One of the easiest and most exciting ways to get a steady passive income is to become a short-term rental entrepreneur. Online booking marketplaces like Airbnb happily exist to connect local rental owners with travelers. Property hosts gain profits for leasing out their spaces while guests can stay in nice accommodations that are often significantly cheaper than hotels. Win-win in its purest.
If you are nourishing an idea of launching an Airbnb business, here are some aspects to pay attention to – if you want your venture to succeed.
Types Of Airbnb Entrepreneurs
The hospitality business offers so many opportunities and so much flexibility! Even if you have a single room to spare, you can rent it out occasionally to make a fast buck. An extra apartment or a house can be a stable money-maker, too.
You can start an Airbnb company as a part-time gig, but as your business grows, you may even wish to quit your 9-5 job to become a professional full-time host. There are, essentially, five types of property managers on the Airbnb platform.
- Opportunist. Such a host seizes the chance to hit a lick during high season – the periods of a year when there is an inrush of tourists in the city. Opportunists do not regard this business as their main occupation but are trying to capitalize on the rental demand in the area during peak seasons.
- Extravert. Such an Airbnb entrepreneur offers cheap and cheerful accommodation– a vacant bedroom or even a couch to live together with the owner (or other guests). The target audience of extravert hosts is people on a tight budget who will not mind sharing a room with others (and oftentimes having a mediocre service).
- Classic Host. Such an Airbnb entrepreneur generally has one full-fledged property for leasing out and invests much time and effort to keep it attractive. A classic host will carry out a preliminary screening of potential guests and may even ask you to provide copies of your ID documents to be on the safe side.
- Full-time Airbnb Manager. To this group of entrepreneurs belong managers and hosts who run several vacation rental homes. Such businessmen make their rentals available all year round and generally outsource cleaners and maintenance workers to take care of properties.
- Airbnb Pro. These hosts run numerous properties and manage them full-time, controlling the entire cycle of a deal. Such entrepreneurs often establish a vacation rental agency and hire qualified teams for different departments of the business, including marketing, accounting, maintenance, legal professionals, and more.
What Does It Take To Make Your Airbnb Business Successful?
While Airbnb allows everyone to list their vacant spaces on their website, you cannot reach success in this venture without applying energies.
Unleashing your marketing skills
Marketing is powerful! It is virtually half the battle. The pillars of an effective marketing strategy include brand identity, advertising, Airbnb SEO, campaigns, and nurturing loyalty in your customers. You will have to learn the fundamentals of each of these aspects or employ well-trained marketers to efficiently tout your business.
Staying On Top Of Legalities
Laws regulating vacation rentals vary from region to region. For example, San Francisco, Portland, and Paris recently enacted legislation forcing Airbnb hosts to pay tax on their income from leasing out. In New York City, it is illegal to rent a property for less than 30 days under the Tenement Homes Act if there is no primary resident. You must be aware of the specific rental laws of your city before getting down to business.
Having a Business Plan
You want to approach your startup with a business mindset. You should have a clear idea of your financial goals, perform a thorough market analysis, define your niche, evaluate primary competitors, scrutinize legal factors, analyze your property’s earning potential, and have a plan of action in case of unexpected circumstances. Building an Airbnb business does take a significant investment of time and, oftentimes, personal finance.
Getting Ready To Scale Up
Many small startups that eventually grew into huge enterprises often suffer from scalability issues – an inability to adequately handle an ever-increasing amount of work due to the absence of necessary resources in the company. While it is quite easy to manage a single rental property without applying to third-party assistance, managing a dozen homes can turn into a nightmare without additional help.
Many forward-thinking Airbnb hosts implement vacation rental management software solutions to their business processes to automate repetitive, time-grabbing procedures such as guest communication, availability calendar updates, task assignment, and more (read more here). Business automation streamlines inefficient processes and minimizes human-factor errors, thus, helping you become a better host.
Understanding the earning capacity of your short-stay rental property is vital. Many Airbnb hosts tend to either undervalue or overvalue their vacation homes, which may prevent them from making the most money of their real estate.
On the Airbnb platform, one of the secrets to success is flexible pricing that is based on the current market situation. Your best bet is to set adequate rates during peak seasons and slightly lower your prices when the demand subsides. Top-notch rental management software generally comes with an auto-pricing feature that does the entire price optimization work for you, so you never miss profit opportunities.
Being Aware of Risks
While the hospitality business promises great money-making opportunities, it is not free of its risks. When you are listing on Airbnb, you essentially invite strangers to settle in your home for some time, and now one can predict whether they will respect your property or ruin it. Stolen things, broken furniture, not-adequately-working appliances are sad results of some bookings. To mitigate these risks, you can buy insurance for your property or request a deposit from your guests, so you will not suffer financially when discovering bad surprises after a check-out.