Is Airbnb right for you?
Before you dive in and start an Airbnb business you will love, it is important to understand if this is a business you believe you will enjoy. I began my journey as an Airbnb host in 2017 because I was tired of being a landlord. I had been a landlord for 12 years and while I had mostly good tenants, the bad ones took a toll on me and I was also ready for a change.
Short-term rentals give us our power back! And if we don’t like a guest, it’s ok because they are only in our homes for a short time. You will also make more money as an Airbnb host if you do it right.
In this blog I am going to discuss some of the most important things that you need to keep in mind if you want to embark in the world of vacation rentals with Airbnb. This blog is not about getting rich or doing Airbnb rental arbitrage. My goal is to help you understand the business, enjoy it as much as possible and earn a decent living.
If you want to rent out a room in your house or you have rental properties that you want to convert to an Airbnb business you will love, please continue reading!
Do what you love and the rest will follow.
Why did I choose Airbnb instead of VRBO or Booking.com?
I chose Airbnb because my friend was renting his condo using the Airbnb platform and he was having success. I didn’t do any research at the time. I just did it. The decision felt right since Airbnb seemed to be the most popular platform.
Today I know a lot more about the other 2 platforms and my decision back then is still right today. I wrote a blog that outlines the main differences between Airbnb, VRBO and Booking.com so you are well informed before you dive in.
Some hosts choose more than 1 platform but I would advise against it until you have had enough time in the business to ensure you enjoy hosting and you can make a good living. There is a lot to learn on the Airbnb platform!
Learn more about the differences between Airbnb, VRBO and Booking.com.
What skills do you need to be an awesome and happy Airbnb host?
You need to be someone who enjoys people if you are planning to do most of the interactions with your guests. You also need to be flexible. Your guests come from all corners of the world and they may have different customs and needs. Sometimes they will ask you for things that may seem unusual or they may do things that appear silly. I’ve had guests who could not turn on the shower or the stove because in their countries their appliances are completely different.
Our instructions said: "Park as close to the tree as possible" ..... and so they did!
You also need to have high standards especially for cleaning and maintenance. Your properties don’t need to be brand new but they should be well kept and clean.
Having family members or contractors to help you manage the day to day are critical to your success to ensure you don’t burn out.
How much money will you make on Airbnb?
The million dollar question! How much money you make on Airbnb truly depends on your market, what you are selling, how often you want to host and what you outsource.
I have 4 units on Airbnb. I began my journey testing the smallest unit first to ensure I liked the business and that it was as profitable as others said. My tenant was paying $750 for a bachelor apartment and once I renovated it and turned into a 1 bedroom apartment on Airbnb, I made $2,500 in my first month!
Do your research!
Before you begin renovations, decorating or anything else, do the following:
Check local laws, permits & taxes
Cities and towns have their own local laws regarding short-term rentals. Sometimes you might have to apply for a permit before you are allowed to start operations. Also find out if you need to add taxes to your listing based on your jurisdiction. Don’t miss this step as it can make or break your new Airbnb business venture.
Get a quote for Airbnb home insurance
The moment you decide to use your residence or a rental property as a place to conduct business, you change the use of your property and the liability exposure which means your current home insurance policy is likely not appropriate. If you don’t update your house insurance policy and you need to process a claim while you are running a business, your provider may deny your claim.
I encourage you to get at least 3 quotes because house insurance for Airbnb businesses can vary greatly. I wrote a blog on the topic that will provide you with useful information on the house insurance providers I am currently using.
Stay at a local Airbnb
Find a property that is similar to yours and book with a host who has excellent reviews. This exercise will help you to see who your competition is and how they do it. As a potential new host, you may not know what to look for so here are a few tips:
- Read the listing description carefully and see if the description and the photos match what the host advertises.
- Watch carefully how the host communicates and the information that he/she shares prior to and during the reservation.
- Examine any signage and/or house rules binder to see if you can pick up any tips.
- Check the amenities and look for opportunities to improve (eg.- quality of linens and towels, shampoo, conditioner, coffee, tea etc)
- Take photos for future reference.
Do the math!
It is time to sit down and prepare a simple spreadsheet that will help you to analyze your potential expenses and decide if it makes sense for you to embark as an Airbnb host.
Our occupancy rate for all 4 units is 90-95% which is quite high. Covid has not made much of a difference because we pivoted quickly and changed our listings to accept longer term guests. How can you figure out your occupancy rate?
