For those who want to start a business in real estate with minimal time invested, you should invest in AirBnB. This AirBnB business model demystifies hosting.
On average, an Airbnb host makes just shy of $1,000 a month. But you’re anything but average. You’re an entrepreneur, and you’re looking to build a long-term hospitality business.
It’s possible. That’s the good news. Some hosts can and do make over $10,000 every month.
But let’s not get ahead of ourselves. You need an Airbnb business model that prioritizes scalability and produces results. Otherwise, your business may never get off the ground.
The short-term rental industry has only been around for about a decade. If you’re not sure of the details, you’re not alone. Here’s how to start an Airbnb and turn it into a lucrative business.
1. Start as a Co-Host
Here’s a well-kept secret: You don’t need a rental property to earn a living from Airbnb. Starting as a co-host is an excellent way to learn how the hospitality industry ticks. It also provides an opportunity to earn liquid and scale your own business later on.
What is a co-host on Airbnb? The listing owner—the person who probably owns the house—can take on up to 3 co-hosts. Co-hosts can act as property managers, converse with guests, and manage the listing.
Basically, a property owner can pick up some co-hosts and split the profits, in return for their help. If you don’t have the connections at the moment, that’s okay. You can find hospitality classes to provide proof of experience and help you land a great business partner.
2. Gain Capital With Rental Arbitrage
There’s another way of starting an Airbnb without property of your own. If you’re renting a house or apartment, you may be able to sublet it as a short-rental and land a profit. This is known as rental arbitrage.
The process is as simple as renting out your rental property for more than its monthly fees. Of course, if it were that easy, everyone would do it.
Rental arbitrage is not legal in some areas. You should absolutely know the local law before you decide to rent out anything for use in a rental arbitrage business plan.
And it’s not just the law you need to worry about. Make sure you talk to your landlord about your plans. You should also check the lease to determine the subletting policy.
3. Find Your Market
Whether you use your own capital or gain it through our previous plans, you’re ready to purchase your first rental investment property.
Your first step is to find a market with a high arbitrage potential. Some short-term rental hotspots are more popular and profitable than others. Although this rental industry is still in its infancy, some states have cracked down on the practice.
Research some of the best Airbnb markets around. Palm Springs, CA; Lahaina, HI; and Davenport, Florida currently offer some of the best revenue potentials.
But just because it’s profitable doesn’t mean it’s right for you. Use this list of the best and worst Airbnb cities to get started.
4. Learn How to List
Once you’ve bought your first short-term rental property, it’s time to list it. There’s an art to creating an Airbnb listing. And if you want to keep the guests streaming in, you need to master it.
One of the most important factors of a great listing? Great pictures. You want high-quality images that show off your home in its best light.
And although a picture is worth a thousand words, that’s not enough for Airbnb guests. Write up a snazzy and inviting description that plays to the interests of your target guests. This will depend largely on where your property is located.
New listings get a temporary SEO boost, so you want to make sure it’s in order as soon as you post. Otherwise, you could be losing out on potential bookings while you improve the listing.
Your personal Airbnb profile is just as important is the listing. It adds credibility to your lodging and tells a part of the story. Try to emphasize your professionalism, but remember to appear fun and approachable, too.
5. Screen Guests
Airbnb offers an insurance policy for guests who go through their service. It’s rare, but a select few people use the service to squat on the property or party hard. These are the guests you should avoid.
That’s why it’s important to screen them. Some simple questions can go a long way. Start some small chat about why they are coming, for how long, and how many guests you should expect.
Still, it’s a good idea to install a smart lock and a noise monitor. This can keep guests out of the home past their booking date and alert you of unusually loud behavior.
Of course, either you or a property manager will have to change the batteries on these devices. What’s inside of a lithium battery, anyway?
6. Diversify Beyond Airbnb
Any Airbnb business plan should seek to scale off the platform. Diversify to other rental sites to bring in more guests. This step is almost essential during the off-season, depending on the location of your property.
You can even take it a step further and create your own short-rental website. A dedicated SEO plan can give you an edge over using other platforms. That’s because Airbnb, HomeAway, and other sites all have their own SEO indicators you can’t hope to compete with.
Follow This Airbnb Business Model
Vacation rentals are really an extension of the already-established hospitality industry. You shouldn’t have to worry about taking chances or creating new financial benchmarks on the fly.
With an Airbnb business model in place, you just need to follow it. Remember to create an unforgettable experience for your guests, in addition to fantastic service. If your guests are happy, your wallet will be, too.
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