If you have an Airbnb for rent and are determined, focused, and prepared, you can avoid common pitfalls and secure yourself a successful business.
Do you have a second property, guest house, or a spare room? Or are you about to buy your first investment property to create a passive income stream? When getting into the Airbnb hosting business, you should know that what you put into it affects what you get from it. If you want to be successful, you must plan, prepare, and know what to expect.
To help you get the best head start, we’ve compiled a list of things you must know before you list your beach house on Airbnb.
Starting an Airbnb for Rent? 13 Things to Know Before You List
If you are not prepared for what the Airbnb business can bring on your shoulders, things can quickly become overwhelming. We bring to you a step-by-step guide of the process, breaking it down into several simple steps to help you avoid any mistakes along the way.
1. Set Your Goals and Desired Outcomes
To start, you need to consider your goals for monthly occupancy and income. Ask yourself:
- How much money do I want to make?
- How often do I need to rent out my Airbnb property in order to meet this goal?
- Is my occupancy goal realistic in terms of my capacity to manage turnover and current market potential?
You also need to think about how much contact you want with your guests and whether you’re looking for merely business relationships or a social connection. In the end, there might be some experiences that would make you stop putting up your Airbnb for rent. Think about what kind of experiences those might be.
Learn More: A Guide to Investing in Short-Term Rental Properties with Ease
2. Understanding Airbnb Policies and Local Regulations
There is an entire section on the Airbnb website that’s devoted to information about host insurance, trust and safety, and hosting. Peruse everything carefully to ensure that the culture and platform work for you. It’s not enough just to lease your Airbnb for rent without getting to know the rules of that business world.
When it comes to Airbnb rules, there are some that can make hosting a bit challenging. For example, to achieve the Super Host status, you must have hosted 10 stays that average 4.8 out of 5 stars during one year. Your Super Host status can be revoked if you cancel more than 1 in 100 booked stays. Read as much as you can about such rules; it will be of great help when it comes to creating an Airbnb for rent strategy.
As for the local rental regulations, every U.S. state defines its own. In some states, the laws are pretty loose, but others impose quite strict regulations that could prevent you from entering the business. For example, in Los Angeles, you are only allowed to rent out your primary residence as an Airbnb and not for more than four months (120 days) in a year. In New York and Las Vegas, things are even stricter.
Short-term rental laws and regulations change frequently and it’s expected that Airbnb will be exposed to even tougher regulatory security.
3. Do the Math
When calculating for your investment to find out whether it will pay off to put up an Airbnb for rent, you should factor in all the items. For example, it’s true that you can charge more per night when renting out your home short term than you could when renting out long term. However, short-term and vacation rentals have significantly more overhead expenses. People expect to have high-speed internet, 24/7 AC, cable TV, long hot showers, professional cleaning services, bottled water, and other amenities.
Also, don’t go into much detail and try to make the place your own. Because you will rent it out, it is not your home but your guests’. Furnish your property in a way that appeals to everyone in general instead of your specific taste.
Learn More: How to Evaluate an Airbnb Investment
4. Rental Arbitrage Opportunities
For those who don’t know what Airbnb rental arbitrage is, it’s when you rent a property with the goal of subletting it on Airbnb. In order to get this business model to work for you, the income you make must be higher than your rent and other expenses.
But before getting into rental arbitrage, you must consider all legal regulations and rules since some cities don’t allow subletting rental property. You need to:
- Meet the requirements regarding how old to rent out Airbnb without owning property, and;
- Obtain subletting permission from the landlord.
If your landlord agrees to let you sublet their rental, it can be a great option to enter the Airbnb industry without owning a property. You will need much lower start-up capital, have the flexibility of moving on to better opportunities, and scale faster.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
5. Remember to Pay Your Taxes
You’re getting ready to list your Airbnb for rent, which is similar to running a small business, which means you will be earning money. And if there is money earned, it means there are taxes to be paid. Even if you don’t receive any tax forms, it’s your responsibility to report your earnings when filing a tax return. Remember to take your taxes into account when calculating your rental costs versus potential profit.
Related: The Real Estate Investor’s Guide to Airbnb Tax Deductions
6. Cleanliness Standards are High
If you cannot maintain your rental space, you should hire professionals to do it because of high cleanliness standards. This includes keeping hidden areas, pillows, mattresses, linens, and bathrooms spotless. Be sure to consider the overall appearance and cleanliness of any indoor or outdoor space that your guests can access or see.
7. Have Emergency Support on Your Speed Dial
Before you enlist your Airbnb for rent, you should get trustworthy electrical and plumbing referrals and establish a working relationship with them. If you manage to find reliable people that provide excellent service, you’ll eventually understand how valuable they are.
Things go wrong—toilets overflow, electricity goes out, and keypads fail. Besides your go-to contacts for repairs, you should consider hiring a property manager if you’re unable to manage it yourself. The most important thing is to be prepared and have a plan and people to rely on.
You should also get insurance for when something goes wrong that’s not property-related, such as a personal injury. Let them know that you’ll be putting out your Airbnb for rent, set up an LLC, and use it as a hosting company. This will protect your assets in case you are faced with a lawsuit.
Install carbon monoxide and smoke detectors in your home to show your guests that they are safe. Ultimately, have an emergency plan that includes contact info for fire protection and local law enforcement services.
8. Gather Supplies
Stocking up on supplies will keep your guests happy, but you surely don’t need to overstock. Just have some reserves of basic things around the property at all times.
