Entrepreneurship is a great thing and everybody should be looking for ways to make money off of what they already have available to them. Saying that it’s also important to know the risks of any money making strategy you come up with because sometimes the risks are much higher than the potential money to be made off of the venture. There is a new site that I’ve not heard of before called Airbnb that allow you to post up your place of residence and rent it to those who’ll be in the area for a short while (I think it’s aimed at people on vacation). It seems like an easy way to make money but anybody with two brain cells to rub together could figure out one giant risk involved, you’ll let people into your home which can have some major consequences as one person found out:
The facts: Last month “EJ” wrote a long blog post about how a renter spent an entire week carefully robbing and trashing her home. Walls were cut through to get to locked valuables, including her grandmother’s jewelry.
If somebody is going to be in your place when you’re not there there’s always a risk of your place ending up trashed, robbed, or both. This is a risk landlord, hotels, and motel owners have to deal with constantly. Many people lack any respect for the property of others and are more than happy to destroy or outright take it (for example, it’s the statist standard operating procedure).
Landlords, hotels, and motels attempt to alleviate this problem through insurance, verifying the identities of clients, and through a means of obtaining payment to cover damaged before they happen. In the case of landlords they usually required a security deposit which is returned to the client when they leave so long as nothing has been damaged. In the case of hotels and motels they usually require a credit card on file which they will charge any room damage or theft to.
Airbnb is a slightly different beast as they keep both parties in the deal anonymous until money has traded hands. This means until a client has actually paid for the use of the property the property owner is unable to perform actions like background checks or identify verification. This also generates a risk for the client as they may arrive only to discover the property isn’t there, the property that is there doesn’t belong to the owner, or that the place isn’t as advertised. Airbnb’s plan to alleviate these potential problems lies in their user ratings, but as the service is new there are few user ratings to go off of leading those interested in the service running blind.
Personally I find the prospect of renting my dwelling to another to carry a higher risk than the reward would be worth (especially since I’m renting and thus would be subleasing which in turn would be a violation of my lease). Others obviously think differently otherwise Airbnb wouldn’t be around at the moment. But the thing to note here is that there is no such thing as risk-free money (unless you’re the government, stealing from people is pretty risk free when you have a monopoly on the use of force). If you figure out a plan to make money make sure you understand the potential cost of the involved risks. Losing $100.00 because you loaned somebody money and they never repaid you isn’t life or death for many people but many will be unable to recover from the loss involved in having their entire home destroyed and much of their property stolen.