Airbnb is an increasingly popular way to make income on the side—in fact, there are over 5 million hosts on Airbnb! 🤯
Starting an Airbnb business can feel complicated, but we're here to show you that it might just be easier than you think. Keep reading to discover the 6 steps to starting your Airbnb business, a few keys to success, and how to overcome the common challenges that Airbnb hosts face. ✍️
6 steps to starting an Airbnb business ✍️
There are a few key steps to starting an Airbnb business that are fairly similar for every Airbnb business owner. However, keep in mind that local laws differ for every state or country, and your Airbnb property will have to comply with local tax laws, occupancy laws, and other rulings. 🧾
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1. Do your research and discover your purpose 💡
The absolute first step to starting an Airbnb business is to do some market research. You’ll also want to research successful Airbnb properties in the area where you’re looking to host your Airbnb. See how much hosts are charging per night and what kind of properties (homes, condos, etc.) are popular.
Airbnb elects certain hosts as Superhosts, which are the hosts that have given above-average experiences to their guests (among other criteria). Check out the reviews for the Superhosts in your area to understand what you’ll have to do to compete with them. 🥇
Then, you’ll want to budget for expenses and understand what kind of monthly income you’ll need to pull in from your Airbnb property to match your mortgage or rent. This will help you create a solid business plan and launch your Airbnb business with confidence.
Lastly, spend some time thinking about why you're starting your Airbnb. No matter what kind of business you want to start, every great entrepreneur needs a bigger "why" to fuel them through the highs and lows. Why do you want your own Airbnb? Do you want to bring in extra income on the side while you work a 9-5, or build enough passive income to reach financial independence and retire early?
2. Choose a property 🏡
It’s time for even more research! If you don’t already have a property you intend to use as your Airbnb property, you’ll need to acquire property in some way. The most common listings on Airbnb are houses, apartments, condos, and townhomes, but there are some truly wild listings out there like yurts, ice hotels, and small islands. 🛖
The property you choose depends on how you want to "sell" your property. Is it for business travelers, large families, or couples? Do you want to pitch your property as an everyday rental or a vacation rental?
Airbnb properties aren’t always houses. Sometimes, you can sublease apartments as Airbnb properties. Make sure that subleasing in this manner is allowed by the lease you signed with the apartment owner before attempting to use an apartment as an Airbnb property. 📑
3. Start your business and learn the local laws 📝
There are several important steps you’ll need to take before listing your property on Airbnb. First, you’ll need to understand the local laws regarding short-term rentals and long-term rentals in your area. Does your local government allow short-term rentals like Airbnb? If yes, you’re good to go! ✅
Your next step will be either starting a sole proprietorship or a limited liability company (LLC). You can use an online incorporation service to simplify this process. These types of businesses have different rules and regulations regarding asset protection and funding. You may also need a business license to operate your Airbnb. If you need help filing any of this paperwork, you can use an online incorporation service.
You also need to understand what taxes you’ll need to file. The IRS recognizes Airbnb income and expenses as legitimate, so keep track of what you spend to set up your Airbnb listing and what you earn from bookings. It's also a good idea to set up a separate business bank account for your Airbnb business.
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The other local laws you’ll want to understand are zoning laws, occupancy rates, and insurance laws. By following the regulations for your Airbnb property, you’ll ensure that things go smoothly when it comes to any accidents, property damage, or claims.
Looking for a business bank account for your Airbnb business? Check out the best banks for real estate investors here. 🏛
4. Prepare your property 🔨
It’s time to prepare your property for rental! This is a fun undertaking...but it can also be a stressful process. You’ll want to make sure your property either follows a specific theme or is generally agreeable in aesthetic. This doesn’t mean that you lack creative freedom, but clashing colors and patterns may make your Airbnb less desirable to renters. 🪛
It’s also important to make sure that your Airbnb property is accessible to the majority of Airbnb guests. Does it have parking? A way to get in for wheelchair users? Are there rails in the bathrooms for support? These are all factors to consider to make your Airbnb more accessible. It may be a larger upfront cost, but it’ll pay off in the long run. ♿️
As an extra benefit to guests, you can stock your Airbnb property with basic necessities, like toiletries, basic kitchen items, and spare linens. This will give your guests a more comfortable experience. 🧻
5. Create your Airbnb listing 📖
It’s finally time! You get to create your Airbnb listing. When you’re listing your Airbnb, you’ll want to use high-quality photos, detailed descriptions, and search keywords. Consider hiring a professional photographer for the best photos. 📸
You’ll want to include a detailed list of house rules and check-in details to make the booking experience as smooth as possible for guests. The Airbnb website can host a lot of information, and it’s important to have information readily available for guests. 🗒
Within the house, create a house manual or guide that includes the house rules, Wifi information, and check-out policy. This helps guests find this information easily when they stay at your Airbnb. Overall, remember that your Airbnb listing should be transparent, full of information, and accurate to the property.
6. Transition to passive income earnings 💸
Now that you’ve got your Airbnb, you may be wondering how to turn it from a full-time job to a passive income-earning side hustle. You can do this by hiring employees and contractors to manage your property. ⚙️
Hiring cleaning services, for example, will save you time and money in the long run when cleaning after guests. You’ll also want to have maintenance services on call, in case there’s an issue with the property and you're not available.
