Whether someone is traveling for business or pleasure, one needs a place to stay. Airbnb makes it easier by listing a range of properties in one place. People can book the place they find reasonable for themselves with just a few taps on the screen.
This convenience has fueled the platform’s popularity and made it a lucrative business option for investors. You can use the Airbnb platform either as the main business or as a side hustle that generates a stable income stream.
So, if you have been wondering how to start an Airbnb business, this piece is for you. We will go over every little detail that you need to know before starting an Airbnb.
So, let’s get to it.
5 Steps To Starting An Airbnb
To start an Airbnb, you have to follow the given steps:
1. Find An Airbnb Space To Rent
The first thing you need to start an Airbnb is a property that can be rented. You can either purchase a property if you have enough capital or rent one. Listing a rented property on Airbnb can be challenging as landlords might not necessarily agree to it.
So, you will have to make an understanding or sign an agreement with the landlord to put it out on rent. As for the one you own, the process is a breeze.
You must consider a couple of factors while finding a property to rent on Airbnb. The first and probably the most important of them is the location. You should ideally get the property in a location that is easier to access and nearby the popular location of the area.
While the acquisition of such properties can be expensive, these have the highest potential to generate profit.
Other factors to consider while purchasing a property for Airbnb include parking spots, nearby restaurants, and a calm neighborhood.
2. Set Up & Furnish Your Airbnb Property
Once you have acquired the property, taking care of little details is important. You have to purchase furniture and take care of the minor repairs.
Furthermore, electronics such as refrigerators, microwaves, air conditioners, and heating systems should also be installed. It not just provides more value to the potential clients but also generates more profit for you.
There is a significant difference between the rents of the well and ill-furnished properties on Airbnb.
So, a one-time investment in the furnishing and finishing of the property will generate more revenue than the one lacking it, provided both are located in the same area.
3. Build An Airbnb Team
Owning an Airbnb business is similar to running a hotel, albeit it requires less staff. You have to put together a team to assist the guests, from welcoming them to taking care of their needs.
Ideally, a team responsible for managing an Airbnb business should include reservationists, operations specialists, and cleaners. People with prior experience working in the hospitality industry will make a good team.
You can upsize or downsize the team based on the number of properties you have listed on Airbnb.
Furthermore, there is even an option to hire the staff for a specific time period, such as the end and the start of the year when there is high demand for rental properties. However, if you have multiple properties listed on the platform, it is best to hire a permanent team.
4. Create Your Airbnb Listing
Once you have taken care of every detail, all that is left is listing the property on Airbnb. The process of listing a property on Airbnb is quite simple and only takes a few steps.
You have to download the application or head to airbnb.com. Click on “Become a Host”; it will take you to a page that says “Try Hosting.”
While setting up an Airbnb property, you will be asked to provide different details of the property to the platform. You have to select the home type and make sure that you have picked the most appropriate category.
Some categories you can pick include apartment, house, unique space, boutique hotel, bed and breakfast, and secondary unit. After picking a category, you will have to provide more details in the drop-in menu.
For example, if you have picked a unique space, you will have to specify whether it is a tent, an igloo, or a barn. The types of questions might vary greatly based on the category you pick.
Other details that you have to provide while listing a property on Airbnb include listing type, location, number of guests, and amenities.
5. Optimize Your Airbnb Listing and Property
The mere creation of a listing is not enough to earn profit from Airbnb. You also must ensure that it is optimized and appears on the search results. The first that you need to do is to complete the profile.
Provide a complete list of amenities and upload professional photos of the space. The next thing you need to do is ask the guests to review the place, which can greatly impact improving ranking on the platform. With every positive review, the ranking on the platform receives a boost.
Be mindful that Airbnb has separate platforms, Airbnb Plus and Airbnb Lux, for luxury properties. So, if you have created a listing on Airbnb, the target audience is looking for an affordable place to stay. Thus, affordable and competitive pricing is the key to getting ranked on searches.
The best way is to offer the property at a 20% lower price than the competition and decrease the discounts in small increments as more guests start renting it.
Another factor that can play a huge difference is the provision of amenities – the more, the merrier. It will make the guests feel valued and welcomed, consequently compelling them to leave positive reviews.
How Much Can You Make By Owning An Airbnb?
The profit generated by Airbnb depends on the type and location of the property. However, the average revenue generated by Airbnb property is more than $20,000 a year.
You can make about $9,000, $8,500, $13,000, and $28,000 with the studio, 1 room, 2 rooms, 3 rooms, and 4+ rooms, respectively.
How Much Are Airbnb Taxes?
Like every business, the Airbnb business is also subjected to some taxes. The type and amount of tax might vary in different regions and countries.
However, the most common taxes include the following;
1. Sales Tax
Hosts will have to pay sales tax, meaning a percentage of income will be deducted on every sale. The exact figure varies in different states of the United States and in different countries.
2. Income Tax
According to US Tax Law, income tax is applied to all properties that earn from the rentals, even if the host is a non-US tax resident.
Hosts running Airbnb in the USA will be subjected to income tax as per IRS tax brackets. The exact percentage and amount of tax vary based on whether you file the returns separately, jointly with partners, or as a head of household.
3. Tax Deductions
In addition to the above two types, Airbnb hosts might be liable to other taxes in different regions. These include local tax, value-added tax, and occupancy tax. Countries have varying regulations around it.
For example, in the UK, the tax you are liable to depends on the tax band you fall under. You will have to pay 20%, 40%, and 45% if you fall in basic, higher, and additional rates, respectively.
How To Market Your Airbnb
In addition to optimizing the listing on Airbnb, hosts can market their properties through other means. These include the following:
1. Outreach To Other Websites
Reach websites that deal with travel or vacations. You can provide discounts to the people who come from these websites. It will favor both the website owners and the hosts as the website can offer a discounted package, and the host can get more guests.
2. Work With micro-influencers
Working with micro-influencers is a tried and tested type of digital marketing. You have to hire an influencer and ask them to review the property nicely on their social media accounts. Furthermore, you can also provide discounts to the guests who book the room based on influencers’ recommendations.
3. Join Vacation Rental Communities
Join vacation rental communities on different social media platforms. It will help you find guests even if the property is not appearing in the search results. You can provide a link to the property in these groups and ask the other members in these groups to help you find the clients.
4. Social Media
Create a page for your property on social media and provide the Airbnb Link to the property. It makes you accessible to a wider audience who can contact and book the property. Furthermore, you can also use social media to address potential guests’ queries about the property.
To get better results, regularly upload posts that can include photos of the properties or any discount that you have applied to them. You can also use targeted ads to attract more guests.
Do I Need Insurance Cover For Airbnb Business?
As an Airbnb host, you can run into several problems, including theft of amenities to damages left by the guests. In either case, insurance can cover those losses and help put you back in the business.
Insurance companies have dedicated packages for Airbnb businesses. It is best to get this insurance, but it is also important to understand the terms and conditions thoroughly before signing with them.
Conclusion
Running an Airbnb can be quite lucrative if you know the ins and outs of the business. Not much goes into setting up this business, but it is important to know all the details nonetheless.
The major limiting factor in the Airbnb business is the property, and everything that follows is quite simple when you figure it out, whether by purchasing or renting one. While running an Airbnb, the thing that you should aim for is good reviews.
Positive reviews greatly impact the ranking of properties in the search results. So, all the efforts should be directed at providing a memorable experience to the guest and getting positive reviews from them in return.
We hope this piece has helped.
