It seems lately that every dinner party conversation here inevitably raises the topic of renting out space in your home to generate a side income. The demand appears insatiable in some Mexican towns and cities, while homeowners flock to online marketplaces and offer space for short-term rent in their private homes.
Online marketplaces for private rentals
The three principal online marketplaces facilitating private rental transactions are AirBnB, HomeStay and Tripping. They are blossoming across Mexico as travelers embrace the idea of using shared accommodation offered in private homes instead of staying at commercial hotels. The demand has been significant enough to catch the attention of major online travel agents like Booking.com, who have also begun to operate in this market.
For travelers, these shared spaces in private homes offer choice and variety in accommodations; and for hosts there is the prospect of earning additional income by renting rooms, an annex, or even the entire property.
If you’ve got space in your Mexican home to share on a short-term basis, this article explains key points to consider when starting and managing a shared accommodation rental.
Setting-up your physical space
Before you can rent un(der)-occupied spaces in your home, you’ll need to prepare the physical space to receive guests, and set-aside the time and energy to host them. In these online marketplaces, buyers are given instant access to a copious supply of offers, so even a small handful of lukewarm reviews about the space you offer can prejudice your chances of obtaining the next booking. If you’re serious about generating an income this way, you should create an agreeable space for others to share and be prepared to invest the time required to operate the endeavor. Take time to browse the existing inventory of offers in your local area and you’ll discover that there’s something for every taste and budget; you’ll need to consider which ‘local niche’ you want to serve with the space you have on offer.
Setting-up your online profile and marketing
When you’re ready to receive paying guests, you can apply to become a host on one or more of the online marketplaces set-up to market your offer and facilitate bookings. AirBnB dominates and drives this market, and their presence in Mexico is impressive; consider marketing your home on other platforms too, including HomeStay and Tripping. To further extend your reach, you might also promote your accommodations through major online travel agencies that serve this market, like Booking.com. You should use high-quality photographs (or hire a professional photographer) to present your offer and ensure that what you publish online accurately reflects what guests will experience when they arrive.
Managing your shared space rental in Mexico
Here are some tips about managing your shared space rental when it’s being actively promoted using an online marketplace:
You should review your profile(s) regularly to keep up with any changes and improvements you might make to the spaces you’re offering for rent, as well working to actively improve descriptions based on your experience of hosting guests.
If you don’t intend to offer your shared spaces throughout the year, you’ll need to actively manage your availability calendar to shut-out dates when you don’t want paying guests staying in your home. If you are promoting your home lodgings across two or more marketplaces, you’ll need to ensure that you reconcile the availability calendar across all of them when you receive a confirmed booking.
Potential guests may write to you asking questions, and you’ll need to respond in a timely manner. They might be making inquiries with several hosts in the area and they will be mindful of how quickly each one responds.
Each guest that arrives to stay in your home – whether that’s a room, an annex or the entire property – will be encouraged to rate the experience and leave a review. You, as the host, will also be asked to rate the guest as well as have an opportunity to respond to the review left by the guest. You need to work hard to earn high ratings and positive reviews, and you need to respond to negative ratings and reviews quickly and decisively. Insufficient reviews can put-off potential guests, and a small handful of lukewarm or poor reviews (especially those with an inadequate response) can severely curtail future bookings. Hosts tend to become subservient to guest reviews in an effort to present their offer in a good light to potential future guests.
Covering your costs
The rates you can charge will depend on the level of demand in the location where your home is situated, the quality and style of the accommodations you offer, as well as the extent of local competition—from other guest houses as well as local hotels and inns. Running a guest service takes time and effort and can be stressful at times. In addition to the expenses incurred as you host multiple guests on a regular basis (e.g. consumables, changing linens, cleaning, etc.) there is additional wear-and-tear to manage and pay for, commissions to pay to the online market operator for each confirmed booking, and taxes to set-aside from the income you earn.
In addition to the practical aspects of opening-up your Mexican home to paying guests, there are some significant matters to consider when you plan to participate in these online marketplaces, which include:
Your resident visa status
Renting out your property in Mexico –even if it’s only a single room– constitutes a remunerated activity. If you are a foreign resident here, you should ensure that your resident visa privileges allow you to earn an income in Mexico.
Declaring the income
You should talk to an accountant in Mexico about the tax implications of renting your Mexican property using online marketplaces. The income that hosts earn from renting personal accommodations is taxable, and hosts are obliged to declare and pay income tax on those earnings. AirBnB in Mexico now reports hosts’ incomes directly to the Mexican tax authorities and hosts may receive letters from the tax office advising them of tax liabilities owed from that rental income.
Some of the online marketplaces offer hosts an insurance coverage if guests damage the property or suffer personal injury while booked-in at the property. While that may cover you for incidents related to guests who made a booking through the marketplace, note that the practice of hosting paying guests in your home while you are present there will probably invalidate your current home insurance policy. Most residential policies dis-allow what is referred to by insurers as ‘simultaneous occupancy’—renting part of your home (e.g. a room, or an annex) to third parties while you are living on the property. This risk is treated differently by insurance companies and thus a regular domestic policy will not cover you; you’ll need to seek out a commercial policy which is likely to be considerably more expensive. If, on the other hand, you rent the entire property and vacate the property while the renters are present, then a regular domestic policy will probably suffice. Check the wording of your existing policy and see our guide to insuring your property in Mexico for further guidance.
Mortgages and tenants
If your home is mortgaged, take care to seek permission from the lender before you participate in these online marketplaces as most financiers prohibit their debtors from renting space in the home as part of the terms of the mortgage. If you are a tenant in someone else’s home, check the terms of your rental contract and seek explicit written permission from the landlord before you attempt to sublet any rooms or other spaces in the house.
Wear and tear
Keep in mind that general wear and tear on your property will be higher when you’re renting it to strangers and you should account for this in your rates to cover for general upkeep and maintenance as well as minor damages which cannot be sensibly claimed on any insurance policy.
All the online marketplaces which offer shared spaces for rent and facilitate the arrangements between guests and hosts state in their terms and conditions that it is the host’s responsibility to comply with local laws and regulations concerning the rental of property. If you are in doubt about any rights or obligations you or paying guests may have while staying in your home, talk with a qualified lawyer in the state where the rental property is situated.
If you decide to rent your entire home on a longer term basis, read our articles about home rental in Mexico, especially the one about the need to know who is renting your home, to avoid possible loss of your asset.
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