Ever wondered how to be an Airbnb host? How much extra income could you earn if you switched a property from a long-term to a short-term rental?
We tracked down several Airbnb experts to explain how you can become an Airbnb host with minimal fuss and maximum profit. They were quick to point out that running a short-term rental business isn’t for everyone — or every real estate business — but it can be very profitable.
From general strategy to more tactical tips, here are 14 tips for being an Airbnb host like you try Airbnb rental as a landlord!
How do you become an Airbnb host?
Investing in real estate and property management is not a “rocket operation” as my ex-girlfriend used to say. But as you research how to become an Airbnb host, you soon realize that posting an ad with a few photos taken with your smartphone isn’t going to give you huge returns.
Follow these hosting tips from the experts and get ready to put in some old-fashioned hard work along the way.
1. Run the numbers
“Before you become an Airbnb host, calculate whether the extra effort is worth the money, compared to what you could earn if you rented the same space on a long-term basis.”
Paula Pant, the sharp mind behind afford everything, uses Airbnb and short-term hosting for some of its rental properties. But not everything.
Here’s how she breaks down the math:
“Let’s say you could rent an apartment on a 12-month lease for $1,200/month. By comparison, you could Airbnb the same space for $100 a night.
“At first glance, that $100 a night sounds like a no-brainer. At full occupancy, that’s $3,000 a month. Why not take that?
“But if Airbnb only gives you 18 days occupancy per month, your gross income would be only $1,800 per month.”
However, vacancy is far from your only expense. You have to pay for gas, electricity, water, internet, consumables such as toilet paper and soap. And don’t forget extra city tax that is stuck on short term rentals!
“Once you subtract this from that $1800/month gross, you’ll find — in this example — that the 12-month long-term lease actually makes you more money.
“That’s not to say all long-term rentals are better, nor is all short-term rentals better. It just means you shouldn’t make assumptions based on gross income alone. Compare the two options to see which is more lucrative.”
2. Price relative to hotels, not other rentals
Al Williamson, arguably the top Airbnb rental expert in the country, insists on a counter-intuitive approach to pricing.
“Your Airbnb prices should have nothing to do with what you might charge for a long-term rental. Don’t even rate your nightly rate based on other Airbnbs nearby!
“Your competition consists of nearby hotels. Look at the nightly rates of comparable hotels and then try to beat them by 15-25%.”
When I asked Al about multi-bedroom units, he said the same principle applies. “A family of six can either book three rooms at the nearby hotel chain… or they can book your three-room apartment. In that case, consider the price of your three-bedroom at the expense of booking two hotel rooms to make your unit an easy decision.”
Want a complete online lesson from Al on how to be successful as a short-term rental business? Here’s a free webinar we hosted with him explaining how he’s doubled his rental income.
3. Know your local laws
The hotel industry is no easy feat. With billions of dollars at stake, they’re not just laying down the loss of market share.
And their cries — and lobbying money and campaign contributions — usually fall on benevolent ears in local legislatures. After all, many municipalities levy special hotel taxes.
That means many local governments have banned or severely restricted Airbnb and other short-term vacation rental services. For example, one study found that: half of Airbnb listings in New York City are illegal. On the other side of the country, San Francisco only allows people to place Airbnb units if they live in the property for at least 275 days a year.
Look up your local laws and make sure you can comply sooner listing on Airbnb!
4. Approach short-term rental as a complete hospitality business
Being a landlord is largely hands-off, with the occasional spurt of effort. That’s what attracts most landlords in the first place – the promise of passive income!
Short-term rentals can provide high income, but are much less passive. And they require a more holistic approach to operate profitably.
“So many people who try Airbnb just throw the list over and sit back and wait,” laments Al Williamson. “They don’t do any marketing outside of Airbnb or VRBO. Then, when it’s off-season, these hosts don’t make any money, ruining their annual returns.
“What they should be doing is launching multiple marketing campaigns. Register with travel websites like Booking.com, post to Craigslist, leverage their own website and audience, and even use hyper-targeted Facebook ads to reach extended-stay business travelers.
“Short hosts who approach it like a business can virtually eliminate vacancy, while those who think of themselves as Airbnb hosts will wonder why their vacancy rate is so high.”
As mentioned before that you should compare the price with the competition of hotels. That also means striving to operate with the smooth efficiency that hotels do.
5. Furnish affordable (but tasteful!)
When most people approach the task of furnishing their rental home, their first thought is, “I think I should go to the furniture store.”
wrong. false. Incorrect.
Your potential guests don’t expect their bottoms to sit on your couch first. No piece of furniture in your unit has to be new.
Buy used furniture and make sure it is in good condition.
Options include Craigslist, Freecycle, garage sales, Goodwill, the Facebook Marketplace, and used furniture stores. You can furnish your unit for a few hundred dollars if you approach it with discerning taste.
Make sure the decor fits into any room. You don’t have to be a Betty Draper to learn how to be an Airbnb host, just pick a color scheme and go with it. Black and white is an easy one. Blue and wood tones is another simple scheme.
When in doubt, bring a tasteful friend to do your shopping.
Oh, and one more tip: avoid political, sexual or youthful wall decorations. If that sounds obvious, I’ve stayed at countless Airbnb units that have broken those rules. The craziest one was decorated with bunnies wearing leather S&M outfits. Seriously.