How to Start an Airbnb Business: 5 Steps for Investors
Setting up an Airbnb after purchasing an investment property is straightforward. Learn about common issues to avoid, how to research the rules, and how to start an Airbnb business that works.
Starting your own Airbnb business doesn’t involve rocket science. While it may seem less involved than other business ventures, it still takes time, effort, and investment to get your Airbnb business and rentals off the ground and making money.
If the world of vacation rentals is calling your name, here are five steps you can take to start your Airbnb business.
Before You Begin
No matter the size and scope of your Airbnb rental business, it can be a profitable investment for anyone looking to make extra money. You can pick the guests who use your rental and charge what you want per night or each stay.
After you’ve found a property and area to set up your Airbnb business, there are a few more things to do before taking the plunge. Here are five steps to follow before you host your first guests.
1. Understand Local Rules and Regulations
As you set up your Airbnb rental, it’s essential that you understand the laws in the city, county, and state where you are doing business. Certain rules may apply to the neighborhood you purchase your rental and what kinds of permits you’ll need to expand your business.
- Rules: It’s essential to understand and follow any rules or contracts that might apply to your listing, such as leases, timeshare ownership rules, condo board, homeowners association (HOA) rules, or rules established by tenant organizations. Read your lease agreement and check with your landlord if applicable.
- Business licenses: Many cities require owners and operators of rental vacation businesses to apply for and obtain a license before it can be operated. Many local governments have sections on their websites explaining the licensing process and providing relevant forms and information.
- Building and housing standards: Most local governments and jurisdictions have rules and regulations surrounding minimum construction, design, and maintenance standards for buildings. If you plan on upgrading your rental home before leasing it out on Airbnb, contact your local government to find out what you can do without specific city approval.
- Zoning rules and requirements: Most cities and local jurisdictions have rules determining how you can use your home. These laws are often found in zoning codes, planning codes, and city ordinances. You should consult these rules to ensure your listing meets current requirements or contact your local government directly.
The requirements that are set out for Airbnb businesses will vary by city and state. It’s crucial that you do your due diligence and check in with your local government before listing your rental. In fact, you can also hire an Airbnb property manager who you can pay to help you learn everything you need to know about rules and regulations to get your business up and running.
Most property managers cost 20% of revenue or higher. Awning offers full-service property management for vacation rentals at 15% that takes care of everything, so you can just sit back and enjoy. You may not need
2. Furnish and Prepare for Airbnb Guests
If you are debating whether to furnish your rental, the answer is straightforward: no furniture, no guests. You will not have any guests lining up to your rental if you have no furniture, resulting in a loss of income. Make sure to purchase the necessary staples to get started, including beds, nightstands, tables, sofas, and chairs.
Going the extra step and including amenities in your Airbnb rental will make it more lucrative for guests. It will also help you stand out from listings that only offer the bare minimum. Some amenities and small touches that are important in adding include:
- A spacious kitchen
- Free parking
- A washer and dryer
- Air conditioning and heating
- Self check-in
- Laptop-friendly working spaces
- Permission for pets
- A hot tub
If you’re on a budget and trying to upgrade your furniture and amenities, consider attending furniture auctions and online liquidation sales. You can also look for garage sales and online listings on Craigslist or Facebook, where people post gently used furniture for low prices.
Ultimately, you can expect to pay $10,000 to $30,000 to furnish and set up your Airbnb rental. The final price you pay for furniture will depend on the size of your rental, how many rooms you have to furnish, and how lucrative you want to make your rental home.
Keep in mind that an investment into high-quality furniture is one of the best investments you can make. More guests will book a well-designed home, they’ll leave better reviews, you’ll have fewer repairs, and ultimately you’ll earn much more money than you spent on furniture.
3. Determine the Price of Your Listing
What should you charge for your Airbnb rental? It’s entirely up to you. As a business owner, you can begin calculating costs by checking out the market and listing prices in your area on Airbnb. This can be done through Airbnb revenue calculators, just make sure that the data is good and that you select comparable properties to your own.
You should price your Airbnb to be competitive with other properties to ensure that your vacancy does not get too low, leaving your property empty. A full-service property manager will also be able to help you with pricing and price adjustments.
Sometimes an event or local interest in Airbnb’s will spike, leading to an opportunity to charge higher rates. In those cases, you should price your Airbnb higher to take advantage of the surplus visitor. Daily dynamic pricing can be taken a step further, with optimizations to keep your Airbnb occupied and maximize revenue. Some full-service property managers will offer to do this for you.
4. List Your Space on Airbnb
Once your rental property is furnished and you’ve settled on a price point, it’s time to list your space on Airbnb. You’ll need your property information handy to set up your listing. This will include knowing:
- Your property type: You’ll need to know whether you’re renting out one bedroom of your rental home or the entire property. Remember that renting your whole place means granting full access to your entire property and all areas.
- The number of guests: Think carefully about the number of people your Airbnb rental can safely accommodate. Select the number of beds or other sleeping arrangements that your property offers.
- Your location: You’ll have to pin the exact location of your rental property on Airbnb’s map. Only confirmed guests can see directions on how to get to your property.
- Property amenities: Select the essential amenities that are available at your rental. After publishing your listing, you can always add more amenities you provide to your guests.
- Spaces guests can use: Tick off all the areas and rooms that guests can use during their stay.
In addition to having this information prepared, you’ll also want to have professional photos of your property to upload. Photos are the first thing that guests pay attention to when searching for a property to stay in. Spending money on a professional photographer can help guarantee that the aesthetic and style of your rental property is displayed correctly.
While photos can make or break listing, a great description is also needed. You’ll want to market your property and define unique selling points that might attract guests to book with you. You’ll also need to optimize your listing for property search both on google and on the Airbnb platform to rank higher.
5. Hire Help to Do Some or All of the Work
Once your Airbnb is up and running, you’ll need to line up all the logistics to ensure that things run smoothly. This could include:
- Adding house rules: To help guests understand your expectations, add rules for your space, such as restrictions on parking, pets, or smoking.
- Setting up your calendar: Update your Airbnb calendar with your availability to ensure you only get reservations when you can host. You can also specify how much advance notice you need or how far in advance guests can book.
- Choosing your nightly price: While we discussed this above, it’s essential to ensure that your pricing is in line with market demand. Set custom price controls for times like weekends and specific seasons.
You’ll also need to set up a cleaning schedule and check-in systems to operate your Airbnb. You can handle your Airbnb rental yourself or hire a property manager to help you with these tasks and manage communication with guests.
Property managers tend to offer full-service solutions that allow people to hand off their Airbnb rental. They will take care of all aspects of managing a property, from ensuring a smooth customer process to handling cleaning and costs.
You can expect to pay a hefty price for property management. Most companies we encountered in our research charged 20% of the rate per night on top of fixed fees added to each reservation to cover logistical costs.
If you hire a property manager part-time, you may pass less overall costs. You would need to determine what parts of property management you wanted them to handle and which you would oversee.
Setting up an Airbnb business cannot be done overnight. There are several steps involved to get your business running and listed on Airbnb, which we’ve covered above in great detail. Time, effort, and money are the most crucial factors you should consider when starting your Airbnb business.