Ever been curious about how much you can raise your revenues by, with Airbnb?
We tracked down several Airbnb experts to provide their keys to success, for new Airbnb landlords. They were quick to point out that managing a short-term rental business is not for everyone – or for every property – but it can be extremely profitable.
From broad-level strategy and narrowing into more tactical tips, here are twelve secrets to success, as you try out Airbnb rentals as a landlord!
1. Run the Numbers
“Before you become an Airbnb host, calculate whether the additional effort is worth the money, compared to what you could earn if you rented out the same space on a long-term lease.”
Paula Pant, the brilliant mind behind Afford Anything, uses Airbnb and short-term hosting for some of her rental properties. But not all.
Here’s how she breaks down the math:
“Let’s say that you could rent an apartment on a 12-month lease agreement for $1,200/month. By comparison, you could Airbnb the same space for $100/night.
“On the surface, the $100 per night sounds like a no-brainer. At full occupancy, that’s $3000 per month. Why wouldn’t you take that?
“But if Airbnb only gets you 18 days per month of occupancy, then your gross income would only be $1,800/month.”
Vacancy rate is far from your only expense though. You’ll need to pay for gas, electric, water, internet, consumables like toilet paper and soap. And don’t forget extra occupancy taxes tacked onto short-term rentals!
“Once you subtract these from that $1,800/month gross, you’ll find – in this example – that the long-term 12-month lease actually nets you more money.
“That’s not to say that all long-term rentals are better, nor is it to say that all short-term rentals are better. It simply means that you should not make assumptions based off gross income alone. Compare the two options to see which one is more lucrative.”
2. Price Against Hotels, Not Other Rentals
Al Williamson, arguably the top expert on Airbnb rentals in the country, urges a counterintuitive approach to pricing.
“Your Airbnb pricing should have nothing to do with what you could charge for a long-term rental. In fact, don’t even price your rates based on other nearby Airbnbs!
“Your competition is made up of nearby hotels. Look at comparable hotels’ nightly rates, and then try to beat them by 15-25%.”
When I asked Al about units with multiple bedrooms, he said the same principle applies. “A family of six could either book three hotel rooms… or they could book your three-bedroom unit. In that example, consider pricing your three-bedroom at the cost of booking two hotel rooms, to make your unit an easy decision.”
Want a complete online lesson from Al about how to succeed as a short-term rental business? Here’s a free webinar we hosted with him, breaking down how he’s doubled his rental revenues.
3. Know Your Local Laws
The hotel lobby is no pushover. As an industry, they aren’t just laying down and surrendering the loss in market share.
And their cries (and campaign contributions) tend to fall on sympathetic ears in local legislature. After all, many municipalities charge special hotel taxes.
That means that many local governments have outlawed or severely restricted Airbnb and other short-term vacation rental services. For example, one study found that half of the Airbnb listings in New York City are illegal.
Look up your local laws, and make sure you can comply before listing on Airbnb!
Free Mini-Course: Passive Income from Small Multifamily Properties
4. Approach Short-Term Rentals as a Complete Hospitality Business
Being a landlord is largely hands-off, with occasional spurts of effort. That’s what attracts most landlords in the first place – the promise of passive income!
Short-term rentals can produce strong income, but they’re far less passive. And they require a more holistic approach to operate profitably.
“So many people who try out Airbnb just throw up the listing and then sit back and wait,” laments Al Williamson. “They don’t do marketing outside of Airbnb or VRBO. Then when it’s off-season these hosts don’t make any money, which ruins their annual returns.
“What they should be doing is launching multi-pronged marketing campaigns. Registering with travel websites like Booking.com, posting on Craigslist, leveraging their own website and audience, even using hyper-targeted Facebook ads to reach extended-stay business travelers.
“Short-term landlords who approach it as a business can virtually eliminate vacancies, while those who just think of themselves as Airbnb hosts will wonder why their vacancy rate is so high.”
Al mentioned earlier that you should price against the competition of hotels. That also means you should aim to operate with the smooth efficiency that hotels do, too.
5. Furnish Affordably (But Tastefully!)
When most people approach the task of furnishing their rental, their first thought is “I guess I should go to the furniture store.”
Wrong. False. Incorrect.
Your guests don’t expect their bums to be the first to sit on your sofa. Not a single piece of furniture in your unit needs to be new.
Buy used furniture, and simply make sure it’s in good condition.
Options include Craigslist, Freecycle, garage sales, Goodwill, the Facebook Marketplace and used furniture stores. You can furnish your unit for a few hundred dollars, if you go about it with discerning taste.
Just make sure the décor matches within each room. You don’t need to be Betty Draper, just pick a color scheme and go with it. Black and white is an easy one. Blue and wood tones is another easy scheme.
