What to Expect When Starting an Airbnb ( aka Short Term Rental )Jun 19, 2020
Hosting your available home or property is a great way to earn extra income depending on your level of commitment. However, the operation of starting and maintaining your business takes time and effort. Whether you desire to run your Airbnb business on the side or intend to do it full-time, you will need to dedicate yourself completely in order to do it successfully. Here you will learn what to expect when starting your new business and some tips that will ensure confidence when building a short term rental empire.
Know the Cost
As in any new business, there are up-front costs. Depending on the condition of your property and if it’s fully furnished, you might be able to start with minimal cash outlay. Remember that every dollar you spend must be recouped before you can make a profit.
Make sure that you are including all of the little things in your budget such as home appliances, silverware/dishes, television/wifi, towels/sheets, etc. You will have additional and recurring expenses that must be deducted from your income to determine your net profit. Your water and electric bill will obviously increase with the number of people staying in your home. Major costs would include mortgage, home insurance, and property taxes.
Be Prepared for the Unexpected
Something as simple as a leaky pipe can throw you off completely if you are not prepared. Keeping your place updated and fixing what’s needed is very important so you don’t end up digging yourself into a deeper hole. Even if your home is relatively new and well kept, you will want to inspect it for any damage before listing it.
Risk and Liability
Damage to the property is always a possibility when renting out to strangers. Document everything before, after and during renting out your space. I would recommend investing in security cameras and a lockbox for your guest’s belongings when they are gone. Secure or remove any items from the home that you wouldn’t want your guest taking or using.
Home Protection and Insurance
Host are protected up to $1,000,000 with Airbnb Host Guarantee but it's at their discretion and is often not enough. To make certain your property is completely covered, you will also want to get renter’s insurance to cover any major property damage. Independent insurance will cover items that are not protected under renter’s insurance such as artwork, collectibles, jewelry, and various valuables. Remember, your home owner's insurance and renter's insurance will seldom, if ever, cover your BNB Business.
Understanding the Legalities
Research the local laws in your area. Some municipalities and homeowner associations forbid personal rentals or renting for less than 30 days. You may need to register to collect taxes, depending on your host site and state/local laws, or be required to purchase a business license. San Francisco, Portland, and Paris have recently enforced a law for Airbnb hosts to pay an occupancy tax.
Take a lot of Pictures
Having good quality pictures of every room makes all of the difference. Take pictures during the day and open windows for natural lighting. Set your home to be neat and clean and add decor to make your home look more appealing. Stand in the corner to take shots across the room at the widest angle possible. Although you are trying to sell the look of the home, make sure to be honest and truly reflect what the guest will be experiencing. As soon as you possibly can, get professional pictures. They will raise your booking rate tremendously unless you're a professional photographer yourself.
Determine your market value by viewing comparable listings in that neighborhood or area. Find a number you’re comfortable with and set your price. When first launching your business, you might want to consider lowering your price slightly to lure in your first few customers.
You can use Airbnb’s Smart Pricing tool to help you determine what is reasonable but we recommend a company like Wheelhouse (find them at usewheelhouse.com) who specializes in dynamic pricing and doesn't cost much, especially in relation to raising your bookings and prices. You don’t want to charge too little if your intention is to make a steady income so maintain competitive pricing and companies like Wheelhouse can help you stay busy or make money. Your choice.
First impressions do matter and you want your guests walking into a clean home. In fact, cleanliness is the first category listed under “reviews”. Hiring a professional cleaning company will save you the headache of doing it yourself. Set an appointment each time you have a new guest or periodically as agreed upon in the listing if you have long-term guests as they will be paying a cleaning fee when booking with you. Even if you decide to clean yourself, charge for the cleaning, as is the norm, and pay yourself. Someday, you will have to pay professional cleaners anyway. You may as well get into that habit.
Ask for Reviews and Feedback
We can’t grow as a business if we are not always looking for new ways to improve. Communication is paramount and it is key to knowing what your guests want. Follow up with questions and ask for feedback. Have a quick response and tell your guests as much information upfront as you possibly can. Do your best to remedy any problems your guests find. Also, add the special touches they may recommend.
Written by Willow Faye Russell
© The Prosperity Process, LLC
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