Have you ever been curious about how to start an Airbnb and become a host? How much extra income could you earn if you transitioned a property from a long-term to a short-term rental? Let’s talk about it.
In This Article:
Why Start An Airbnb and Become a Host?
Here are just some of the pros of being an Airbnb host:
| Benefit | Description |
|---|---|
| Extra Income | Earn additional income by renting out unused space or properties. |
| Flexibility | Hosts can choose their own rental schedule, allowing for flexibility in managing bookings. |
| Meeting New People | Opportunity to meet travelers from around the world and share cultural exchanges. |
| Utilize Unused Space | Make use of empty rooms or properties, turning them into profitable assets. |
| Tax Deductions | Potential tax benefits, such as deductions on expenses related to hosting. |
| Enhanced Hosting Skills | Develop skills in hospitality, communication, and property management. |
| Positive Reviews and Reputation | Good hosting can lead to positive reviews, increasing the likelihood of future bookings and higher earnings. |
| Local Community Benefits | Contributing to the local economy by attracting tourists to the area. |
| Personal Satisfaction | Enjoyment and satisfaction from providing a positive experience for guests. |
| Networking Opportunities | Building a network with other hosts and industry professionals for support and advice. |
For a better look, we tracked down several Airbnb experts to explain how to start an Airbnb with minimal fuss and maximum profits. They were quick to point out that managing a short-term rental business is not for everyone—or for every property—butit can be extremely profitable.
From broad-level strategy and narrowing into more tactical tips, here are 14 tips for how to start an Airbnb as you try out Airbnb rentals as a landlord!
How to Start an Airbnb
Real estate investing and property management aren’t “rocket surgery,” as my ex-girlfriend used to say. But as you research how to become an Airbnb host, you quickly realize that throwing up a listing with a few photos snapped with your smartphone won’t land you huge returns.
Follow these host tips from the experts and prepare to work hard.
1. Run the Numbers
“Before you become an Airbnb host, calculate whether the additional effort is worth the money, compared to what you could earn if you rented out the same space on a long-term lease.”
Paula Pant, the sharp mind behind Afford Anything, uses Airbnb and short-term hosting for some of her rental properties. But not all.
Here’s how she breaks down the math:
“Let’s say you could rent an apartment on a 12-month lease agreement for $1,200/month. You could Airbnb the same space for $100/night.
“On the surface, that $100 per night sounds like a no-brainer. At full occupancy, that’s $3000 per month. Why wouldn’t you take that?
“But if Airbnb only gets you 18 days per month of occupancy, then your gross income would only be $1,800/month.”
The vacancy rate is far from your only expense, though. You’ll need to pay for gas, electricity, water, internet, and consumables like toilet paper and soap. And don’t forget extra occupancy taxes tacked onto short-term rentals!
“Once you subtract these from that $1,800/month gross, you’ll find—in this example—that the long-term 12-month lease actually makes more money.
“That’s not to say that all long-term rentals are better or that all short-term rentals are better. It simply means that you should not make assumptions based off gross income alone. Compare the two options to see which one is more lucrative.”
2. Price Against Hotels, Not Other Rentals
Al Williamson, arguably the country’s top expert on Airbnb rentals, urges a counterintuitive approach to pricing.
“Your Airbnb pricing should not be related to what you could charge for a long-term rental. Don’t even price your nightly rates based on other nearby Airbnbs!
“Your competition consists of nearby hotels. Look at comparable hotels’ nightly rates and try to beat them by 15-25%.”
When I asked Al about units with multiple bedrooms, he said the same principle applies. “A family of six could either book three rooms at the nearby hotel chain… or they could book your three-bedroom unit. In that example, consider pricing your three-bedroom at the cost of booking two hotel rooms to make your unit an easy decision.”
Want a complete online lesson from Al about how to succeed as a short-term rental business? Here’s a free webinar we hosted with him, breaking down how he’s doubled his rental revenues.
3. Know Your Local Laws
The hotel industry is no pushover. With billions of dollars on the line, hotels aren’t just surrendering the loss in market share.
And their cries — lobbying dollars and campaign contributions — tend to fall on sympathetic ears in local legislatures. After all, many municipalities charge special hotel taxes.
Many local governments have outlawed or severely restricted Airbnb and other short-term vacation rental services. For example, San Francisco only allows people to list Airbnb units if they live in the property themselves for at least 275 days per year.
Research the best cities for vacation rentals, including both returns and legal regulations. Always understand your local laws, and make sure you can comply before listing on Airbnb!
4. Approach Short-Term Rentals as a Complete Hospitality Business
4. Approach Short-Term Rentals as a Complete Hospitality BusinessBeing a landlord is largely hands-off, with occasional spurts of effort. That’s what attracts most landlords in the first place — the promise of passive income!
Short-term rentals can produce strong income, but they’re far less passive. And they require a more holistic approach to operate profitably.
“So many people who try out Airbnb just throw up the listing and then sit back and wait,” laments Al Williamson. “They don’t do marketing outside of Airbnb or VRBO. Then, when it’s off-season, these hosts don’t make any money, which ruins their annual returns.
“What they should be doing is launching multi-pronged marketing campaigns. They should register with travel websites like Booking.com, post on Craigslist, leverage their own website and audience, and even usehyper-targeted Facebook ads to reach extended-stay business travelers.
“Short-term landlords who approach it as a business can virtually eliminate vacancies, while those who just think of themselves as Airbnb hosts will wonder why their vacancy rate is so high.”
Al mentioned earlier that you should price against the competition of hotels. That also means you should aim to operate with the smooth efficiency of hotels.
5. Furnish Affordably (But Tastefully!)
When most people approach furnishing their rental, they first think, “I guess I should go to the furniture store.”
Wrong. False. Incorrect.
Your potential guests don’t expect their bums to be the first to sit on your sofa. Not a single piece of furniture in your unit needs to be new.
Buy used furniture, and make sure it’s in good condition.
Options include Craigslist, Freecycle, garage sales, Goodwill, the Facebook Marketplace, and used furniture stores. Or maybe your family or friends have some extra furniture lying around in theirstorage unitsthat they’re willing to lend or give to you. If you go about it with discerning taste, you can furnish your unit for a few hundred dollars.
Just make sure the décor matches within each room. You don’t need to be Betty Draper when learning how to start an Airbnb; just pick a color scheme and go with it. Black and white is an easy one, and blue and wood tones are another easy scheme.
When in doubt, take a tasteful friend with you to do your shopping.
One other tip: avoid political, sexual, or juvenile wall decorations. If that sounds obvious, I’ve stayed at numerous Airbnb units that broke those rules. The weirdest was decorated with rabbits wearing leather S&M outfits. Seriously.
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