Small Business Advice

How to start an Airbnb business the right way

Thinking about launching your own rental business? Learn how to start an Airbnb business so you can maximize your short-term rental income and have complete book occupancy throughout the year.

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Starting a new business, although exciting, can also be a lot of work, especially if you don't know where to begin. Nonetheless, many entrepreneurs are choosing to start a growing industry by operating an Airbnb rental. And as the world reopens, there is no denying that the number of Airbnb guests, whether leisure or business travelers, will continue to grow as the travel industry resumes. Therefore, if you are thinking about starting a business, you may find success in the estate rental industry.

To learn more about how to start an Airbnb business correctly, keep reading for more information. 

7 steps to start an Airbnb Business

From pricing and cleaning services to check-in times and house rules, starting a new Airbnb business can be daunting at first. However, by following these comprehensive steps on how to begin, you can be one step closer to making an Airbnb income. Let's take a closer look at how to start an Airbnb business in more detail below. 

  1. Write out a business plan. 

The first step to starting any new business is to compose a business plan. In your business plan, you will want to determine factors, including the following: 

  • Whether you want to take out a small business loan to purchase new real estate if you do not own property. 
  • A budget to purchase new linens, toiletries, amenities, mortgage, and more.
  • Whether you are going to open a separate business bank account, use your personal credit card for purchases, or other forms of payment. 
  • Determine who will be in charge of cleaning services, such as whether you will outsource a third-party company to do so.
  • Decide whether you will want to live on the property as well or keep it solely as a vacation property.
  • Research who your target Airbnb guests are. Are you tailoring to business travelers or people on vacation? 
  • Purchase an Airbnb property for your new business. 
  • How to automate your check-in process. 
  1. Choose a catchy name for your Airbnb. 

The next step is to choose a catchy name for your new property. For example, a name like "____ vacation oasis" is more likely to catch the eye of future renters. Make sure that you do some research in your area and choose a name that isn't already being used. That way, you can stand out among other properties and be easily identifiable to Airbnb guests if they choose to spread the word about your property. 

  1. Register as a legal business entity 

Furthermore, to ensure your personal assets remain protected and separate from your business, consider registering your business as a legal entity. We suggest registering as a limited liability company in your state as this will ensure you are protected from debts and liabilities. 

  1. Register for taxes in your state

Moreover, the next step to starting a successful Airbnb business is to register for taxes. Regardless of what state you choose to operate in, you will need to pay an occupancy tax and a sales tax on all Airbnb income you make. Generally speaking, you will want to take this tax off monthly and keep track of all business expenses you purchase throughout the year. 

Accordingly, you will be able to submit these expenses for a tax credit at the end of the year. Therefore, it is suggested that you hold onto and organize all purchase receipts. 

  1. Purchase business insurance 

As a rental business, you will need to purchase homeowners' insurance for your property. Additionally, you will also need an insurance policy that protects you against damages, general liabilities, and third-party injuries that may occur on your property. Remember, operating under the right insurance plan can help ensure that you are comprehensively covered in the event something unexpected should happen to your home or one of your Airbnb guests. 

  1. Make your Airbnb listing online. 

Moreover, once all the administrative tasks are complete, you will then need to make your property listing online. This includes: 

  • Taking high-quality photos of your property
  • Setting your check-in time 
  • Crafting your property description, including amenities, house rules, and pet policy
  • Setting your pricing 
  • Determining your occupancy limits 
  1. Launch your Airbnb business 

Now it's time to officially launch your Airbnb business. Similar to all small business owners, your job is now to ensure that guests have a positive experience during their stay. That way, they are more likely to leave positive reviews on the Airbnb website. You can do this by: 

  • Ensuring that you are always responsive to guest questions, concerns, and requests.
  • Keep your property looking appealing and sanitary before guests check in. 
  • Fixing any appliance problems throughout your home. 
  • Marketing your Airbnb business online through social media, advertisements, and other strategies to reach your target audience more effectively. 
  • Work on improving your host rating by listening to the needs of your guests. Remember, these will change between occupants.

Once you have successfully begun your Airbnb short-term property business, you will then need to decide whether it works for your current lifestyle choices. For example, if you are always working and are struggling with a work-life balance, you may wish to consider hiring a property manager or assistant to help you with your listings. On the other hand, if your first property is doing very well, you can then consider purchasing a second property to expand your Airbnb income in the future. 

Starting an Airbnb checklist

Furthermore, once you have gone through the steps listed above to start your own Airbnb business, you may wish to keep a running checklist of items and services that you should have on your Airbnb property for potential guests. To help you get started, we've put together a list of things you should consider keeping at your short-term vacation rental. Click the link to download our PDF version. Remember, while your checklist will vary depending on the type of vacation property you choose to purchase, these items will help steer you in the right direction to ensure you don't miss anything important. 

