Investing in Airbnb rental properties can be a lucrative way to secure income and build wealth. Whether you want it for some on-the-side money or have bigger ambitions, learning how to build an Airbnb business is essential before you even get started. There is some important groundwork that you will need to lay if you want to have a successful Airbnb real estate business. With that, let me present you with a step-by-step guide on how to build an Airbnb business.
Related: Four Things to Consider Before Purchasing an Airbnb Investment Property
How to Build an Airbnb Business: The Steps You Need to Follow
1. Check the local laws and regulations
The first step on how to build an Airbnb business is checking the local laws and regulations on short-term rental properties in the area you want to invest in. Airbnb regulations are more stringent in some cities than others. These regulations also tend to change with time. To ensure you are within the law, make sure you contact the local city council and ask about the most recent Airbnb regulations.
In some cities, you may be required to attain a business license or special permit. Some states offer a limited number of business licenses for short-term rentals. Short-term rentals are even forbidden in some areas. Also, inquire about property taxes in the area that apply to owning a short-term rental. Be sure to check for important information on the Airbnb website regarding the regulations that may apply in your city to ensure responsible hosting.
2. Find the Right Location
After learning about the Airbnb laws and regulations in your city, the second step on how to build an Airbnb business is to find the right location. You will need to conduct a real estate market analysis to determine the most profitable Airbnb location. The location of your Airbnb rental property will have a huge influence on your Airbnb success. Is the location suitable for an Airbnb rental property?
The best locations for short-term rental properties are those that have a high influx of tourists and travelers. The location should be in close proximity to attractions, recreational activities, and city centers. It should also be near amenities like public transportation, restaurants, shops, gym, swimming pool, etc. The location will influence the Airbnb occupancy rate, rental income, and return on investment. With the right location, making money with Airbnb is easier.
Related: 8 Best Cities for Airbnb Investment in 2019
3. Find the Right Airbnb Rental Property
After identifying a suitable location, you can start looking for the right Airbnb rental property. You can begin your property search with Mashvisor’s property finder. This tool will help you to find profitable rental properties for sale in your area that match your criteria. You can then use Mashvisor’s Airbnb profit calculator to analyze the selected properties to find an optimal one with a good return on investment. The calculator uses Airbnb analytics to calculate important financial metrics like cash flow, Airbnb rental income, Airbnb cap rate, Airbnb cash on cash return, and Airbnb occupancy rate.
Related: What Kind of Airbnb Occupancy Rate Can You Expect?
4. Prepare the Airbnb Rental Property
It is now time to make your Airbnb rental property ready for your target tenants. Making your property convenient to travelers is another important step in how to build an Airbnb business. Most travelers choose Airbnb over hotels because of the experience that Airbnb offers. The expectations of the tenants are high and you are required to fulfill their needs. What exciting features does your property have to ensure that guests enjoy their stay? Keeping your target audience in mind, provide quality basic amenities like toiletries, beddings, a well-stocked kitchen, high-speed internet, laundry service, etc. You don’t have to entirely refurbish your investment property to attract Airbnb guests. However, having a state-of-the-art facility with a few ‘wow’ factors will pay off.
Preparing your Airbnb property could also include hiring professional cleaning services to ensure the property is always clean. If you want to save on time and worries, you could also hire professional Airbnb management to take care of all the day-to-day activities of the business. This includes checking in guests, handling guest queries and complaints, and doing regular maintenance. Having all these things will not only help you secure positive guest reviews but will also help you beat your competition.
5. Price Your Property
One challenge of how to build an Airbnb business is pricing your Airbnb rental property. Your rental rate is a massive factor in attracting guests. It also determines your rental income and the amount of profit you will be making. To ensure you have positive cash flow and enjoy a high return on investment, make sure your rental rate is high enough to cover all of your expenses while leaving you a profit.
Research what similar local listings are priced at to get an idea of how to price your listing. Airbnb offers ‘smart pricing’ that can help you out. The Airbnb algorithm analyzes similar Airbnb rental properties in your area and suggests the price you should be charging. To maximize profits and also keep your property constantly booked, you must price your listing competitively. You can also adjust them according to market trends and events.
6. Set Up Your Profile on Airbnb Website
To attract Airbnb guests on an ongoing basis, you need to ensure that your Airbnb profile is appealing and inspiring. Your Airbnb listing should be inclusive of all necessary details while providing a visual perspective of the property. Invest in nice professional photos that represent your Airbnb property from its best side. You can also make use of the free professional photography service offered by Airbnb.
You should then add a catchy title and captivating Airbnb listing description. Focus on selling your Airbnb rental property’s most unique features so as to stand out from the crowd. To beat the Airbnb search algorithm and keep the guests coming, you can also promote your listing on social media.
The Bottom Line
Starting an Airbnb business is not too difficult. However, there are some fundamental steps that every successful real estate investor follows. Learning how to start an Airbnb business is essential if you want to be a successful Airbnb host. By knowing exactly how to build an Airbnb business, you will be able to avoid the unnecessary mistakes that most beginners make. Be sure to use Mashvisor to learn more about how to run a successful Airbnb business and for your Airbnb investment analysis.
