Airbnb Startup Guide: How to Get Started

Who doesn't love the idea of making some extra income with a property you already own? Airbnb and similar short-term rental platforms can be a great way to create passive income and earn an additional revenue stream.

However, it's important to get things right from the beginning, which is why we're providing a guide to the steps you'll need to take if you want to succeed in the world of Airbnb!

Analyze Your Local Market

Before you jump into Airbnb, you need to understand the current makeup and projected outlook of your local rental market. This includes taking into account the market of the city or general area you plan to host in, including average monthly revenue for Airbnb hosts in your area, average daily rates, and average occupancy rates.

There are plenty of online tools to use for this purpose, including Vello's own price calculator. By plugging in the address of the property you'd like to turn into an Airbnb dream destination, you can gauge the level of rental housing supply and demand in your area, average occupancy rates, and more.

Other factors to consider include seasonality (i.e. what are the high and low seasons for your region of interest), major local events (such as sports games and concerts), exciting attractions (from museums and parks to unique eateries and bars), and the type of tourist who is interested in the area in question.

Apart from deciding which town to host an Airbnb in, you should also research the right neighborhood for you. Research walkability, access to public venues and transportation, and local amenities. If your target guests include businesspeople, you should also find a property close to office spaces.

Performing comprehensive research in your local market is essential for noticing major rental trends and the level of competition you can expect to face. This will in turn let you set up a business strategy that is appropriate to the market you find yourself in.

This type of market research will also help you after you've started your Airbnb by equipping you with the data points you'll need to adjust your pricing and make decisions in the future about investing in additional short-term rental and vacation properties.

Estimate Your Likely Earning Potential

Another part of finding the right short-term rental property and the optimal time to start hosting is calculating the amount of money you're likely to earn on that property. This includes not just how much you can reasonably expect to receive in revenue (which you'll have something of an idea of during your initial location research), but also how much in costs you'll have to subtract from your gross revenue.

After all, running an Airbnb is a business like any other, meaning you need to aim for profit rather than just initial earnings.

Costs you'll have to factor into your earning potential include rent or mortgage for your property, utility expenses, or supplies, and any other payments you need to make in order to stage your vacation property for listing, prepare it before and after guest bookings, and otherwise keep the property in good shape.

A quick way to estimate your potential earnings on an Airbnb property is to add up all your monthly costs for maintaining the property and divide that sum by 30 (the average number of days in a week). That number will tell you how much you have to charge at minimum just to break even. You can then use that number as a baseline for how much you could earn.

If you already own an Airbnb property (such as if you're renting out a section of your primary residence) and have determined that the winds of the local rental market are blowing in your favor, you can move on to the next step.

However, if you still need to secure a rental property for hosting an Airbnb, you'll need to work with the appropriate real estate personnel to purchase a property so you can start earning.

Prepare Your Airbnb Space

So you've decided to list your property on the Airbnb platform and start earning some passive income. How do you go about setting things up for future guests? Frankly, you'll need to invest some time, money, and elbow grease into your pad to make it the best Airbnb venue it can possibly be.

Depending on its current layout, getting your Airbnb property into shape may require some major upfront renovations, such as adding a wall or furnishing a room to create a dedicated living room in the residential dwelling unit.

Furniture for your Airbnb space should meet the needs of both form and function, with an edge given toward whichever aspect is likelier to appeal to your desired clientele. One thing you can't skimp on with furnishings is sleeping furniture. A positive sleep experience is essential for getting a 5-star review, and the opposite tends to be true for negative sleep experiences.

You should also stock your vacation rental property up with all manner of amenities to please potential guests. Some amenities seem obvious, such as a fridge and coffee maker (whether drip, Keurig-style, or both). Other conveniences, such as a smart TV, secured Wi-Fi, charging cables, and printers may seem optional but tend to be taken for granted by guests.

Even when it comes to simpler items, you'll still have plenty to prepare. You need to fully stock your vacation property with all the essentials, such as fresh bed sheets, clean and folded towels, and plenty of toilet paper and rolls of paper towels.

By putting enough time and upfront cash into the preparation, you'll have your unit ready to maximize customer satisfaction.

Create a Fun, Exceptional Guest Experience

When it comes to preparing and outfitting your Airbnb property, your emphasis should be on providing amenities that will enable your guests to have a memorable and pleasant experience. Even something as simple as shelling out some money for a nice clothing iron and a hair dryer can go a long way toward making it easier for your guests to give you a great rating.

One trick for making sure your Airbnb property is ready for future guests is to stay in the space overnight. By sleeping in the room you will be offering to guests and using the same amenities, you'll be able to experience the same pros and cons that a paying customer would. You can then make changes to create a more satisfying guest-stay experience.

Maybe the bed needs an additional blanket or a few extra pillows, or perhaps you'd have greater ease of mind if you added an extra fire extinguisher. Whatever the case, make the bedroom as pleasant as possible for your guests long before they ever set foot in the building.

