If you are looking for a side hustle that can move you toward your FIRE goals without taking a lot of time, Airbnb can be a profitable way to earn extra money and develop financial independence.
“I’ve been in digital marketing for years and hated that feeling was short-term; you’re always worried about how to make money in the month,” says JR Rivas, Airbnb owner, real estate investor and co-founder of BNB Leverage, a company that helps people buy and list their first Airbnb. Next: “I knew I needed to diversify my income sources.”
Rivas got into real estate investing. Seven months after he bought his first property, he listed one on Airbnb. The income was surprisingly impressive.
“I’ve listed four more properties, and now I have five on Airbnb that bring in six figures of revenue per year,” he says. “I want to play a long game.” The entrepreneur has steadily transferred his vacation rentals to an airbnb that produces positive cash flow every month.
Since it began in 2007, Airbnb has grown into a major rental platform with four million hosts and over one billion guests. You can list a house, apartment, room or common space as a vacation rental property; There are many options for making money from short term rentals. Airbnb has more than six million listings in 220 countries, and its hosts have grossed more than $150 billion, according to internal reports from the company.
There is a lot of money to be made from owning a successful Airbnb business. Here’s what you need to know about how to start an Airbnb business, list rental property short term, and how Airbnb can become a profitable side business.
What you need to get started on Airbnb
If you’re wondering how to start an Airbnb business, there’s good news: the process is relatively simple.
You need a house, apartment, room, shared space, or other rental property to list it. If you want to list an apartment or room for your business on Airbnb, you first need to make sure that it’s allowed in your rental agreement and that your listing complies with local zoning laws.
Assuming you comply with local laws and homeowners association rules (if you own a home and are going to list it), here are the steps to getting started with your vacation rental platform.
#1: Register as a host and list your property
Go to Airbnb.com and create your account. Then select “Add Card”. You will be directed to fill out a form that asks for general information about your Airbnb rental property, such as:
- The number of guests allowed in your Airbnb rental
- The city in which you list your rental property
- What utilities are on your list
- The number of bathrooms, bedrooms and bed types available in your property
- The type of property you are listing
Airbnb property types
You can include a “full place” that gives guests full access to the rental property and all available amenities, such as a backyard or pool. Or maybe you want to include a “Private Room” that gives guests access to certain rooms and common spaces (bathroom and kitchen), but limits their access to other areas based on what you specify.
There is also an option to list a “shared room” for your business on Airbnb. This option allows guests to access a shared room with you or others. Think of this as similar to a hostel or other short term low cost rentals; The guest shares a room and only has access to the common spaces that you specify.
“I have what I call a ‘tiny house mansion'” says Jodi Winslow, an Airbnb owner and branding expert who helps business owners build their personal brands. from the beach.
“Guests have their own bedroom and bathroom, but we share a house,” she says. “I live on the beach, so most people come here to go to the beach and play. My experience of renting a part of my house on Airbnb has been great. I am keen on who I rent because I am a single female.”
Winslow notes that her decision to start an Airbnb business led to financial and social benefits.
“I met people from all over the world, and I used the income to pay off 60% of my mortgage,” she adds.
No. 2: Make the listing attractive
Once you select your property type, you will be asked to add pictures of the property and create a description of what guests will rent. This is your chance to crack the code on how to successfully start an Airbnb and make a first impression that stands out from the crowd.
“A year ago, I wanted to buy a church,” says Jamie A. Hearn, owner of Airbnb and founder of Blue Aspen Incorporated, a company that offers short-term rentals of historical significance. “I wanted to give my husband a reason, so I told him we could use Airbnb. We bought a church in Jackson, Pennsylvania, renovated it and listed it on Airbnb last winter. We’re marketing our list to people interested in historic buildings, and we’re thrilled with the results.”
Hearn says her vacation has a 50% occupancy rate, which results in between $4,000 and $5,000 a month, and that Airbnb is great as a side business because the amount of administrative effort required is low.
“We run ourselves, with only a cleaner on staff, and we spend 1-2 hours a week on administrative tasks,” she says.
#3: Adjust your booking, calendar, and pricing settings on Airbnb
See Airbnb guest requirements. You can also make additional requirements, such as requesting a government-issued ID. Establish house rules for your short-term rental property and provide the details. Get specific information that will be useful upon arrival, such as whether your guests will have to climb stairs or find parking independently.
When you figure out how to start a business on Airbnb, know that your calendar will be used to set:
- When guests can book your vacation rental
- How far in advance can guests book your vacation rental
- How long can guests stay (you can restrict long-term stays)
- Any date ranges you don’t want your property to be available in
Then you need to decide how to price your listing. Some hosts offer discounts for bookings a week, a month, or more than 30 days to encourage more use of their Airbnb business. Airbnb has suggestions you can use to set a good price for vacation rentals.
