You might wonder: How does Airbnb work? How can I start an Airbnb business?
Owning an Airbnb investment can be fun. Surely, you will be earning a profit, but you will also get to learn about various cultures while you make money! Starting an Airbnb business is also not too difficult. However, it requires that you maintain a diligent attitude in every step you take.
This guide will help you learn of the gist of starting an Airbnb business. Make sure to follow each step and you will enjoy a prosperous journey.
How to Start an Airbnb Business Step #1: Study Regulations
Airbnb regulations have become more stringent in recent years. Some municipalities and even homeowner associations forbid personal rentals or short-term rentals. Some states, moreover, limit the number of times you can rent in a year.
Your first step before buying an Airbnb property, then, should be studying very carefully the regulations and state laws that govern Airbnb rentals within your area or the area you’re choosing to invest in real estate. Contact the local city council and inquire about the most recent regulations.
You may also need to attain a business license and register to collect taxes. Make sure to inquire about the license as well. Learn thoroughly of the procedures for attaining a license and observe the rate at which real estate investors are granted the license. In some states, government officials have limited the number of business licenses given out.
How to Start an Airbnb Business Step #2: Find the Right Location and the Right Property
Finding the best place to invest in real estate for your next Airbnb rental property is the second step to starting your Airbnb business. You must conduct a real estate market analysis to determine the most suitable location to buy an Airbnb rental property. When you are studying a location, consider regulations, as we have previously discussed. Also, note that a location might be suitable for a traditional rental property but not for Airbnb. The best locations for Airbnb rentals are those that enjoy a high influx of tourists and travelers. Consider locations that also have many amenities and are in close proximity to city centers. These locations will provide the Airbnb real estate investor with high occupancy rates, rental income, and return on investment.
Related: Four Things to Consider Before Purchasing an Airbnb Investment Property
You can start looking for properties using the Rental Property Finder via Mashvisor. The tool uses machine-learning algorithms and predictive analytics to help real estate investors find rental properties for sale that match their search criteria.
Do you have a free Mashvisor account? Use our Property Finder to find lucrative investment properties that match your criteria in a matter of minutes!
Then, you will need to analyze the rental property to find the optimal one for a successful Airbnb business. Using Mashvisor’s Airbnb profit calculator, you simply insert the costs of owning a rental property and the calculator will then provide you with an estimate of the return on investment and profit expected from this property.
The tool will give you an idea of what rental income you will be earning. It will also help you to calculate other important financial metrics such as capitalization rate (cap rate), Airbnb cash on cash return, and Airbnb occupancy rate. To calculate the profit on your Airbnb rental property today, Sign Up with Mashvisor!
How to Start an Airbnb Business Step #3: Prepare the Property
Now it is time to make your property ready for your target tenants. Remember that tenants have chosen Airbnb over hotels for the experience that Airbnb offers. Tenants’ expectations are high and you are there to fulfill their needs and cater to them for an enjoyable stay.
Preparing the property could include hiring professional cleaning services to clean the property, and/or doing some repairs depending on the condition of your investment property.
You are almost there! Make sure to provide clean towels, kitchen cutlery, and other essentials that tenants would need during their stay. We recommend that you also provide your tenants with brochures or even coupons to some of the city’s attractions such as restaurants, theaters, and museums. Most importantly, make your rental property homey for your tenants!
Related: The Ultimate Guide to the Airbnb Investment Property
How to Start an Airbnb Business Step #4: Price Your Property
One of the challenges of how to start an Airbnb business is pricing your property and setting your rate. The rental rate determines your rental income and how much profit you will be making. To enjoy a high return on investment, your rental rate should be high enough to cover all expenses while leaving you a profit.
One way you could go about setting your rental rate is by looking at other Airbnb rental properties within your area (real estate comps). Set a rate similar to theirs. Or you could use an Airbnb profit calculator which proves to be more reliable. This tool allows real estate investors to analyze the profitability of an Airbnb rental property as well as provides real estate comps to help you decide how much to charge for rent.
How to Start an Airbnb Business Step #5: Set Up Your Profile on Airbnb.com
Your profile on Airbnb.com should be inspiring. It should be inclusive of all details while providing a visual perspective of the house. Make sure to invest in professional photos. As a matter of fact, in some areas, Airbnb offers a professional photography service for free- make use of it!
How to Start an Airbnb Business Step #6: Start Your Business Here
To facilitate your journey in starting your Airbnb business, we have compiled data for some of the most popular Airbnb cities.
Airbnb Fort Lauderdale, FL
- Median Property Price: $621,476
- Price per Sq/Ft: $340
- Monthly Airbnb Rental Income: $3,165
- Airbnb Cash on Cash Return: 2%
- Airbnb Cap Rate: 2%
- Airbnb Occupancy Rate: 51%
Airbnb Orlando, FL
- Median Property Price: $318,710
- Price per Sq/Ft: $172
- Monthly Airbnb Rental Income: $2,334
- Airbnb Cash on Cash Return: 3%
- Airbnb Cap Rate: 3%
- Airbnb Occupancy Rate: 58%
AIRBNB Virginia Beach, VA
- Median Property Price: $359,812
- Price per Sq/Ft: $182
- Monthly Airbnb Rental Income: $3,553
- Airbnb Cash on Cash Return: 6%
- Airbnb Cap Rate: 6%
- Airbnb Occupancy Rate: 48%
If you want to learn about other cities, Sign up with Mashvisor and explore more top cities. With Mashvisor, we aim to help you find ways for how to start an Airbnb business in the new year.
Related: What Will 2019 Look Like for Airbnb Real Estate Investing?
Buying an Airbnb property is certainly a great investment to start the year. As you follow the steps above and search for rental properties using both Mashvisor’s rental property finder and Airbnb profit calculator, your Airbnb investment will be set for growth. Remember to maintain a scrupulous attitude in every step you take.
For more information about how to start an Airbnb business, visit Mashvisor!