If you want to use a catch-all service, it’s recommended to hire a property management company that can manage these things for you. They can handle the cleaning, the maintenance, and anything else that comes up at your property. You’ll just need to respond to incoming messages about booking. 📞
Keys to success with an Airbnb business
Airbnb is chock-full of great listings and amazing hosts. If you're wondering how to start an Airbnb business that truly stands out, here are a few things you can do to set yourself up for success. ⬇️
🗝 Become a Superhost
Airbnb Superhosts are hosts that have reached a certain amount of customer bookings and satisfaction ratings. It’s an automatic process that is run by Airbnb every three months, so no need to worry about a manual application. 📝
By becoming a Superhost, your listings will come with a higher recommendation to potential guests and will be highlighted on the Airbnb website. To become a Superhost, you’ll want to be very responsive to questions and ensure a great guest experience. Over time, with enough positive reviews, you'll be on your way to becoming a Superhost.
🗝 Don't forget to market yourself
Starting an Airbnb business is like starting any other small business—so treat it that way! Marketing is a great way to increase your total number of bookings. Consider advertising your Airbnb on social media (without the actual address) and encourage potential guests to ask you questions about the property.
Hosts across Airbnb also agree that professional photography really takes your listing to the next level. Professional photos help potential guests feel more confident in booking your property and show your property in a positive light. 📸
🗝 Be strategic with pricing
Pricing your Airbnb can be difficult, especially for first-time hosts. Look at similar Airbnbs in the area and use your budget to determine what a minimum price would be for your listing. You can always change your price to reflect popularity—for example, a beachside rental’s prices would be much higher in the summer. ☀️
Airbnb also has a really great tool called Smart Pricing. Smart Pricing takes dozens of factors into account and automatically adjusts your prices accordingly. You’ll still be able to set minimum and maximum prices and fix specific prices for specific nights.
🗝 Manage your money efficiently
Cash flow is the lifeblood of any successful business. Remember to create a monthly budget for your Airbnb business and to keep expenses in check. This is especially important when your Airbnb is new, as it may take some time to attract your first few customers.
One of the best ways to manage your Airbnb cash flow is the Profit First method. With Profit First, you set aside a percentage of your income for profit first each month (in a separate bank account), before paying any expenses. This helps you ensure your business is profitable from day one—even if you can only set aside a small percentage of income. We all have to start somewhere! 💚
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With the online banking platform Relay (that's us!), you can easily open individual, dedicated bank accounts for profit, income, expenses, and other categories. Plus, there are no monthly fees—and you can open your account entirely online.
🗝 Automate your business
Aside from Smart Pricing, which is one way you can automate your Airbnb business, there are other tools that allow you to make your business earnings passive. One tool is scheduled messaging, which allows you to automatically message guests with welcome notes, reminders, and thank you.
Another great tool to use is quick reply, which can help you take less time to answer frequently asked guest questions. Instead of having to type out the Wifi password every time or answer where the parking is, your quick replies can save you time.
You can also use Instant Book, which can sync with your calendar to allow guests to instantly book available dates without you having to approve each booking.
With all of these tools, turning your Airbnb business into a passive income business is easier than ever!
💡 Want to discover more ways to automate your Airbnb business? Check out these 10 amazing AI tools for small businesses.
Potential challenges with Airbnb businesses ⛔️
Like any business, you’ll run into challenges when running your Airbnb business. Here are some common obstacles that Airbnb hosts face and how to handle them.
⛔️ Bad ratings
The majority of bad ratings come from misunderstandings or miscommunications about the property. Make sure that you check in with your guests and ensure that they are comfortable throughout their stay. If they have any questions or concerns, get them squared away before it turns into a bad review.
⛔️ Destruction of property
It’s not common, but it does happen; some guests just don't have respect for others’ property. To prevent this, you can look at the reviews of the guests from other hosts and make sure that the guests have contact information and profile pictures (which increases the likelihood that a guest is legitimate).
⛔️ Few bookings
As you start hosting, you may notice that you’re getting few bookings, which contributes to fewer reviews overall. To negate this, try lowering your prices for the initial few bookings to encourage guests to try out your space.
The bottom line 🚀
Starting an Airbnb business might feel overwhelming at first, but with the right strategies, tools, and mindset, your venture can thrive. Just remember, every Superhost began right where you are today. By staying dedicated, focusing on giving guests a great experience, and managing your finances and resources wisely, you're laying the groundwork for a successful and fulfilling business.
Keep your eyes on the prize, employ the practices we’ve outlined, and watch as your Airbnb business soars to new heights. You've got this! 💪
Get more small business tips from Relay 📧
Relay is an online banking and money management platform that lets small business owners open multiple no-fee business checking and savings accounts.
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FAQs: Starting an Airbnb business
Do you have more questions about starting your own Airbnb business? Here are some common questions and answers about Airbnb businesses. 💚
1. Why has Airbnb become so popular over the last few years? 🤔
Airbnb is incredibly flexible when it comes to the options you have as a host. You can host properties, where guests rent your home to stay in for short or long periods of time, or Airbnb experiences, where you lead guests in local experiences like food tours and craft sessions.
For those with multiple properties, Airbnb is a popular option because it’s quick to set up and easy to maintain for unused properties. You have complete control over potential guests and when they stay at your property.
2. Where does your income come from with an Airbnb business? 💵
The main source of income comes from the booking fees and service fees that guests pay when they book your property. When you list your Airbnb, you’ll be setting a nightly rate that can fluctuate based on popular seasons or change based on your research.
Startup costs come from fixing up your property initially, making it aesthetic for guests, and improving its accessibility. Recurring costs include cleaning costs, fixing costs, and the costs of restocking guest necessities.
3. How can I boost my Airbnb business? ⬆️
Improving your Airbnb business is a slow and steady process. Consider using social media to advertise your new small business. Focus on the guest experience, and make sure that staying at your place is a pleasant experience for all guests.