For the bathroom:
- Shampoo and conditioner
- Toilet paper
For the kitchen:
- Hand soap
- Coffee, tea, and sugar
- Salt, pepper, basic cooking spices, and cooking oil
- Cups, plates, and silverware
- Bottled water
- Paper towels
- Garbage bags
- Hand sanitizers
- Latex gloves in a dispenser
- Disinfectant wipes and basic cleaning supplies
- Extra blankets
- Local maps and lists of things to do/see
Meanwhile, if you’re wondering whether adding an office to your Airbnb property to cater to the needs of business travelers will help increase value, check our video below:
9. Talk to Your Neighbors
When putting up your Airbnb for rent, there’s a great chance you will have neighbors. Be sure to talk to them before listing your investment property to see how they will react. If there are already many angry neighbors in your surroundings who are petitioning to restrict or even ban Airbnb, you need to be careful. Otherwise, you or your property could face fines. In the end, your neighbors will definitely determine the success of your Airbnb business.
10. Desperation Can Ruin Your Airbnb Efforts
Some people are desperate for success, so they permit any number of guests to stay at no extra charge, allow for flexible cancellations, and set no minimum nights per stay. Such hosts are simply too scared of losing any money on their investment, not realizing that they’re making the wrong move. No need for desperation because Airbnb has a set of rules and controls you can take advantage of to propel your business. You’re allowed to:
- Require a deposit for potential damages
- Pay for extensive electric or water use
- Up-charge for additional guests
- Set stricter cancellation policies
Imagine how much money you can lose by paying for damages or having your Airbnb unoccupied due to frequent cancellations.
Furthermore, you are exposing yourself to a range of other risks. You are at risk of renting to a squatter and are putting your Airbnb at risk of theft. There’s also the potential liability risk if your guests damage other property, get injured, or injure your neighbors. You can minimize these risks with the right liability insurance coverage.
11. Set the Right Pricing
Don’t ever be okay with leaving extra profit on the table. When it comes to pricing, it is not just about setting your weekend or weekday rates once and never optimizing them. It takes time to get the right pricing initially, but it needs to be revisited from time to time as you keep hosting. And if your Airbnb is located in a popular tourist destination, your pricing should be set according to the tourist season. Mashvisor can provide information regarding occupancy and monthly Airbnb income in areas of your interest, which can be of great help in optimizing your Airbnb pricing.
12. Stay on Top of the Market Trends
Just like any other market out there, the Airbnb market is susceptible to changes. Market conditions, local laws, and guest tastes—all of these factors will determine your success, and they fluctuate. There may be different kinds of travelers during different seasons that want different things. Be ready to keep up.
13. Join Local and Global Community Support Groups
There are many Airbnb community groups for managers and rental owners to network, brainstorm experience improvement ideas, and share tips. After all, Airbnb is about trust and community. Airbnb has made it easy for hosts to connect and share stories, so before you put up your Airbnb for rent, it’s a smart move to get online and gather as many tips as you can.
Find out if your city or nearby tourist area has existing community groups, and once you start hosting, be sure to start sharing your experiences.
How Mashvisor Can Help with Starting an Airbnb for Rent
We live in the 21st century where businesses rely on technological solutions to provide higher quality services, better return on investment, and gain competitive advantage. Are you getting ready to rent out your beach house or invest in vacation rentals to start an Airbnb for rent? Then you will definitely appreciate the advantage you will gain with Mashvisor by your side.
Mashvisor is an AI-based analytics platform that helps Airbnb investors perform a thorough short-term rental analysis to find the most profitable apartments for rent. The platform greatly shortens the entire search and analysis process that would otherwise take days when conducted manually.
Our rental data and analytics platform is here to help you:
Locate a Good Neighborhood
With Mashvisor’s Real Estate Heatmap and Property Finder, you’ll be able to conduct Airbnb analysis to find neighborhoods with the best Airbnb profit potential. For example, Airbnb guests are mostly tourists who want to be close to popular places—coastlines, play parks, urban areas, etc. The Real Estate Heatmap allows you to locate the best neighborhoods by using filters such as the amount of monthly Airbnb rental income, cap rate, listing price, and more.
Once you narrow down your search, you can use the Property Finder to find an investment property that matches your criteria. Use the Property Finder tool to pinpoint your property choices. And once you find the right properties, use our powerful Airbnb calculator to determine how much income each of those properties would make you.
Provide Fresh and Detailed Rental Data
Mashvisor’s investment property calculator provides essential real estate data in a matter of minutes. You can either use our data and input your own and then let the calculator estimate a property’s return on investment metrics.
The calculator will provide expense estimates according to the property’s location and real estate comparables, including startup and ongoing costs. Our Airbnb income calculator is equipped with many unique features that will help you get the most accurate ROI analysis, such as:
- Investment payback balance
- Real estate comps
- Property income
- Optimal rental strategy
Remind You of Rental Property Expenses
Your Airbnb rental property costs include upfront costs and ongoing monthly expenses.
- Appraisal fee
- Home inspection
- Closing costs
Ongoing monthly expenses:
- Licenses or permits
- HOA fees
- Property taxes and mortgage payments
- Rental income tax
- Utilities and cleaning fees
- Property maintenance
- Property management fees
- Vacancy costs
- Upgrades and emergency budget
Mashvisor’s rental property calculator can help calculate your property’s cash flow by extracting rental pricing and costs from rental comps. Then, it provides a detailed breakdown of these expenses. Your cash flow will depend on utility bills, charges, local home market, and additional expenses.
When setting up an Airbnb for rent, things will go wrong and you need to accept that. Roaches or rates could enter the premises or the AC might go out. But in spite of all those issues, you can still get five-star reviews if you are proactive in fixing them and going above and beyond. Still, you will have expensive and stressful moments. And your guests will find a reason to complain. But when you have a guest, none of these are up for debate.
While the day-to-day management is in your hands, Mashvisor can help you conduct the most accurate Airbnb rental analysis to locate the top-performing investment opportunities in the marketplace. That way, you’re confident that you are investing in a profitable venture that will make all the hard work worthwhile.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.