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I have used a variety of places as Airbnb rentals, and discovered basements work well for this purpose. There are a few important factors to consider before using your basement as an Airbnb.
Here’s How to Turn Your Basement into an Airbnb
- Check Your Local Planning and Zoning Requirements
- Get the Correct Insurance Policy for Your Airbnb
- Be Aware of Tax Requirements
- Acquire Permits and Licenses for Your Basement Airbnb
- Follow Your Homeowners Association Rules
- Provide Adequate Fire Protection
- Consider Egress Windows in Bedrooms
- Insulate Your Walls and Ceiling
- Consider a Private Access for Guests
- Make Your Basement Safer for Children
- Keep Guests Comfy Even in the Basement
- Provide Amazing Amenities for a Great Guest Experience
- Provide the Right Decor for a Dark Space
Read more below as we go into each one of the items in more detail:
1. Check Your Local Planning and Zoning Requirements
Before you fill out your Airbnb listing, you’ll want to check your local zoning requirements. Some cities forbid you from hosting paying guests for short periods of time. Other locations permit this but with an assortment of restrictions.
The zoning laws concerning your ability to host on Airbnb can vary not only between cities, but some municipalities have a number of different zoning rules within their own boundaries. These regulations can change from time to time, so it is best to keep current with any changes.
My city is currently considering requiring hosts to live on the property where they rent to guests. They may require a notice to go out to surrounding neighbors notifying them that an Airbnb is being proposed for the area. Hosts are not happy, so we’ll see what happens.
2. Get the Correct Insurance for Your Home
Unfortunately, your homeowners policy probably won’t cover your Airbnb. Your insurance company might actually rescind your policy if they find out that you are operating a business in your home.
You will want to get a dedicated insurance policy that covers both the residential side and business side of your operation. Check out this company. I use this company for all of my rentals. They only do Airbnb insurance and cover all kinds of short-term rental issues that you aren’t even aware of. This insurance completely replaces your homeowners policy.
3. Paying Taxes for a Basement Airbnb
If you live in a tax jurisdiction that has a local occupancy tax, Airbnb will take care of calculating, collecting, and remitting the local occupancy tax on your behalf. However, you will be responsible for reporting the income you make on your own tax return.
4. Acquire Permits and Licenses
Of course, any work you do in your basement will require you to get the necessary building permits. You will want to talk with local building officials regarding any permitting, safety, and health regulations that may apply.
5. Follow Your Homeowners Association Rules
If your home is in a homeowners association (HOA), check their rules to make sure there are no requirements limiting the number of short-term rentals or any other restrictions imposed.
In addition to any rules specific to short-term rentals, more general regulations will need to be followed by your guests and may include parking rules, noise levels, pets, trash, etc.. Your HOA documents should have this information, but a call to the HOA management office regarding any potential changes is well worth your time.
6. Provide Adequate Fire Prevention
Ensure you have a functioning smoke alarm and carbon monoxide detector, and that your property meets government safety guidelines for your area. Be sure to provide a functioning fire extinguisher. Also, test your smoke alarms and make sure they are properly located, as well as testing carbon monoxide detectors.
Check Out These Other Articles on Rental Recon:
- When Does Airbnb Send Check-In Instructions to Guests? 
- When Do Airbnb Hosts Get Paid?  It Depends On Several Factors
- What to Leave for Airbnb Guests: 5 Ways to Impress Guests
7. Egress Windows in Bedrooms
If you are permitting any work in your basement in preparation for your Airbnb, your local code may require you to construct accessible windows and window wells for each bedroom. The windows will need to be a certain width and a certain height off the floor, and the window well will have to meet specific dimension requirements for egress.
8. Insulate Your Walls and Ceiling
Wherever possible, insulate the floor above the area you will be renting, and all of the walls for noise reduction. This will help with noise transmission from the first floor to the basement, and vice versa. Some sort of window coverings will be needed to give your guests the privacy they crave.
If you have pets, be certain they do not disturb your guests. If you decide to allow pets, make sure they are aware of all local regulations about pets, and make sure the pets can be provided for in the area you are renting.
9. Provide a Private Stairway for Guest Access
Private access for your guests is always preferred. If you plan on hosting for many years, an exterior stairwell may be worth the investment. Or maybe re-configure an existing interior stairway to create some type of private access for guests.
10. Make Your Basement Airbnb Safer for Children
Here are some ideas to make your basement safer for children. Hosts can provide electrical outlet covers, cordless blinds, and rubber guards on sharp furniture.
TVs and other large appliances should be strapped down to avoid potentially serious injury to a child. If there are storage closets that may contain chemicals or any dangerous tools or appliances, they should always be locked.
11. Keep Guests Comfy Even In the Basement
Wherever possible, provide your guests with a thermostat so that they can control their own temperature. This may or may not be an option with your existing heating system.
Temperature swings will be huge between the main floor and the cold sub-grade conditions found in the basement. An electric wall heater may be something to consider if furnace alterations are out of the question.
Baseboard heat is a fire hazard and should be avoided wherever possible. Guests won’t be as aware of the dangers as homeowners are.
12. Provide Amazing Amenities for a Great Guest Experience
Make sure there are plenty of clean, quality bed sheets for your guests. The bathroom should be stocked with hand soap, body wash, conditioner, and shampoo. Toilet paper (including at least one spare roll) must be available. There should be a toilet plunger. A can of Lysol or another air freshener would be helpful.
13. Provide the Right Decor for a Dark Space
When you advertise your Airbnb, it will be up against a significant amount of competition, so it is important for your space to look as appealing as possible.
Since basements don’t get much natural light, choose light paint colors, provide an abundance of elegant lighting, and perhaps some vibrant colored accent pillows.
If you are building out an unfinished basement, provide nice-sized closets in each bedroom. The bedding must of spotless with a comfortable mattress, mattress protector, and possibly a mattress topper.
Consider using carpeting in most areas, since concrete floors are quite cold on bare feet.
Leave your guests an informative house manual showing how to operate the TV, appliances, and tell guests where your favorite dinner place, coffee shop, and grocery stores are located.
People in a strange city would also appreciate a list with important telephone numbers such as a local pharmacy and hospital. Transportation is another essential, so a local bus schedule and the local telephone number for taxi services and Uber will be appreciated.
One of the most important safety requirements for yourself is taking out a robust insurance policy. A standard homeowner’s policy will not be sufficient, since almost every homeowners insurance policy has a “business exclusions” clause. We recommend you look at Proper Insurance. They offer a comprehensive insurance option specific to Airbnb and short-term rentals.
Airbnb does offer a Host Guarantee which is a million-dollar insurance policy for its hosts. Airbnb will offer host protection against some losses, for no cost. However, this is not enough, as the Airbnb Host Guarantee will not cover items like cash, collectibles, rare artwork, jewelry, pets or any type of personal liability.
Additionally, the Host Guarantee program does not cover loss or damage to property due to normal wear and tear. The Airbnb Host Guarantee should be considered some sort of a backup to your own short-term rental insurance.