit for a fee (around $40 to $50 annually) and providing proof of insurance. You should also check with your homeowners association if you have one, as some condo buildings or neighborhoods might not allow short-term rentals.

Some cities require you to notify your neighbors of your intent to rent, though you might want to do it regardless as a courtesy so neighbors don't worry about unknown people entering your home.

Beyond Airbnb, the Couchsurfing community involves hosts sharing their homes at no cost, instead gaining the benefit of meeting and learning from travelers. There's also always Craigslist. Checking out listings on these sites might help you price your unit competitively as well.

Short-term perks

Martha Nerenhausen had so much success renting the other half of her Minneapolis duplex in Lowry Hill for a short stay during the 2018 Super Bowl that she turned her basement into an Airbnb, marketing it as a "stylish garden apartment."

The income helps cover the mortgage.

"It allowed us to live in this lovely neighborhood," she said.

Nerenhausen prefers short-stay rentals vs. long-term tenants because she then has the flexibility to host family members when they visit town.

"We can leave those spaces unrented and have the kids and grandkids have their own spaces," she said.

Another advantage is she doesn't risk ending up with a bad tenant who's on a yearlong lease.

"With Airbnb, you never have any tenant that long, so it seemed lower risk, and the revenue is higher," Nerenhausen said. "But it does take quite a bit of work, more work than I anticipated."

Your time and money

Communicating with guests via the app, greeting them, cleaning between stays and replacing broken items and other repairs come with leasing a short-stay unit.

At minimum, a comfortable bed and decent linens are musts. Korbel kept it simple — and her initial costs low — by doing a lot of initial setup herself, from deep cleaning to painting. She also avoided making any major purchases — like new furniture — at the start.

For those offering an experience, a lakefront primary suite or woodsy place up north for example, consider more of an investment in décor to attract vacationers who want more than just a place to sleep, said Rebecca Roberts, who until recently lived below her "Castle Loft" Airbnb unit in Ely.

But that could run into the thousands of dollars for kitchenware and furniture, or even more money if you decide to renovate.

"You want to underpromise and overdeliver," she said.

Roberts estimated furnishing the Castle Loft cost $7,500 but was worth the investment to draw visitors seeking a sanctuary up north.

The one-bedroom unit accommodates four with a sleeper sofa that alone cost $3,200. She described it as a "romantic, cozy space, in a historical Victorian house" with a two-story deck, gas firepit and nearby "delightful" restaurants, shops, cafes and bars. "In addition, the Boundary Waters, lakes and hiking trails are minutes away and perfect for a day trip," the listing reads. Roberts now rents out the first-floor unit for short stays as well.

Airbnb suggests hosts consider offering handwritten notes guiding guests to favorite shops and restaurants or congratulating them on birthdays or anniversaries. Thoughtful amenities like boutique-style shampoos also are a nice touch.

Whether a listing is upscale or basic, Airbnb advises the photos and description should accurately reflect the offerings.

"I still to this day say that if your pictures are accurate, your description is accurate, it doesn't matter if it's basic or fancy," Korbel said.

To cut down on her tasks, Nerenhausen began hiring cleaners, though that comes with another set of negatives.

"That cuts in quite a bit to how much you're earning," she said.

Even finding cleaners who have the flexibility for varying Airbnb rental schedules is challenging, plus "you have to clean to the standards of Airbnb, which ... is hotel-level clean," she said.

Sharing pros and cons

Being onsite offers the advantage of making quick fixes if something breaks down. But it can also lead to uncomfortable situations, as described above.

To screen guests, Korbel carefully reads their reviews. For guests who are new to Airbnb and don't have reviews, she pays close attention to email exchanges and trusts her instincts when she has a bad feeling or is uncertain. Korbel has turned away several guests this summer.

Hosting guests at home also means adjusting everyday behavior.

"I find myself being quite quiet, and [I] creep around the house when I have guests," said Korbel, who sleeps in her third-floor attic above the guest rooms. "I don't want to disturb them. I want them to be able to do what they want, sleep in, whatever."

Roberts tried to be conscientious about her three dogs not disturbing the guests upstairs when she lived downstairs from the Castle Loft.

"One's a barker," she said. "We tried to make sure someone was home to manage that."

Hosts can decide for themselves how friendly to be with guests. Korbel brews coffee for guests and recently invited a visitor from overseas to a dinner she happened to host while he was in town.

She used to greet all her guests in person but now has a keyless entry lock offering guests access when she's away. The bedrooms don't have locks, though Korbel keeps the home's doors locked and asks guests to do the same.

She usually tells guests they're welcome to relax in her home's living room but finds most of them prefer the privacy of their own rooms.

"I think in seven years, I've had one or two people take me up on it," she said.