UPDATE: This post originally appeared in July 2017. Since then, we decided to stop hosting short-term rental guests when our city council made rules and regulations around it onerous and intrusive. We now only host people who stay greater than 31 days, but will soon end that as well. We enjoyed the constant flow of new and interesting people and are sad to lose that. In the end, the city loses too; our numerous guests contributed greatly to the local economy.

The popularity of short-term rentals is increasing, with 100 million stays per night through Airbnb alone. New entrants are trying to capture a piece of the action, with Expedia and Priceline creating features to compete with Airbnb and VRBO.com.

My own experience with short-term rentals began with an Airbnb stay with my wife in Seattle, in 2013. Airbnb is an online service that acts as a matchmaker between travelers seeking lodging and hosts willing to rent a room, a house or even an RV or boat, on a short-term basis.

Our prospective Seattle hosts promoted their glassblowing work. As an amateur glassblower myself, I was curious to see it.

The glass work turned out to be more interesting than promised, but our curiosity was drawn even more to the hosting experience. We wondered if we’d make good hosts too.

During our stay we quizzed our hosts about the upsides and downsides to accommodating numerous people in a short period of time. We evaluated our room and the common spaces of their home for things we liked and didn’t like or could do better. We considered how our own lives would be different if we had a stream of strangers coming and going. We wondered what the problems were.

We were convinced when the worst experience our Seattle hosts could recall was a guest who headed straight from the front door to the bedroom with the speed and skill of a suspected criminal hiding their face from the paparazzi cameras outside a courthouse, without saying more than “hello”.

We could handle that kind of problem.  We signed up as hosts shortly after that and haven’t looked back.

Hosting on Airbnb is simple. The prospective host merely needs to register with Airbnb and create a host site that includes photos and a comprehensive description of the space, amenities, area, pricing, availability and rules. Airbnb takes care of the rest.

The main attraction for our Boulder county home is our easy access to hiking and beautiful sightseeing, including that in Rocky Mountain National Park. As a result, most of our guests come for that reason, or to visit family or friends. And most of our guests stay in the summer. We could easily be busy nearly every night of June, July and August, but rarely in December, January and February.

Friends, colleagues and even guests ask what it takes to do well as an Airbnb host. They wonder if it’s more risky than it’s worth. We like to tell them about the extra insurance and support Airbnb provides. We like to say that in four years of hosting more than 100 guests, our negative experiences have been limited to some minor personality clashes. We tell them how other hosts aren’t as fortunate, although such episodes are rare.

Even still, it’s not for everyone. Those who tend to be naive or are bad at setting boundaries are better off leaving the hosting to others.

But for those who want to risk it, the best way to stay safe is to be wise and not only know your limits and expectations but clearly explain them to your potential guests. Airbnb makes this easy through the web site, but it’s also good to personally check-in every guest and point out the highlights. During that time you can also assess what kind of fit your guest will be.

Our screening process is a mixture of “gut feel” and common sense based on experience. For example, we don’t rent to anyone who doesn’t have some sort of bio, or anyone who does not explain the reason for the visit. If something sounds fishy we ask questions. If the potential guest makes what we think are unreasonable requests before they even book, we expect them to do the same when they visit. We say “no” in advance to avoid problems for all of us.

Recently we got a request for a stay from a woman who had been an Airbnb member for a while but she had no reviews and no bio. Her request stated, “Hi my friend and I are coming to hike at Rocky Mountain National park and would enjoy walking around your lake … Hope to hear from you soon.”

This was not enough information for us to make a decision so we asked for more. She didn’t respond within an hour. Since Airbnb only gives us 24 hours to say “yes” or “no” we declined the reservation. She appeared to be a first time guest and potentially problematic; we didn’t want to take the risk without more information.

Shortly after we declined, she responded to our questions with great answers. We invited her to re-request the stay. She did so. Recently she and her friend completed their stay and they were two of the most delightful guests we’ve had to date. But we never would have known that from our first encounter.

Reviews are another important part of the mix; that guest had none.

Someone once asked why they should bother reviewing their hosts. It may seem like it’s unnecessary, especially if someone has a lot of good reviews already, but recent good reviews are one of the main reasons why most of our guests choose to stay at our home. And they factor heavily in our decision to accept a guest.

While some hosts only book potential guests with good reviews, we try to read between the lines. For example, we once hosted a guest whose previous host said she left their place a mess and had other unkind things to say. The guest had only stayed at that one place before, but her reason to visit seemed sincere.

When she arrived, we mentioned the bad review to her. We wanted to hear her response. We don’t know if she was culpable in that prior instance (she claimed she wasn’t) but indirectly we let her know that we expected more. She left our place immaculate.

We’ve had enough experience now that we can tell (and are right more often than not) what a guest will be like before they arrive. Some require more help with information or extra services than others. Some like to use our kitchen. Some are so busy we barely see them. Some keep to themselves. We provide the space or connection according to what they want.

Pricing can be one of the easiest decisions to make in hosting an Airbnb space because the company has developed automated pricing rules. Hosts may also define their own price. Whichever option they choose, the automated pricing provides a guideline of what most places rent for in the area. You can also search other homes in your area to see what they offer.

Some areas can charge a premium, others can’t. For example, when we started hosting, competition included only four other hosts in the area. Now that number is closer to 100. That significantly limits pricing in our area to around $40 a night.

On the other hand, we stayed at a lower quality option in Charleston, SC for $200 a night. But it was the cheapest option in the downtown area at the time, including hotels and other lodging options.

According to Airbnb data the average host earns $6,000 a year, but as you can see by my example some earn a lot more. Our host in Charleston need only host slightly more than 30 nights to earn $6,000 (to accommodate fees), whereas someone in our area must host five times as many nights to earn the same.

For those who have the space and the stomach for it, Airbnb or another short-term rental option can be a good fit and may just generate a nice cash flow.