There were 193 million bookings on Airbnb in 2020. Although it was a significant drop from 2019, it still shows demand for short-term rentals even in a pandemic. What's more, guests are staying longer in Airbnb rentals compared to previous years. We are talking about a 10% increase in 2020 of stays 28 days or longer, from 14% in 2019.
If you've been thinking about starting an Airbnb business and become a landlord, this guide is for you. We take you through the requirements, steps, and essential tips you need to create an Airbnb business.
Let's get into it.
1. Define Your Budget Range
Like any other investment business, you need to determine how much you are willing to invest at the start. If you have an existing property, you will require a smaller marketing budget and provide essentials for your guests.
On the other hand, you must set up a more considerable reserve to buy property, registration fees, maintenance, and additional miscellaneous fees when starting from scratch. Once you have a budget cap, you can make better decisions on the properties to invest in.
2. Analyze Potential Locations for Investment
Location plays a significant role in an Airbnb business— it determines whether your business succeeds or not. That's why you need to be on the lookout for areas that guarantee consistent demand for short-term rentals. Typically, such locations are popular with tourists or people traveling for business purposes.
As an entrepreneur looking to invest in Airbnb, you might find it helpful to have a tool that gives you the short-term rental market statistics. Air DNA is one such tool. With it, you can gain access to rental demand, revenue growth, seasonality, and investment ability of properties in your desired location.
3. Understand the Short-Term Rental Regulations And Permits
Even though Airbnb has seen massive growth in recent years, some cities in the US have enforced constricted regulations to deter landlords from listing their properties. Affected towns include Santa Monica, San Francisco, and NYC.
Keep in mind that most towns will also require that you register for permits and licensing before you can list on Airbnb. This Airbnb page has some handy guides on regulations you need to evaluate before listing your property.
Finally, go for the locations that allow non-owner-occupied short-term rentals. This type of arrangement gives you the flexibility of owning rentals in multiple locations.
Tip: For multi-family houses, make sure to also check for any HOA regulations that might setback your Airbnb business.
4. Define Your Target Customers
Will you cater to tourists, business travelers, families, or backpackers wanting to see the world? What's their likely age and income bracket? What about their likes and preferences? Having a defined customer base will help you attract the right guests by offering what they want and need.
Furthermore, it will be easier to furnish the rentals based on your customers' tastes and preferences. And finally, you save money by promoting your listings to people looking for rentals such as yours.
5. Form an Airbnb Legal Entity
Airbnb is a profitable venture. And if you are planning to scale, forming a legal entity will be the quickest way. One popular option is to create an LLC for your Airbnb business. Your personal assets are protected from liability with an LLC if the company doesn't go as planned. An LLC will also reduce your tax burden by keeping things straightforward and in line with the law.
Registering your Airbnb business as an LLC will buy you credibility from service providers such as cleaners and maintenance companies. And when we talk of expansion, a formal business is more likely to receive financing than an informal business.
Tip: Have a business account separate from your bank account. A business account makes it easy to analyze growth over time and better monitor taxes and expenses.
6. Invest in An Airbnb Property
The good thing about Airbnb is that you don't necessarily have to buy property to start an Airbnb business. You can begin with Airbnb rental arbitrage. Here's where you rent property to sublet it on the Airbnb platform. To gain a profit, the cost of expenses, including rent, should be lower than what you earn through Airbnb.
The second method would be to act as an Airbnb co-host. A property owner adds you to their listing as a co-host so you can help them manage the guests. Your roles may include adding a listing, preparing the booked spaces, and maintenance. Co-hosting Airbnb properties is the least lucrative method but the easiest way to start your business.
Tip: Having your rental properties will be the most lucrative and flexible method of running an Airbnb business. You will have complete control of pricing, strategy, and managing your Airbnb rentals.
7. Create Your First Airbnb Listing
Now comes the most exciting part— listing your property in the Airbnb marketplace. The Airbnb platform is straightforward. What matters most is how you present your listing.
It all starts with your profile. Adding a short description of your business, who you are, and the type of guests you target will roll the ball. Your listings' photos should be quality and professionally done to capture the attention of guests.
Another thing that guests will appreciate is a detailed description of the property. Include the specs, attractions, and the Unique selling point of your property. Is it perfect for a getaway? Great for a full-activity weekend? Is it business-friendly with access to office space and supplies? What about close amenities? Think of what your target customer would appreciate and add it to the description.
Best Listing Practices
Let's go through the best practices when you list your AirBnB.
Meet Inna Shevchenko: Inna is the Chief Marketing Officer at IGMS. She added some of her expertise to this article. IGMS is a SaaS company that provides short-term rental management software for Airbnb hosts and property management businesses. The neat thing about IGMS is you can try it before you buy it. This is where you create a free account.
Photography:
Taking high-quality photos is a prominent practice, but many people tend to neglect this part. Get a photographer in. Make sure the lighting is right. Ensure your listing looks as appealing as possible, as this is always the first thing potential tenants will look at.