Airbnb regulations by city

Moreover, another essential step to consider when launching an Airbnb business is your city's Airbnb regulations. These regulations typically include zoning laws and administration codes. Additionally, the majority of Airbnb hosts must also register their property as a vacation or short-term property with their city and obtain a permit or a license to run their business legally before they are able to welcome renters to stay. 

One thing to keep in mind is that city regulations can be confusing. However, you can find more information on occupancy tax, zoning laws, and more on the official Airbnb website. Further, if you are still having difficulties with regulations for your new business venture, consider calling your city hall directly to speak with a representative for more information. That way, you can ensure that you are following all local and state laws while avoiding any unexpected fines later down the road. 

Tips for starting an Airbnb business from Reddit

Further, if you're still having difficulties figuring out how to start a successful Airbnb business, online forums like Reddit are a great place to look for more tips. In fact, you'll be happy to know that there is a forum on Reddit dedicated to helping out new Airbnb business owners. 

The Reddit forum is called r/Airbnb, for your ease of reference. With 281,000 members, you can find anything from advice, things to avoid, guest experiences, and more. Therefore, if you are seriously contemplating starting a short-term property rental with Airbnb, we highly suggest taking a look here as well. With that said, here are three direct quote tips from the forum page we think may be helpful to you. 

1. "Print out a QR code to connect to your Wi-Fi and put it up on your wall for guests." – u/acrane55

Guests love convenience, especially when they are on holiday. Therefore, to enhance the guest experience for your renters at your Airbnb listing, consider adding a QR code as stated by u/acrane55. 

  1. "Short-term rentals can be incredibly time intensive as you need to clean appropriately between each and every guest. If you're hiring a cleaning service to handle the cleaning, it's more passive, but that can really eat into your profits, and I know many have trouble finding a reliable service that they can really trust." – techiesgoboom

Property management isn't easy. And if you're expecting your Airbnb business to be a breeze at first, think again. Many business owners working in the rental business are more of a full-time job than a passing, extra income opportunity. So, keep this in mind when determining whether this is the correct type of new business endeavor for you. 

  1. "Know your market and your intended customers and price accordingly. All kinds of people use Airbnb for all kinds of reasons; any single space won't suit everyone's needs. Sometimes you can make more money by not adding extra amenities and keeping the cost low. Sometimes having a really nice space that costs a little more can make you stand out and justify a higher cost. There's a need for both and finding which is currently in demand more in your area is important." – techiesgoboom

Moreover, like any small business, it is essential to know who your target rental market is. That way, you can use social media and other marketing efforts to reach the correct potential guests depending on your Airbnb property and what amenities it has to offer travelers. 

Frequently asked questions

Lastly, we've put together a list of frequently asked questions you may have as an aspiring Airbnb business owner. Let's dive into these questions in detail below. 

How profitable is an Airbnb business?

On average, Airbnb rental property owners can make an additional $950 a month. However, keep in mind that your Airbnb income will vary depending on several factors, including: 

  • The location of your real estate property 
  • The nightly rates you have chosen to implement 
  • The amenities you offer 
  • Whether your property is seasonal or not
  • The cost to replenish items throughout your rental property 
  • Whether you decide to rent an entire home or a single spare room 
  • Your yearly occupancy rate 

Additionally, property owners should keep in mind that they will need to pay upfront costs, especially if they are purchasing new real estate before they are able to increase their monthly cash flow.

How do I start an Airbnb business without property?

To start a successful Airbnb Business without owning a real estate property, consider the following options: 

  1. Airbnb rental arbitrage: Renting a property for the purpose of subletting for vacation rentals. 
  2. Become a short-term rental property manager: Rather than purchasing your own Airbnb property, you can serve as a property manager for others. 
  3. Work as a co-host to another Airbnb host: As a co-host, you will likely perform many of the administrative tasks associated with being a rental property manager. However, you will work directly with an Airbnb host instead rather than working with a company. 
  4. Launch an Airbnb business for cleaning services: Rather than owning your own Airbnb rental, consider starting your own cleaning services business strictly for Airbnb properties. 
  5. Be a professional Airbnb photographer: Part of the reason why Airbnb does so well is that they have high-quality photos. So, why not start an Airbnb business as a photographer? 

Final thoughts 

As you can see, starting an Airbnb rental business isn't a walk in the park. However, by following the comprehensive list we have put together for you above and downloading our complimentary checklist, you'll be one step closer to launching your business and making a profit. 

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