If you decide to stay at an Airbnb in your local area, ask your host! Sometimes hosts are happy to share and it doesn’t hurt to ask. You can also:
Join an Airbnb Facebook Group in your country or city and ask the hosts to help you figure out what the average occupancy rate is for your area. I belong to 2 groups:
I recently came across another site called AIRDNA that can give you a guideline for occupancy rates in your area. I find their numbers a little bit low but that’s ok. It is always better to be surprised if your occupancy rate is higher than expected vs the other way around. When I did my analysis, I used 75%.
Renovations, Decor & Other…
I invested in renovations in 2 out of my 4 properties because the apartments were not ideally set up for short-term rentals. If you want to charge top dollar and be as full as possible, your listings need to show it. I spent $20,000 upgrading the flooring, kitchen and bathroom in my bachelor apartment. I recovered my costs within the first year of being on Airbnb.
Hiring an Interior Decorator
If you don’t have an eye for colour and for interior design, I urge you to invest in the services of an interior decorator. You could waste countless hours and money picking the wrong paint colours and furniture. I hired Pamela Lynn and every cent I spent with her has been worth it.
Pam chose the colour scheme, furniture and she also styled the units for the photos. She is familiar with Airbnb and knows where to spend a little extra on specific items like beds, sofas and not as much on items like side tables for example.
Interior decorator - Pam from Pamela Lynn Interiors
Some Airbnb hosts prefer to hunt for used furniture at Thrift stores and do it successfully but this is not a skill I possess. The other tricky thing is finding furniture that matches your style and also the space. Pamela Lynn took great care to find pieces that fit the spaces perfectly. It would be very difficult to achieve a cohesive, well designed space with used furniture.
Professional Photography Services
At the beginning of my Airbnb business venture, I used my phone to photograph every unit. I read articles on the Airbnb website on how to take great photos for my listings. I am also a pretty decent photographer so my photos looked good.
Once I started making money, I decided to hire a professional photographer and I am so glad I did! I am one of the only hosts in my area who has professional photos and I get to reap the benefits. My units sell out first and at excellent prices.
Photo taken with my phone
In my Airbnb income/expenses spreadsheet, I allocated a line item for interior decorating and photography services with suggested fees for budget purposes that you can use to help you do the math!
Outfitting a short-term rental requires a lot of work upfront. Do you remember when you moved out of your parents house and into your own apartment? This is similar – you have to buy EVERYTHING!
When I began my journey with Airbnb, I kept track of everything I bought and how much I spent. Check out my blog where you can read about my experience and download the entire list.
I picked up 50% of my kitchen items at Thrift stores where we live. But don’t go too cheap. If you are buying used items, make sure you only buy quality items and ensure the silverware, glassware and china match. First impressions count!
Home & guest security devices
I didn’t have a camera when I launched and I paid the price. One of our guests decided to have a party and we were completely unaware of the situation. The guests left $3,000 worth of damage. I was devastated but I learned my lesson and installed a camera immediately after they were removed from my property.
Easy check in
I installed Weiser Electronic Locks in all my properties and they are easy to install and so easy to use. Guests love them too.
Signage, House Rules Binder and Amenities
You’ll need to add some signage inside the house with important information such as wifi but don’t overdo it. You don’t want your house to look like a bus station full of ads. In my blog I share which signage I use.
You will need a clean, well written house rules binder. Also make sure you budget for these essential amenities. I have travelled extensively and stayed at many Airbnb’s. As a traveller and host, I have first hand experience on what amenities are worth the money!
Setting up your business
Congratulations!!! You have done your homework and you have decided that becoming an Airbnb host is a business you will enjoy AND that you will love. What are the next steps?
Branding an Airbnb business
You might be asking yourself if you need to come up with a name for your property. Some hosts do and others don’t. It is entirely up to you. I didn’t and I have had plenty of success.
If you live in a unique town and/or your property has some unique traits that would help you sell it by branding it, I would encourage you to do it. Also if you plan to have more than 1 unit, it could be beneficial to have everything under one umbrella.
You don’t need to do it to launch successfully.
Register a business name
I did not register a business name to operate my rental business. I claim all of my income and expenses under my personal name because our properties are under our personal names and it would be next to impossible to incorporate them and get mortgages for them.
