If you plan to rent your home successfully on Airbnb, VRBO or any other similar platforms you must treat it as a business. Starting a vacation rental business can be a great way to earn extra income but many people underestimate what it really takes to run one successfully. Whether you have a spare room in your home or are looking to purchase a property specifically for Airbnb, you need to mentally prepare yourself that this is an actual business and must be treated as such.
Domi & Diego
In this blog post, we provide a step-by-step guide on how to start an Airbnb business, including the most important steps we’ve taking for our own properties to ensure we provide a top-notch experience for our guests.
This post assumes that you will not hire a property manager or Airbnb co-host. After all, we do it ourselves and it's way more profitable.
Even if you decide to work with a professional vacation rental company it is important to have an understanding of all the concepts below so that you are well prepared when selecting one company over another.
Renting a vacation home is legal in many cities across the world but you must check you with your local government.
You can’t really establish a good business in the long run if your city does not allow or simply imposes too many restrictions on vacation rentals. You must ensure that your property complies with all local laws and regulations, including zoning, licensing, and insurance requirements. You may also want to check with your local community, building administrator, or condominium association to make sure you are complying with their own regulations.
Another important aspect is to consider opening an LLC for this activity in order to minimize your personal liability. You should also make sure you have proper insurance specifically designed for vacation rentals. We highly recommend having a brief consultation with a lawyer to talk about these topics.
In short, legal compliance and protections should be the first and most important implications in your decision to enter this industry.
Is there an actual market for your property? Before you start your Airbnb business, it's important to research the market in your area to see what types of properties are in demand and what the competition looks like.
You can start by searching for properties in your area on Airbnb to see what is currently available and how much they charge. This will give you an idea of what type of property is in demand and what you can charge for it. The latter will also help you answer if it is worth doing it under your specific economic circumstances.
We mention Airbnb a lot because of its popularity but it's also critical to look at other short-term rental platforms, such as VRBO and HomeAway, to get a sense of the competition in your area. After all, you must list your property in more than one channel if you want to maximize your earnings.
Once you have a sense of the market in your area, it's time to choose your property. This could be a spare room in your home, your entire house or a separate property that you purchase specifically for Airbnb. When choosing your property, it's important to consider the following:
Once you have chosen your property, it's time to set up your listing on Airbnb. This is where you will provide all the information about your property, including photos, descriptions, and pricing. Setting up your listing in any of the distribution or marketing channels such as Airbnb or VRBO will usually require you to:
Before you start accepting guests, it's important to create house rules and guest policies that will ensure a smooth and enjoyable experience for everyone. Our top recommendation here is make these as explicit as possible and prepare a legal agreement that can be embedded in the booking process of most listing channels such as Airbnb. Some policies to consider include:
Once you have created your house rules and guest policies, make sure to clearly communicate them to your guests in your listing and also provide a printed copy for them to review when they arrive. You can do the latter by posting your house rules as signs as we do.
Before your first guests arrive, it's important to prepare your property to ensure that they have a comfortable and enjoyable stay. Some things to consider include:
Once your property is ready, it's time to start hosting your guests. To ensure a great experience for your guests, consider the following:
Running a vacation rental business can be a lot of work, especially if you have multiple properties or are renting out a property on a full-time basis. But, with the proper systems in place, the venture can run smoothly. The essentials include:
A channel manager is a tool that vacation rental owners and managers can use to distribute their property listings across multiple online travel agencies (OTAs) and booking platforms. A channel manager simplifies the process of managing bookings by automatically synchronizing availability, rates, and reservations across all of the channels where a property is listed.
It’s also the most important tool to avoid double bookings!
If you plan to manage rentals for other owners, a property management system (PMS) is another essential tool. A PMS allows you to manage reservations, track guest details, communicate with guests, manage maintenance and cleaning schedules, and provide owner portals for reporting. It can also help you manage multiple properties and automate routine tasks. Popular vacation rental PMS options include Hostfully, Guesty, and OwnerRez.
Managing your finances can be a challenge when you're running a vacation rental business. It's important to have an accounting and invoicing system in place to keep track of income, expenses, and taxes. Consider using a tool like Quickbooks or Xero to manage your accounting and invoicing, or hire an accountant or bookkeeper to help you manage your finances. At the very least, try using Quicken or similar personal finance software to tag and segregate transactions related to vacation rentals.
When you are not working with a full property manager, you can save tons of money but you will need to establish trustworthy contacts for the following key roles:
A cleaning professional is a crucial aspect of running a successful vacation rental business, as cleanliness is a top priority for guests. Ideally, she or he should have experience in cleaning vacation rental properties but it is not always easy to find. Instead, concentrate on someone who is reliable, detail-oriented, and efficient and able to follow specific cleaning checklists and protocols. Someone who has helped you with cleaning before might be a potential candidate. We did that with our own cleaner in Washington, DC. We taught her exactly how to clean our home during turnovers with the help of our checklists. She now cleans our 3.5 bedroom house in less than 3 hours and our reviews are impeccable partly because of how our guests find the place. We followed the same methodology of recruiting for our homes in the Riviera Maya, Mexico.
Another key aspect. You want someone to attend to emergencies after hours and also someone who can keep the house in top shape. Again, in Washington, DC we offered a trustworthy handyman that we already knew the job to check the house after every turnover and fix whatever is needed. We pay him an hourly rate that varies based on visits. We have a similar arrangement for our properties in the Riviera Maya, Mexico.
Once your Airbnb business is up and running, it's important to monitor your business to ensure that you are providing a great experience for your guests and that your business is profitable. Some things to monitor include:
Last but not least, a vacation rental business has important tax implications depending on your city, state and country, including: income tax, sales tax, occupancy tax, transient occupancy tax, and potential deductions. Vacation rental owners should keep accurate records of all income and expenses related to their business and consult with tax professionals to understand the tax implications of their business.
In the trenches of short-term rental hosting, we stumbled upon our own gold mine of challenges. That’s how HelloBnB sprung to life—crafted from our mishaps, adventures, and a-ha moments. It's more than just a product; it's our passion project, steeped in insider know-how. We’re turning our oops into your perks, offering a tool that gets the guest experience just right.
Our commitment is to furnish you with top-notch resources that will enhance your guests' experience
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