How to Start and Grow Your Airbnb Business

Vacation rentals are big business. It’s no surprise that the name Airbnb has become synonymous with the practice of renting out homes and rooms to vacationers and even become a lucrative side hustle for many.

If you want to start an Airbnb business and continue to increase your income, one of the best ways to do this is by investing in additional properties. However, when you’re buying a property specifically for your Airbnb business, you need to calculate your projected earnings by subtracting mortgage payments, cleaning costs, and Airbnb fees from your average earnings per night.

Additionally, you may need approval from your mortgage provider when renting out a property for a vacation rental business.

Creating an attractive and honest Airbnb listing is crucial. Highlight unique features, provide detailed information, and include great photos to stand out.

Here are the factors to consider when buying Airbnb property.

Top 6 Things to Do Before You Get Started

Before you even start to look at individual properties for Airbnb business, take a step back and consider the bigger picture, including the profitability and legal aspects of short-term rentals. Here’s what needs to be done before you start your property search:

The vacation rental industry is expected to continue growing, providing hosts with job stability and income potential.

1. Research the local real estate market.

Understanding your local real estate market, including home prices and demographics, is extremely important if you want your property acquisition to result in a profitable investment for your Airbnb business. You can get a leg up in this department with iGMS’s Market Insights tool.

2. Get approved for a loan.

If you plan to take out a mortgage in order to finance your newest property acquisition, it is a good idea to first get pre-approved for a loan so that you know exactly how much you can afford to spend.

3. Open a business bank account.

It is crucial to open a separate business bank account for managing business finances. This helps in keeping business and personal finances separate, making bookkeeping easier, aiding in tax purposes, and developing a disciplined approach to managing business expenses.

4. Find out the potential costs of renovations.

If the housing stock is older in the area where you’re planning to buy, you may want to consider renovations in order to bring the property up to a level of quality that is suitable for Airbnb guests. Remember, your goal is to provide living quarters that are roughly on par with hotel accommodations for the best results.

5. Figure out legal, insurance, and tax concerns.

Understand and comply with local laws related to short-term rental properties, such as obtaining permits, registering, getting licenses, and complying with housing association rules.

Additionally, be aware of the responsibility of paying sales tax based on state regulations. What are the property tax, business licensing and permitting, and insurance regulations that apply to owning a property for an Airbnb business?

6. Figure out how much you need to earn to break even.

Before you even get into looking for individual properties, you’ll need to decide how much you’ll need to earn in order to make a new property investment profitable for your Airbnb business.

What to Consider When Buying an Airbnb Property for Business

Once you’ve decided to purchase a property in a particular area, it’s time for you to narrow your criteria down by weighing the pros and cons of each property for sale that you come across.

Here are some factors to consider when evaluating individual properties:

Location

Vacation rentals need to be situated where the demand is. Is your property going to be located in an area that’s likely to receive a large number of tourists? Is it walkable? Are amenities such as public transportation, shops, restaurants, and recreational activities located nearby? Would business travelers find your property to be convenient?

These are all important location factors that will affect the number of bookings that your property receives.

Size

Many Airbnb hosts are often uncertain about choosing the right size for an Airbnb property. The truth is that there isn’t a right size. Depending on your budget, you may only be able to afford a small studio or you might be able to afford a large 5-bedroom house.

Look for something that you think you can successfully manage and will generate enough profit to exceed the mortgage and other ongoing costs related to your property purchase. The income potential of a typical Airbnb host can vary, but maximizing bookings and average daily rates can significantly boost earnings.

Number of Bedrooms

The number of bedrooms is very important given the fact that the more bedrooms your property for Airbnb business has, the more you can charge for each booking. That said, you should also consider taking a creative approach to making additional sleeping spaces with a sofa bed or bunk beds.

Unique Amenities

What is it about the property that will catch guests’ eyes? For your Airbnb listings to get attention on Airbnb, it needs to stand out from the array of other available properties.

Consider purchasing a property that offers unique amenities such as a unique design or views of the nearby harbor, city, or mountains. Private rooftop or outdoor entertaining areas are also sure to attract attention. Including high-quality photos of these amenities can make your listing more appealing and increase bookings.

Access

Consider how your Airbnb rental guests will access your property. You need to be able to offer “self-check-in” options that allow guests to come and go as they please while also ensuring the security of your property.

Pricing Strategy

Setting the right rental rates is crucial. Base your pricing strategy on market research, local competition, and demand fluctuations. Adjust prices seasonally and for special events, and consider using Smart Pricing to automate the process.

Cleaning and Maintenance

How easy will it be for you to travel to the property to take care of routine cleaning and maintenance issues if you plan to do the work yourself? Is there a local property management company that you can trust to do the work for you or the cleaning service you can hire? Consider the ongoing or recurring costs for cleaning services to keep your property in top condition.

As you search for the right property for Airbnb business, stay patient. Taking the time to do your homework and getting to know the area that you want to invest in will only increase your chances of finding a great deal.

FAQ

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Final Thoughts

Let’s wrap up. You have a fair number of things to consider when pursuing an Airbnb business, but we’ve laid it all out for you. To quote everyone’s favorite line about starting a new endeavor, “The journey of a thousand miles begins with a single step.” It’s no different here. The first step is deciding to start this business. Or grow it.

By following our guide and bringing iGMS on board to help you manage all the nitty gritty details, you’re sure to make the most of the opportunity.