Talk to an accountant and get advice on whether you should operate under a business name.
I like to keep things simple :).
Set up a bank account
If you are going to hire a bookkeeper to do all the paperwork for you, you should set up a separate account so he/she can track income and expenses much more effectively.
If you plan to do it yourself, do what works best for you.
Hire a bookkeeper and accountant
When I was running 2 businesses and had no time to track my rental expenses, I hired a bookkeeper. I kept every receipt and once per month, she entered everything in an excel spreadsheet I created. At the end of the year, the spreadsheet was sent to my accountant to prepare my tax return. Easy peasy!
Today, I have a lot more time and do all the tracking on my own. In my course, I teach students how to do this easily.
You will need an accountant to help guide you in your business endeavors. I have been working with the same accountant for 10 years. I talk to him whenever I need advice or if I am contemplating making a change. A good accountant can save you thousands of dollars down the road. Always consult with him/her first before you make a business change.
Registering your property on Airbnb
This is an exciting step. Airbnb makes it incredibly easy for hosts to register a property, your profile and everything else you’ll need to be successful.
This is where hosts can get creative so get your marketing hat on because you will need to come up with a name to make your property stand out. Don’t rush this step. Take the time to write a profile that does a great job of describing who you are as a person. Guests who stay at Airbnb are looking for a personable experience, your profile and your listing needs to show your personality.
Uploading photos & descriptions
If you don’t hire a professional photographer, make sure your pictures are great. I have seen so many listings where the beds are not made to perfection or there is a weird angle and it is hard to accurately see the space. Show the outside, show the entrance and every room in the house. You need to paint a detailed picture of what you offer. Also detailed pictures will save you from having to answer questions like how many steps are in the home, how many beds, is the kitchen fully stocked etc.
Last but not least, write accurate descriptions with each photo. Don’t leave this space blank. This is another opportunity where you can sell that your kitchen is fully stocked for example.
Check out my listing as it offers a good example of how to write good photo descriptions.
If you have done your research and visited one of your competitors, you’ll have a pretty good idea what you want to charge. If your unit(s) are the best ones in the area, go as high as you can on price but not when you launch. Price your unit slightly lower than the lowest price to get a booking as quickly as possible. Once you have 3 reviews, increase your price to what it should be.
Do not undersell yourself because you are new. Guests will pay what you are worth. You will need to check your prices at minimum weekly to ensure you are priced right at all times.
Do you need an Airbnb marketing strategy for your business?
In my experience, you do not need a separate strategy to promote your Airbnb rentals. Airbnb is so well known especially in North America that properties sell themselves as long as you follow the tips I have outlined in this blog and as long as you live in a city or a town that has strong immigration and/or tourism. If you live in a smaller town, networking in your community is always a good idea to get you more exposure.
What about social media?
I never used social media to promote my properties. All the business I receive comes from Airbnb, word of mouth and repeat guests.
If you love using Instagram or Facebook and you want to promote your town and your Airbnb business, go ahead! Some hosts who are also professional photographers do this and they get referrals that way. But if you don’t have time or this sounds like too much work, forget about it and just do a great job on the Airbnb platform with your photos, descriptions and communication with guests.
What about a website?
You definitely don’t need it when you launch but I think that there are some opportunities for a website where you could provide more information for your guests in one easy link.
I have also found that guests will ask for information about transportation or restaurants in the area and although you can upload this information on the Airbnb platform, sometimes having it nicely organized on your own site is better.
If you have more than one property and guests don’t know that, having a website can help you to cross sell. But again, you don’t need to do this when you launch.
Airbnb Experiences & Other Services
Once you embark as an Airbnb host and become successful doing it, you will notice that there is a cap on how much you will make per year unless you buy more properties. This is where Airbnb Experiences could help you earn more income. If you have a special skill and you want to teach it to your guests or others who find you on the platform, you can promote this service under “Airbnb Experiences” and make more money.
I considered taking our guests on hiking excursions but when I did the math, the money I would make was not worth the effort so instead I decided to launch Happyhosts.ca.
I enjoy hiking as a hobby vs a business
So there you have it. Now you know all the ins and outs of what it is like to run an Airbnb business.
I am in the process of developing a course where I will go in depth and show step by step details on how to launch successfully. If you would like to be added to our email list, sign up!
I hope you will enjoy hosting as much as I have and if you have any questions, drop me a line.