Strategically Price Your Airbnb Property

Deciding on the right price for your Airbnb property is one of the trickiest yet most important parts of the vacation rental business. You'll learn more about creating an effective pricing strategy from experience, but there are plenty of things to consider upfront when setting the price for your short-term rental property.

You'll want your nightly prices to be competitive with that of other rentals being offered in your neighborhood, yet still high enough that you end up making a profit at the end of the day. Consider implementing discounts for guests who stay for longer amounts of time, as this can help you secure bookings that bring in guaranteed revenue.

One strategy is to start your Airbnb journey at a lower price point, allowing you to secure more bookings and get multiple positive reviews right from the word "go." Once you've built up some credibility for your listing, you can gradually increase your listing's prices to hit that sweet spot of "competitive yet profitable."

Average local prices will also fluctuate throughout the year. Keep an eye on the average daily rate in your area, which can vary depending on the season and any local events (such as state or county fairs, major sports events, and the like).

Finally, all the hard work you put into furnishing and providing amenities may pay off during the listing process. Depending on the amenities your property includes, you may be able to ask for more than the average daily rate. For example, giving guests access to a full-size swimming pool or a hot tub is a great way to command a premium price for your Airbnb rental.

Understanding Taxes and Airbnb Fees

Some of the costs associated with running an Airbnb business are immovable and non-negotiable. For example, any Hotel Occupancy Tax or other form of tax required by state or local law must be collected when your guests are charged. Airbnb collects and remits these taxes on the hosts behalf for each stay since the guests pay them for these taxes. 

The additional income stream you receive from your Airbnb will count as small business income, meaning that you will need to fill out an IRS Form 1099-K if you make more than $600 in a single calendar year. Airbnb will send you this form to fill out so you can report how much you earned as a vacation rental owner.

Fortunately, many expenses for your Airbnb property can potentially be deducted as business expenses. You'll have to talk to a tax expert or financial planner, but you may be able to deduct items such as your property's rent or mortgage, utility expenses incurred by guests, repair costs, and upkeep expenses related to the management of the property. 

Please contact your CPA with any tax related questions and/or further information.

As far as fees on the Airbnb platform go, here is a list of their relevant service fees. These service fees are charged for each booking and go directly to Airbnb.

List and Market Your Space

Setting the price for your Airbnb space is only half the battle, however. Effective marketing is also required to secure bookings early on and start building up your property's profile as a desirable destination.

Effective marketing tactics for your short-term rental listing include writing a descriptive title that highlights the unique benefits of your property, utilizing targeted keywords that will optimize your listing's rankings on search engines such as Google and Bing, and uploading at least a couple dozen photos that showcase the layout and amenities of your property.

When taking and selecting photos for Airbnb, ask yourself if the picture is the kind that would receive likes and attention on a visually focused platform such as Instagram. If not, read up on basic photography techniques and take some more pictures that will put your listing in the best possible light.

Finally, use the listing description to emphasize the perks and unique benefits of your property by describing the clear reasons why your Airbnb experience stands out. Be honest and avoid exaggerating, but don't be afraid to brag about the parts of your vacation home that you think guests will like.

Figure Out Logistics

Since you're running a business, you need to learn and know the Airbnb rules, as well as any state or local regulations, inside and out. Get in touch with your local state or city comptrollers or other regulatory offices, and save Airbnb's customer service line in case you ever need to call them for clarification.

Once your property has been booked, establish a friendly welcome for guests during check-in. If guests opt for a face-to-face meeting, be present if at all possible during check-in, and try your hardest to make a smashing first impression. If you install a keyless door lock, you'll be able to enable guests to check in 24 hours a day, which can give you an edge over listings that lack this amenity.

Don't be afraid to send a brief message on the first day of your guests' stay to make sure everything is to their satisfaction. Even if there isn't anything that needs to be repaired or otherwise addressed, you'll still earn points in their mind for thinking of them.

If you ever need to enter the Airbnb space during a booking, always ask for guest permission ahead of time (EVEN IF they are out of the house at the moment).

Finally, take a moment at the end of a guest's booking to ask them two questions: 1) How was the experience?; and 2) How could I make it better for the next visitor? If you detect that your guests are happy with their experience, don't be afraid to politely ask for a 5-star review.

How Much Can You Make as an Airbnb Owner?

Some people can turn Airbnb hosting into a full-time job, but for most people, it's a fun side hustle that earns them a healthy second source of income. If you go into the vacation rental industry expecting to make money as a hosting gig worker rather than a full-time entrepreneur, you're more likely to be happy with the results. If you need AirBnb property management, please contact us. 

Contact Us Today!

And that's it! By understanding your local market, studying the market, preparing your property with love and care, pricing your property competitively, and optimizing your listing, you'll be well on your way to earning some extra income through your Airbnb business!

Of course, if you want an expert team to help guide you through the process and take the stress out of managing your Airbnb properties, you'll want to talk to the team at Vello. Schedule a consultation with us to learn how much our professional hosting specialists can do for you, from our dynamic pricing tool to our price calculator!

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