Starting an Airbnb and becoming a great host doesn’t need to be complicated. With the right amount of effort, you can add distinct value to your new rental and stand out amongst your competition.
In this four-part series from Beyond, we’ll dive into how to be a successful host on Airbnb. In addition to research and deep analysis, we’ll even chat with a few hosts to see how they established themselves in the vacation-rental field.
In this first post, we’ll dive into the basics to get your short-term rental business off the ground. This includes getting to know your market, laws, and ordinances, setting up business accounts, determining your costs, and automating your property and listing.
But First, A Success Story
Are you wondering what you can accomplish as an Airbnb host a few years after starting? For some inspiration and encouragement, we asked Airbnb host Jonathan Roper to share his story:
“In 2018 we bought a house in a San Diego neighborhood called North Park with a 1bd/1ba granny flat on the property. We were excited to have something to rent out to help subsidize our mortgage. Somewhere in the process of buying/remodeling the granny flat I got referred to a guy who was an Airbnb host and was making great money listing his similar-sized granny flat. He encouraged me to try it and assured us we would make 2-3x more on Airbnb than we would in the long-term rental market. He was right! It was so successful that we began talking to my father-in-law, who owns 5-6 multi-unit complexes in San Diego, about renting units from him and listing them on Airbnb. Three years later we host 7 properties in North Park, Pacific Beach, and Bankers Hill.”
Understanding Your Market
Becoming an expert on your market is the critical first step to professional vacation rental management. This means analyzing your area, your competitors, and following local regulations. As we saw in Beyond’s latest report on the short-term rental market, the pandemic has accelerated flexible travel and motivated people to move further afield. According to data from the May 2021 Airbnb Report on Travel & Living, there was a shift away from mass tourism to iconic destinations as trips become more about connecting with people and cultures.
New nomads and travelers are from all different places, incomes, professions, and more. Consider the types of guests that might visit your destination so that you can cater directly to them. Resources include search engines, city tourism departments, and Beyond’s local experts.
Here are some questions to consider when finding out more about potential guests:
- Do guests in this market have the income to support your business?
- Is there enough guest demand in your market to maintain profitable occupancy?
- Who are these guests? You need to develop a profile of these visitors to describe the target market that you will market your listing towards.
- What brings people to your town?
- What are its major industries and employers?
In addition, a strong economy, quality shopping, public transit, and other essential amenities help to bolster considerations for short-term stays. How can you situate your property to access these amenities and necessities? Where can people access what they’ll need and/or want to see when traveling?
This endeavor should always include seasonality. Find out peak and low seasons and how major holidays and celebrations affect tourism in your area. To ensure the most profitable daily rates in your market, consider using a tool like Beyond’s dynamic, demand-driven pricing tool. It automatically incorporates extensive local research, competitor rates, and hundreds of other factors to save you time and ensure your pricing strategy maximizes revenue and occupancy.
Setting Up Your Business
A key factor to consider when starting your Airbnb business is government regulation on short-term rentals in your area. Major municipalities that now require Airbnb licenses include San Francisco, New York City, Paris, Barcelona, and more. In addition, buying into apartment, condominium, and other residential communities usually means adhering to any homeowner association (HOA) bylaws.
Before you buy, make sure to familiarize yourself with HOA rules and the short-term rental regulations. There are a number of resources to learn and to align with guidelines. Cities and counties are required to make this information accessible to the public, so their websites are a great place to start. Utilize government offices and officials to follow up and answer any questions you might have.
Another essential part to set up your business is determining costs, which will factor into how much you will charge for your short-term rental. Fixed costs include mortgage payments, insurance premiums, property taxes, accounting fees, and property management fees. Variable costs include utilities, renovations, maintenance, cleaning fees, and listing fees. Laying out your baseline expenses will give you a picture of what monthly amount you’ll need just to break even. Considering that your vacation rental is likely to be a long-term investment, you should seriously consider hiring an accountant and/or attorney to confirm licensure, insurance, permitting, taxes, and other administrative requirements.
Automating Your Business
The short-term rental business is not a hands-off investment, but there are plenty of ways to automate regular tasks to free up your time. Your renters will need communication and guidance from you during every stay. Welcoming them into your rental, helping them to navigate the area, attending to maintenance issues, leading them through the check-out process, etc. You can save a lot of time by automating some of these processes. This includes adding automatic door locks, installing exterior cameras for security, and setting up auto-messaging within Airbnb.
To help automate your check-in process, Jonathan recommends a house manual clearly displayed in your Airbnb. This is not only a great tool for your guests, but it can protect you as well in case something goes wrong.
“You cannot please everyone! 95% of the time everything runs smoothly. However, there will always be that 5% of stays where something goes wrong or guests just cannot be pleased,” said Jonathan. “Clearly outline house rules and infractions/fees associated with breaking these rules in the house manual. If there is an issue and you need to write a report to Airbnb, you will need to document each incident in detail and the fees associated. If they are written down and clearly available for the guest to see, you should be able to receive further compensation if they break the rules. For example, if your property is strictly a non-smoking property then you might want to include something about charging the guest an additional fee to pay for additional cleaning to eliminate odors. It will be hard to charge a guest additional fees without this kind of documentation.”
In part two of our series coming out soon, we will take you step-by-step into communication with guests, including check-in/check-out procedures, designing your new short-term rental, setting up reviews, pricing your rental with dynamic pricing, and finally listing this place on vacation platforms like Airbnb. In the meantime, check out our blog for more insights and advice.
Are you ready to try dynamic pricing on your new Airbnb rental? Beyond powers thousands of hosts to get, grow, and keep revenue through our easy-to-use revenue management platform. Test it out with a free 30-day trial.