Airbnb offers ways to create an extra income from its platform, either by running a vacation rental property or servicing the needs of short-term rental owners. Aside from the current, temporary tourism slowdown due to the COVID-19 outbreak, demand for short-rental property is on the rise with over $115 billion industry value according to researches.
You don’t need a large amount of capital to begin an Airbnb business. And how much you can earn with short-term rentals depends on factors like location, local housing affordability, and how you manage the property. These steps outline how to start an Airbnb business on the right foot.
1) Choose Airbnb business type
While many Airbnb businesses consist of owners renting their owned spaces, you have other options as well. You can serve as a property manager on behalf of the owners, or handle the marketing, daily management, and guest needs for them.
Furthermore, you can offer an assisting service catering to Airbnb owners, such as a short-term rental cleaning company. In a busy Airbnb market, a supporting business could have high demand.
Read more on Airbnb Cleaning Fee
2) Write a business plan
Research how to start operating a holiday rental in your area. Knowing information about the local rules, regulations, and taxes is essential before starting an Airbnb business. Some local laws regulate where short-term rentals can operate, which impacts any property purchasing or arbitrage decisions.
In addition to the regulations, conduct market research on the local demand and supply. Seasonal fluctuations impact the occupancy rate, in turn influencing revenue potential for owners and supporting vendors. It’ll let you know if you need to be more available during one time or year over another.
Learn how the cleaning and maintenance process works for guest turnovers. The quicker a property turns-around, the earlier it’s available again.
Assess the possible risks of owning a short-term rental property, like market downturns, property damage, and guest liability. Short-term rentals see more wear-and-tear than other properties. Estimate the cost of regular property upkeep plus long-term capital expenses like replacing appliances or furniture.
Finally, think about how you’d like to market the property. Analyze the potential competition by looking at Airbnb listings. Consider how you’d create a unique experience to attract potential guests and how to market the selling points.
3) Prepare the business
Armed with an Airbnb business plan, start executing your vision. Future Airbnb hosts need to start looking at buying a vacation rental property or preparing the space they own. The purchasing and preparation process takes time.
Formally incorporate the business and apply for operating licenses and permits. Lay the foundation to protect you and your assets with insurance, accounting software, and short-term rental management platforms.
4) Set up your Airbnb
To list properties on Airbnb, create an Airbnb host account. Familiarize yourself with the features and terms of service.
Prepare the property for guests. Stock the location with the necessary amenities and furniture. Think about the wear and tear in the design choices. Balance durability and function with an interior design that creates a “wow” effect to impress guests. First impressions, both through marketing and in-person, matter in the short-term rental market.
Create a welcome book with policies. Include a phone number where guests can reach an Airbnb host 24/7 in case of an emergency. Outline the house rules for your Airbnb business. Most guests are inclined to follow your rules; having them clearly stated reduces the possibility of property damage.
Decide on amounts for the cleaning fee or extra amenities. Include these in the marketing strategy and welcome book as well; side to side with information and rules about the home and surrounding area.
Keep the logistics in mind when setting up the location. How will guests gain access to the property? What about vendors like a cleaning service? Find a solution that is easy and secure for everyone who will engage with your property.
5) Promote the business
A large part of figuring how to start an Airbnb business on the right foot is marketing. Create the listing with potential guests in mind.
Images are incredibly impactful when securing bookings. Hire professional photographers to capture the property’s features in the best possible light.
Optimize the listing using the SEO best practices. The title and description must sell the experience of staying there. Hit on keywords vacation renters might search for to find the listing. Think of the property description as the story to sell the vacation.
Use dynamic pricing to set nightly rates that reflect supply and demand for the local market. Consider adding minimum stays. Be open to long-term rentals, as these cost Airbnb hosts less in marketing and turnovers than multiple short-term rentals.
Airbnb offers other ways to attract guests and increase your income potential from a booking. Contemplate offering add-ons like an Airbnb Experience, bicycle rentals, airport pick-up/drop-off, or extra cleaning services.
6) Manage the business
Once you start an Airbnb business, keep it running by setting a high standard of service for your guests. Use vacation rental software to automate repetitive tasks, handle guest communications, sync across multiple accounts, and run financial reports.
Software with automated responses to guest queries increases your response ratings and builds potential guest confidence in booking with you. It also streamlines coordination with cleaning and the rental management team. Some options are free and will reduce human error in the management process.
Choosing to run a rental property for an Airbnb business brings risk and reward. As an Airbnb host, you’ll meet interesting people and create a way to generate extra revenue. We’ve illustrated how to start an Airbnb business to get your venture off the ground and on the road to producing income.
Inna Shevchenko, Chief Marketing Officer at iGMS
Inna has over 12 years of experience in marketing and content writing specifically. Currently, she is the CMO at iGMS, a short-term rental management software company.