A good way to start 2019 is to work on maximizing your Airbnb rental income. The question is, how?
Just like traditional rentals, Airbnb rentals are the best income generating assets in real estate. To make money by renting out on Airbnb, you can rent out either an entire house or choose to rent out an available room.
The best part is the wide platform that is available to short-term rental property owners, or, in other words, the high exposure to the market. Back in the day, you used to go above and beyond to find a platform to market your property for rent. Now, however, it is completely different. You can easily market and rent out vacation homes all in one place.
So, the basics of having a profitable vacation rental business are at your feet. But how can you make more money? How do you increase your Airbnb rental income in 2019? Here are 7 ways.
Start by Crunching Some Numbers
If you want to be making money in real estate, you have to start planning for financial success way before actually buying an investment property. It starts at the point where you first begin to think about investing in rental properties. At this point, your objective is to find a profitable income property with a high ROI (return on investment).
For this, you must first look at the location of the rental property. Since you are investing in a tourism-based business, you want a location that is busy all the time- whether it is thanks to business travelers or vacationers. Pick the locations that are best known for being a travel destination. This strategy will automatically increase the Airbnb occupancy rates for your income properties. Therefore, you will make sure that your Airbnb rental income is flowing smoothly into your bank account.
Once you find a location of interest, it’s time to get an in-depth feel of the real estate market there. Conduct comparative market analysis and find real estate comps for comparison purposes.
Then you need to start evaluating investment property analysis metrics to ensure the highest ROI possible. These include the Airbnb cap rate, the Airbnb cash on cash return as well as the potential for positive cash flow.
Consider using an Airbnb profitability calculator to make all of this faster and easier. This way you can guarantee the process of making money in real estate.
Add a Sense of Experience and Some Tech
The first thing your Airbnb guests are looking for is an experience. After all, they are choosing your rental property over others for a reason. When decorating the property, make sure to include some local decorations to create a sense of experience. Add accessories that reflect what the area is known for. If it’s festivals, beer, or even landscape, it does not matter. Your guests love to be surrounded with the experience they’re about to go through. Eventually, it will be of great benefit to your Airbnb rental income. Don’t overdo it though!
As for technology, it is time that you start dealing with it. Adding a few advanced pieces of technology can be a great step towards drastically increasing the value of your rental properties and consequently your Airbnb rental income.
Keep Up with the Reviews
If there is one thing you, as an Airbnb host, must operate by, it would be the Airbnb reviews. Your entire Airbnb rental income is dependent on Airbnb reviews. Now, there is the Airbnb host reviews and the Airbnb guests reviews. Basically, just as a guest can leave a review about the host and rate them, the host can do so with his/her guests as well. So, your objective would be to receive great reviews, and most importantly, accept guests with good reviews as well. The last thing you want is a huge party that would leave half of your rental property in ruins. This type of guest will definitely leave you at a loss.
Adjust Your Pricing Strategy- It Determines Your Airbnb Rental Income
This tip has to do with your Airbnb pricing strategy. Your Airbnb rental income comes from your pricing strategy. The more you charge, the more you receive. So, hear us out!
Never charge less than what other similar properties around you charge (this is why we said real estate comps are important). If your clients are the type who love to pay money, then go ahead and charge more. However, make sure your Airbnb rental property is worth the money they’re going to pay. To put it into perspective, a cheap Airbnb rental in a luxury neighborhood sounds fishy! So, give your guests what they expect.
On the other hand, an expensive property that has nothing to offer is a bit too much and will throw your guests off, resulting in bad Airbnb reviews. So, find the middle ground where you can price your short-term rental property reasonably.
Related: How Much Should I Charge for Rent?
DIY Airbnb Property Management
Airbnb property management is a great idea for those who are just starting out in the business. However, after a while, you should be able to let go of these services when you have enough experience. In order to increase your Airbnb rental income, cut off as many rental expenses as possible. Learning to manage your property is not very hard unless you do not wish to be involved or own an out-of-state rental property.
The best businesses are the ones where the owner is 100% involved. After all, you are the only one motivated enough to run the business as you have the most to lose!
Take Advantage of Tax Deductions
We have always said, the best part about real estate investing is the tax deductions an investor gets to enjoy. Imagine that for each of your rental property expenses, you get a tax refund at the end of the year. Even if it’s a $500 deduction, you worked hard for that money so you deserve to get some back.
Click here to learn more about the tax deductions that apply to your Airbnb rental income.
Keep Up with the Laws
Airbnb can be the optimal rental strategy. However, the biggest trap real estate investors fall into is the Airbnb legal issues. Understand that Airbnb regulations are constantly changing. Sometimes it is for the best and other times, they’re not the best for your business. So make sure you know what’s going on with the Airbnb industry in your state/city so that your Airbnb rental income won’t be affected.
The Bottom Line
You can work on maximizing your Airbnb rental income almost every step of the way- from buying an investment property using your real estate education and the right tools to owning a short-term rental property and managing it well. There are plenty of options so don’t settle for making less!