If you’ve been wanting to start a vacation rental business but thought you couldn’t because you don’t have tons of money, think again. Financing your first Airbnb doesn’t mean you’d have to be a millionaire. Nor do you have to borrow loads of capital and get buried in debt.
There are ways to become an Airbnb host without having to purchas a single property. Here are 5 of them.
Each year, thousands of people all across the world join the Airbnb home-sharing economy – even without owning any posh property of their own. If you’re thinking of how you can also jump into this lucrative industry – without any significant Airbnb financing – check out these 5 simple strategies. We guarantee they won’t cost you an arm and a leg.
The easiest way to start earning from Airbnb is to share your own space. Rent out a spare room, basement, attic, garage, or any unique place that you have access to. Even a van that you can convert into a sleeping pod will work, especially if you live in a city with very high visitor traffic. All you may need is a couple of hundred dollars to spruce up the space and make it homey and comfortable.
Depending on the existing amenities, you may not need to invest much. If you have a decent bed frame with a good mattress, some closet space, and a bathroom that guests can use, the only thing you’ll probably need to invest in is new bedings, towels, and toiletries.
You will need to make the living room, kitchen, and other common areas highly functional and presentable. Though you don’t need to design them professionally, you may need to do some good decorating. Remember that you’ll be competing with other hosts in your area. You’ll want to make sure your place looks comfortable and inviting.
As mentioned earlier, you don’t have to purchase, rent or own the property you’ll be hosting. You don’t even have to furnish it yourself. If you just help others host their property, whether or not they own it themselves, you can get 10-20% of the amount they’re renting the space for — as your service fee.
Co-hosting is the best way to enter the short-term rental space without spending any money of your own. Your best investment will be your labor, time, and hosting skills.
Over time, and as you build a network of co-hosting clients, you may be able to save up enough funds to start a rental arbitrage business of your own.
Read also: Co-hosting on Airbnb — Can You Do it Without Prior Hosting Experience?
With the Airbnb rental arbitrage model, you still don’t need to purchase any property. The funds required for starting an arbitrage are low enough so that you can easily raise the capital and self-finance your first unit.
Normally, around $7k to 10k is enough to cover rent, furnishings, utilities, and business and legal payments for a condo or apartment in an urban location. After Covid-19 though, there has been an uptick in demand for rural properties which require even less capital to start with.
For some people, that amount can be covered by a credit card. But note that credit has an interest. If you go that route or borrow money from other people, you become indebted to them until you can pay them off. But if you raise the capital from your savings, you’ll be spared from potential headaches.
To do that, be ready to live frugally for a while. Avoid eating out, don’t go on vacations for a year, and avoid any unnecessary expenses. Do some side hustles if you can.
Make some personal sacrifices. You can think of it as contributing to your future — your future financial freedom.
For example, if you could save $100 a week, you can raise enough capital to start your rental arbitrage in a year and a half. And after you get your first unit, you’d only have to wait a couple of months until you can raise enough seed money to host your next unit.
Listen as Jon and I discuss the different ways how you can go about financing Airbnb properties.
Rental arbitrage doesn’t have to be a solo flight. If financing an Airbnb property is too hard to do on your own, you can work with someone you can split the investment with, 50-50. Then you can share the profit among yourselves.
You can also form a joint venture or small conglomerate. Invite your family members, friends, relatives, co-workers, or anybody you trust in your network. Tell them you have a potentially lucrative opportunity and you’re interested in sharing the investment with them.
This method works well if you happen to have inherited some property, or know somebody who has. Together, you can rehab the place, rent it out, build equity, and refinance it — also known as BRRR — to make enough money to secure another property.
Read also: Rental Arbitrage vs. Co-hosting vs. BRRRR vs. Turnkey — 4 Ways to Run Your Airbnb
Another way to help raise funds for your first Airbnb is to save money on furnishings. You don’t have to purchase from big-name brands like Pottery Barn or Crate and Barrel. You can just go online to Craigslist or Facebook Marketplace and search for people who are doing moving-out sales.
If you have extra cookware and utensils, furnish the kitchen with those. The short-term rental industry is a flexible enough business that you can improvise, be creative, and be practical when furnishing a home — especially when you’re just starting.
Read also: Don’t Start an Airbnb Business Without Answering These 8 Questions First
Hosting a short-term rental is one of the best ways to create a passive yet lucrative side income. And there are different and less riskier ways to get Airbnb financing than borrowing money. You certainly don’t need to be a millionaire, nor even own property of your own.
With patience, hard work, creativity, and some personal sacrifices, you can raise your own capital and self-finance your first Airbnb. Or you can start hosting other people’s properties.
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