How much can you earn with Airbnb?
As of March 2022, the average annual earnings per host on Airbnb in the United States is $13,800, according to internal reports from the company. Remember that Airbnb will incur monthly expenses, and if you choose to set up your Airbnb as a business, it may be necessary to obtain a business license, business insurance, and/or a business bank account. Airbnb allows you to ship by the day, week, month, or longer; The ability to charge at different intervals can lead to income above the rates set for a typical investment property.
“If you have a property that is renting short term (like Airbnb), you will see a lot more returns than traditional real estate,” says Patrick Berryman, asset manager at Eden Companies, a Kentucky-based investment firm. Perryman and his wife Rebekah own and operate an Airbnb. In May 2022, Perryman’s Airbnb plane was booked for 19 of the 23 nights available. Its booked earnings of $8,578 generated a couple net cash of $3,842.29, according to an Airbnb hosting report and supplemental profit and loss statement reviewed by NextAdvisor.
“The average daily short-term rent is higher than a 12-month lease,” Berryman says. “Because you have a lot of people coming in through a short-term rental, the income can be three to five times higher. My wife and I have seen more revenue and income from Airbnb than if we rented it long-term.”
Al Berryman notes that Airbnb has become a side activity they can comfortably manage along with their job responsibilities and their two children.
What are the requirements to be an Airbnb host?
Airbnb hosts have to meet specific requirements for each listing, as Airbnb wants guests to have a comfortable stay. These requirements are:
- Respond to inquiries and flight requests within 24 hours
- Accept trip requests whenever possible to increase vacation rental bookings
- Avoid canceling as much as possible
- Maintaining a high rating and a consistent level of quality
Hosts have the opportunity to check their Airbnb income and how they are performing using the Airbnb Performance Tool. The tool tracks performance against the average for all rental properties on Airbnb. According to Airbnb’s terms, listings that are consistently below average may be subject to penalties.
Tips for Being a Superhost on Airbnb
Airbnb evaluates hosting performance over the past 12 months for all listings on the account; They conduct this assessment every three months. If the host meets the requirements by the evaluation date, they will automatically become a Superhost – there is no need to apply. Hosts are notified of their status at the end of each assessment period.
To qualify, a host must:
- Have completed at least ten flights or three reservations totaling at least 100 nights
- Maintain a 90% response rate (or higher)
- Maintain a cancellation rate of 1% (per 100 bookings) or less, with exceptions for anything covered by Airbnb’s extenuating circumstances policy
- Maintain an overall rating of 4.8 based on previous reviews left over the past 365 days
Airbnb suggests making the basic amenities on your list. These elements are what guests consider essential to a comfortable stay, and are a key factor in how to successfully start Airbnb. Amenities can include toilet paper, towels, linens, pillows, and soap; The little things you give encourage guests to leave a great review.
“On my property, I save toothbrushes, razors, and toothpaste for travel,” Rivas says. “It helps to get those five-star ratings. Also, if there’s something strange about your property, say it on the list. There are many flaws that guests are willing to put up with as long as they know about it beforehand.”
Having the essentials makes the guests happy, and you can add cool items to make their experience over the top. Great entertainment, game related item (pool table, table football, etc.), hot tub, books, nice sitting area outside – think of things you can offer guests at your Airbnb business that aren’t that expensive but create a place that’s not Experience is forgotten.
Consider adding special touches, like special amenities, to encourage five-star reviews. High ratings build momentum and position you to become an outstanding host.
“The three Airbnbs I stayed in allowed me to have more comfort and space,” says Marisa Sergey, chief growth officer for Lova Bella Winery, a winery based in Louisville, Ohio, and a new Airbnb tenant. “Cleanliness and good amenities are the reason the menus left such a good review.”
How do taxes work with Airbnb?
As an Airbnb host, you may be required to collect local taxes or value-added tax (VAT) from your guests. If you need to collect sales tax, you must inform guests of the tax amount before booking.
If your country of residence is in the European Union, Latin America, China or South Korea, you may need to assess VAT on any services you provide. It is wise to consult a sales tax advisor in your area for more information on what you need to know. Additionally, you’ll also need to submit your W9 to Airbnb so they can issue a 1099 for you to report the host’s earnings in a year on your taxes.
Do I need to own an Airbnb place?
The good news is that you don’t have to own your own property to operate Airbnb. If you are within the regulations in your area, and the owner of the home or apartment complex allows you to, you can list a private room, shared room, or entire property.
Get started with Airbnb today
Starting an Airbnb can be a low-maintenance side hustle that grows your fortune over time. You don’t need to own a property to get started, you can build this income stream at your own pace, and Airbnb maintenance doesn’t have to take much of your time.