Drone footage is quickly becoming a standard feature, as one can see the surrounding areas, rather than just the interior of the property.
Selecting your cover photo should take some serious consideration, as this will be the first thing that prospective guests will see. Select a photograph showcasing the critical selling point of your property, rather than just a single object image.
Optimizing your titles:
Improving the titles of your listings is a small task but can be a very proficient way of getting potential tenants to view your listing. Mention the best features within your Airbnb title, and go for words that convey real meaning, such as “spacious” or “private.”
Make an engaging description:
Making your description as compelling as possible is essential. Include the precise, essential details of your Airbnb properties, and make it easier to read by breaking up the text into bullet points. Nobody enjoys long paragraphs. Provide less thought of information, such as nearby features, the neighborhood, or distance from the city center. This just might make your property slightly more attractive.
Set Ground rules:
Providing clear and concise house rules, as well as providing details about you as a host is a great way to demonstrate your values, and how you expect your property to get treated.
A well-done personal profile is a great way to help build trust with your potential guests.
8. Welcoming Your First Guest
Your first guest can be a jittery but exciting experience. To smoothen out the process, prioritize communication, and ensure check-in instructions are clear. Make sure that everything is clean, the rules direct, and the guest's needs are considered.
How To Market Your Airbnb
Creating a listing on Airbnb is only the beginning. With over 600,000 property listings on the platform in the US alone, standing out is hard. That's where marketing comes in. Relying on Airbnb algorithms alone is not enough. You need to diversify your marketing to reach a broader customer base.
Here are some ways and channels to market your Airbnb business.
Social media
Over 50% of travelers look to social media for recommendations when planning a trip, and over 40% of posts on Facebook are related to travel.
Sites such as Instagram and Facebook can help you get the word out. On Instagram, focus on using attractive photos showcasing property features. Use captions to describe aspects that guests will love. Additionally, you can run ads on social media platforms to boost impressions and get more leads.
Facebook:
Apart from regular posts, setting up paid ad campaigns to a targeted, suitable audience is an incredibly efficient way to build awareness of your brand, as you’ll instantly gain access to a market that may be looking to travel to your area.
In addition to posting about your short-term rentals, sharing helpful content about recommendations on the top destinations in your area is a great way to build trust within your brand.
Instagram:
Instagram is another social media platform that cannot be overlooked. Instagram marketing is a great way to highlight a critical focal point relating to your property, such as a standout feature or amenity.
Instagram Stories can convey new developments to your property, or you just may want to record the best activities in your area. Collect these stories into your highlights and into specific topics, which your visitors can view at all times.
This footage can help build anticipation in visiting your area and your Airbnb.
Work with micro-influencers
When starting, you can tap into micro-influencers through blogs and social platforms. If finances are an issue, you can create a model where micro-influencers review your property in exchange for a free or discounted stay.
Local Partners:
Local partnerships are a popular method of promoting your Airbnb. Collaborating with local restaurants or local stores is something that competitors may not even consider it. Your new “partners” can help spread the word about your property within the local community.
Join vacation rental communities
By joining forums such as subreddits and community groups where vacationers hang out, you will better understand their needs and advertise your properties to them.
Inna Shevchenko adds, " Community with Airbnb is a safe haven where Airbnb hosts can connect and communicate. One can learn how to manage their Airbnb more efficiently and effectively here, but there is also the potential to benefit from word-of-mouth advertising. There’s also a chance that a fellow host may send some business your way."
Out Reach to Other Websites
Getting in touch with tourism websites or travel agencies is another worthwhile method to generate bookings. Having your properties listed on trusted sources, which generate their own traffic, can be a fruitful
strategy in growing your occupancy rate.
Use the Snooze Function
A tip by Inna is to use the snooze function. It's a lesser-known secret to ranking your listing on Airbnb. ‘Snoozing’ a listing for a couple of minutes, and then reactivating it can cause a sudden boost in rankings, as Airbnb’s ranking algorithm gives priority to freshly published listings.
This may not be the most long-term and effective strategy to promote your Airbnb, but it may offer some worthwhile benefits to ranking in your area, especially during peak season.
Do I Need Insurance Cover for My Airbnb Business?
Airbnb has a Host Guarantee insurance that covers up to $1million in property damage protection. It also offers Host protection insurance that provides hosts liability coverage.
However, these insurance covers are excluded in some countries and situations. For instance, battery and assault are excluded in the Host Protection Insurance. This means that if a guest is attacked on your property, even if it is not your fault, they may still choose to sue you. Airbnb will not cover such a situation since the accident was caused intentionally as per their policies.
To protect yourself and your property, we recommend getting an additional insurance cover specific to short-term rentals. Check out what we can offer to get your Airbnb covered. Get a free quote in just minutes!
Conclusion
There's nothing to stop you now. Starting an Airbnb business is not only easy but also lucrative when you play the cards right. Consistent marketing and creating a fantastic experience for your guests is the heart of thriving in an Airbnb business.
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