Do you own or rent property in the woods, desert, or along the coast? Why not put up a luxury yurt for an Airbnb glamping business?
In these times of economic uncertainty, many people want to start an Airbnb business to get extra income. If you’re considering how to start your first short-term rental, there are a few questions you need to ask yourself first.
While you can certainly earn good money by hosting a short-term rental, hospitality isn’t for everyone. Find out if starting an Airbnb business is for your by addressing these 8 important questions.
Like everyone says, “Location, location, location.” Indeed, geography is critical in determining whether you’ll have a market for your property or not.
Do people want to visit your chosen area? What is its draw?
Folks travel mostly for business or pleasure. On some occasions, they visit loved ones in a hospital or their kids at a university. Are you in a part of town with places like those? Or are you at a jump-off to a remote but beautiful wilderness?
Find out if there’s a demand for an area like yours. As with any business, getting started with airbnb requires doing a market analysis. Visit sites like AirDNA, Transparent and Mashvisor to learn which markets are most viable, their expected revenue growth, and everything else trending in the short-term rental (STR) industry.
Whether you own or rent the space you’re thinking of letting, you’ll need to know if you’re allowed to host strangers. Will the building owner or homeowners’ association approve of it? How about your county? Is your place zoned for STRs?
Study your local and state laws so you’ll know the regulations you’ll need to comply with. You don’t want to start an airbnb, no matter how small-scale, only to be fined or shut down later.
Also, check with your landlord. Do they allow you to re-rent a room in your apartment? Furthermore, you could look for other properties in your area that will allow you to do arbitrage.
Do you like socializing or are you a bit iffy around strangers? Perhaps you prefer peace and solitude over interaction. Identify your strengths and become self-aware so you can manage your expectations appropriately.
Think about it. You’ll be welcoming total strangers into your home. If you’re staying there at the moment, you’d likely feel even more awkward.
Hosting requires courtesy, as well as superb communication skills. You’ll have guests who may or may not speak your language. They may be of totally different cultures, mindsets, religions, and political backgrounds. Can you look past those?
The STR industry is not just real estate. It is hospitality. You’ll need to have patience when it comes to guest relations.
Take a few minutes and listen as Jon and I discuss how to start an Airbnb rental on the right footing.
Running a rental is managing a small business. It requires effort and skills in marketing, customer relations, accounting, and property management. Similarly, it is not passive, seasonal work that will require only minimum input while bringing in huge, passive income. It can be a lot of work — especially at the start.
Cleaning, checking guests in and out, re-stocking, managing the calendar, and addressing inquiries and complaints. Be prepared to do all of these yourself so you can quickly learn the ins and outs of hospitality and property management.
And as you go, you’ll have to optimize the different aspects of the business before it can grow over time.
Read also: Property Management Software — Which One is Right for Your Airbnb?
Though you can pre-screen guests – and we certainly advise you to do so – you’ll still encounter people whose standards and behavior differ very much from yours. There may be rude people, demanding people, people with unreasonable expectations.
Guests can complain about the smallest things. They may ask for discounts and refunds. Some will feel entitled to stealing your linen.
Though troublesome guests are more of the exception than the rule, keep in mind that hospitality is a service industry, which will require you to stretch your patience farther than you could expect.
Are you willing to solve issues whenever they arise — even if it’s late at night or early Monday morning? Can you be on call 24/7?
Be ready for interruptions and emergencies at the oddest hours. And make sure your spouse, children, and pets are prepared for them, too.
Consequently, if you can’t deal with such inconveniences, consider hiring a property manager.
In a time of anxiety over Covid-19 and the spread of infections, you’re going to have to be fastidious about sanitation. In fact, you are also going to have to be patient with guests’ expectations.
While Airbnb has set standards for enhanced cleaning protocols, different people still have different standards for cleanliness.
Likewise, if you want to go “above and beyond”, you’ll have to clean for the fussiest guest you’ve ever allowed into your home. Sanitation is the bone of contention in many Airbnb complaints.
Be obsessed with cleanliness. Or, hire cleaners who are.
Read also: 9 Tips to Help Your Airbnb Rental Survive Covid-19
Make sure you set realistic goals. How much money do you expect to make on a monthly and yearly basis? How much capital will you need for furnishings, operations and maintenance?
Your costs must not exceed your expectations. And that applies not only to the financial aspect, but even to the time and effort you’re going to invest as well.
Are you starting an Airbnb just so you could make a few extra dollars with your spare room? Or do you want it to become a stable source of secondary income? Maybe your ultimate goal is to rent out several properties and build a strong, solid portfolio so you can eventually leave your full-time job?
The goals you set today will determine the budget, labor and commitment you’ll be pouring into your rental business in the years ahead.
Read also: 5 Simple Strategies for Financing Your First Airbnb
Like any industry, there are risks and liabilities to running a short-term rental. For example, you risk the loss of income during slow season. You risk minor damages. Even theft.
There’s also a possibility that a guest gets sick or injured while staying at your home. Misbehaving guests (or their pets, in case you offer pet-friendly amenities) could do something annoying or harmful to your neighbors.
When you start an Airbnb business, you’ll want to consider how to handle these issues.
Go over Airbnb’s host protection insurance to see which unlikely incidents can be covered by their liability insurance program. Or consider getting a homeowner’s insurance for vacation rentals.
While you can try and prevent accidents from happening at your rental, no host can control things like earthquakes, power outages, and fallen trees.
By no means are these questions meant to discourage you from starting an Airbnb business. On the other hand, they’re here to help you set your expectations right and aid you in making smart, practical decisions.
Aside from financial gain, getting started with Airbnb can bring a host of opportunities. It lets you learn a lot of new skills, develop wisdom and patience, and make wonderful, life-long friends.
Ready to learn how we built & operate a $2M/year short-term rental business, operate properties throughout the USA remotely, and acquired 70+ properties without owning any in just 2 years? Attend our free online master class to learn how you can do the same. Click here.
Read also: How to Buy Your First Airbnb Property in 7 Simple Steps
