Investing in Airbnb rental properties can be a pretty lucrative business. Over the past decade, many investors have earned substantial profits by investing in this popular rental strategy. Many travelers prefer Airbnb properties to hotels because they offer a homely feel, which drives demand and leads to a good return on investment. However, not every Airbnb host gets to generate good returns. But what makes some investors successful in Airbnb and others not? If you want to make good money from Airbnb in 2020, this blog is for you. We are going to discuss how to build an Airbnb business and stand out from the rest.
Related: What Will 2020 Look Like for Airbnb Real Estate Investing?
How to Build an Airbnb Business: 8 Steps
1. Write a Plan for Your Business
The first step to building a successful Airbnb business in 2020 is to have a clear plan. An Airbnb business plan will help you map out the specifics of your Airbnb business and set up the foundations. It functions as a kind of blueprint. A good plan will help you make sound decisions toward building a successful business. Without a plan, you may not stay focused on important tasks that help the overall bottom line. So it’s best to sit down and create one now.
2. Find a Profitable Location for Airbnb Real Estate Investing
After mapping out your business plan, you now need to begin the process of finding Airbnb property. Buying an Airbnb property with a good return potential begins with finding a top market for Airbnb investing.
Location is an important factor in real estate investing, more so when it comes to Airbnb rentals because it has the biggest impact on your return on investment. Therefore, if you are thinking of how to build an Airbnb business, this is a step you should take seriously.
Top markets for short-term rentals enjoy a high influx of visitors all year round. This includes tourists and business travelers. Such areas have a high demand for Airbnb properties. Therefore, investing in such areas would ensure a high Airbnb occupancy rate.
To find a good real estate market for the Airbnb investment strategy, you need to select not only a top city but also a top neighborhood. Once you have a top city in mind (check out this list to find one now), you can use Mashvisor’s Real Estate Heat Map to do a neighborhood analysis based on the following metrics:
- Listing price
- Airbnb rental income
- Airbnb cash on cash return
- Airbnb occupancy rate
Related: 8 Best Cities for Airbnb Investment
3. Study the Local Airbnb Regulations
Before you decide to begin searching for Airbnb for sale in an area, you need to check out the local regulations for short-term rentals. Some cities have stringent regulations that restrict your ability to host Airbnb guests. For instance, there are cities where you are required to obtain a license or permit before you can start an Airbnb business. In other cities, you may have to actually live on site. Be sure to carefully study the local regulations regarding short-term rentals in the area.
4. Find a Profitable Airbnb Rental Property for Sale
You now have an ideal area to invest in Airbnb. Next, you need to search for Airbnb rentals for sale in the area and analyze them to find the most profitable Airbnb rental property that fits your budget. The best way to search for Airbnb for sale in any area in the US housing market that matches your criteria is to use Mashvisor’s Property Finder.
The Property Finder allows you to search for Airbnb for sale that matches your criteria in a matter of minutes. Once you’ve set the filters, you will get a list of available listings with the highest Airbnb return on investment.
With Mashvisor’s Airbnb profit calculator, you can then do a full Airbnb investment analysis on the properties to determine which is the most profitable one. Mashvisor’s calculator uses Airbnb analytics to estimate Airbnb income and other key metrics such as cash flow, cap rate, cash on cash return, Airbnb occupancy rate, and payback period.
Related: What Kind of Airbnb Occupancy Rate Can You Expect?
Once you find an Airbnb investment property that fits your profitability expectations, hire a real estate agent to guide you through the buying process. For beginner real estate investors, an experienced agent can help you to buy Airbnb property smoothly and avoid unnecessary mistakes that can be costly. It’s recommended that you find a realtor who specializes in working with real estate investors and has experience in Airbnb rentals.
5. Get the Airbnb Property Ready for Guests
To be able to start your Airbnb business, you have to prepare the property to be rented out to Airbnb guests. This involves making any necessary repairs and renovations, doing a thorough cleaning, furnishing the house, and providing basic amenities like bedding, kitchen utensils, toiletries, and possibly a laundry service.
6. Price Your Airbnb Rental Property
Another crucial part of learning how to build an Airbnb business is pricing your Airbnb investment. The price you set will influence your Airbnb occupancy rate and Airbnb rental income.
If you price the property too low, you may not be able to earn enough income to cover your operating expenses. On the other hand, if you price it too high, potential guests will simply avoid your rental property. To find the optimal price to set, you need to look at the nightly rates of comparable properties in the area. Moreover, you should always adjust your prices depending on seasonality and market trends. The quickest way to find Airbnb rental comps is with Mashvisor.
7. List Your Property on Airbnb
Once you have your property ready to receive guests and have found an ideal price for it, it’s time to create an Airbnb listing. Your Airbnb profile has to be appealing to potential guests. This is because it’s your Airbnb profile that will give potential guests the first impression of your Airbnb property. Therefore, optimizing your Airbnb listing will help you attract more guests. This includes having a catchy title, a captivating and detailed listing description and professionally taken photos of the interior and exterior of the house.
Focus on features that will make your Airbnb rental stand out. Be sure to learn the Airbnb.com rules for hosts to avoid compliance issues. To boost your marketing efforts and keep the guests coming, consider also using other marketing channels like social media.
8. Hire a Property Manager
Running an Airbnb business is a lot of work. Some of your responsibilities will include checking in guests, handling guest inquiries, regular cleaning, property maintenance, etc. You always want your guests to have to best possible experience so that they leave positive reviews.
However, doing all the tasks on your own can be quite challenging and would limit the quality of your services. A good way to reduce your workload and save your time is to hire professional Airbnb property management. The property management company will take care of most of the day-to-day management duties and leave you to focus on more important things that will improve your Airbnb business.
Learn more about becoming an Airbnb host in 2020.
The Bottom Line
While Airbnb offers a solid investment vehicle, it’s not as easy as most people might think. To be successful, you need to know the fundamentals of how to build an Airbnb business. If you want to invest in Airbnb in 2020, following this guide could immensely improve your chances of success. Don’t forget to always use Mashvisor for Airbnb data when buying an Airbnb investment.