When in doubt, take a tasteful friend with you to do your shopping.
Oh, and one other tip: avoid political, sexual, or juvenile wall decorations. If that sounds obvious, I’ve stayed at numerous Airbnb units that broke those rules. The weirdest was decorated with rabbits with leather S&M outfits on. Seriously.
Every landlord wants to paint their property in the best light. And that’s fine – as long as guests won’t be disappointed when they see the real thing.
Your listing photos are not good the right place to show off your Photoshop skills. Your listing description is not the place to wax poetic.
By all means, show off the property’s strengths. Brag a little. And when it comes to your property’s weaknesses, be honest.
That doesn’t mean you can’t put a positive spin on them. If you’re renting out a small studio, “intimate” and “cozy” are reasonable alternatives to “cramped” and “tiny.”
Your guests will be rating your property not just overall, but also on the accuracy of your listing. And if they feel gypped when they arrive, they’ll leave terrible reviews – a fast way to sink your short-term rental business.
7. Accrue 5-Star Reviews ASAP
First and foremost, ask your guests to leave a review for you. Pretty please. With a cherry on top.
If you don’t ask, many will simply forget or not get around to it.
But building your rating doesn’t stop with asking for reviews. In the beginning, you might need to price your unit more competitively and go the extra mile with each guest.
The faster you can score your first five (positive!) reviews, the faster you’ll start dropping that vacancy rate. Many guests refuse to stay in units without a minimal number of reviews, so gathering reviews should be a priority when you put a new unit on the market.
8. Cleanliness Is Next to Godliness
Everything about your unit and your guests’ stay could be perfect, but if they see one cockroach cruise across the kitchen counters, you can expect a bad review.
Your units must be spotlessly clean. That goes doubly for kitchens and bathrooms.
And while we’re speaking of reviews, cleanliness is another category that guests will use to rate your unit. And not just on Airbnb, but on travel websites as well.
If you hire a maid service, screen them well, and inspect their work regularly. If you do the cleanings yourself, make sure you do a spectacular job worthy of Mr. Clean’s shining pate.
9. Turn on “Instabook” If You Can
Lily He-Prudhomme, who writes about her frugal journey to financial independence at The Frugal Gene, uses Airbnb rentals as part of her strategy. “Turn on ‘Instabook’ if you don’t have specific schedule demands. It really does make a difference in the appeal of your listing, which translates to price.”
As a frequent traveler and guest on Airbnb myself, I’ve had plenty of bad experiences with approval delays. There have been times when I’ve thrown my hands up and said, “That’s it, I’m not booking any other places without Instabook.”
Sometimes it’s the little things that make the big difference.
10. Create a Concierge Document or Booklet
What do guests need to know, to stay in your unit?
What would make their stay even more enjoyable?
Start with the basics: an emergency contact name and number, the WiFi network name and password, which key is for which door, check-out procedure, and so on.
But don’t stop there. What neighborhood restaurants are divine? Which are tourist traps?
What entertainment or activities are available in the area? Have any tips to get the most out of the experiences? Any recommendations?
Can you include any coupons to local restaurants, events, etc.?
Don’t feel like you need to go overboard with this. Start basic with the bare necessities and add to them over time.
11. Leave a Free Bottle of Wine for Guests
Since most people don’t know what they’re doing, just ask for a recommendation from an oenophile friend, or from a boutique wine shop if your friends are all beer drinkers.
Once you’ve chosen the perfect sub-$10 bottle, buy it by the case for a discount. Half your guests won’t actually drink the bottle you leave for them, cutting your costs even further.
Leave a little handwritten note under the bottle, addressed by name to your guest, inviting them to enjoy the bottle as they enjoy their stay.
It’s a nice gesture, and one that guests won’t get at a hotel.
Which is your competition, remember?
Just make sure you leave a corkscrew in the unit, along with the silverware!
12. Stop Talking About It and Just Try It Already
Know those people who are constantly talking about this or that thing they’re going to try out, but who never actually get around to doing it?
Don’t be one of them.
Success requires some experimentation. Airbnb might not be for you… or it might be wildly successful for you.
Lily from The Frugal Gene has had the same conversation over and over. “My friends kept asking me about it and a year later, I check in with them, and they still never did it. It’s totally new so I understand the hesitancy but to a degree, you just have to jump in!”
Stop talking, start walking.
Start with the webinar we hosted with Al Williamson, it’s a must-see tour of the short-term rental industry. You’ll enjoy Al’s laid-back style, and his examples of the fun (and profitable) tricks he and his students have used to multiply their rental revenue.
And when you’re ready, sign up with Airbnb and launch your short-term rental business!
Have you tried Airbnb as a guest or host? How were your experiences? What are your own tips for success with short-term rentals?