By: Rita Cunha |January 8, 2021
Becoming a host on Airbnb can be a great way to secure an extra income. You can continue working your full-time job or even invest in your small business with the money you make through the platform. It is a worthwhile way of inching closer to financial freedom, even in the times of covid.
This article goes into everything you need to know about how to make money with Airbnb. It will answer all your questions and provide tips to help you become a top-rated host and max out your earnings. Keep reading.
First Things First, What Is Airbnb?
Airbnb is a tech startup that has now established itself as a giant in the vacation rental business. While it only released its IPO in 2020, the app was launched in 2008, around the same time that Uber and other tech giants debuted.
Nowadays, Airbnb regularly connects millions of property owners with short-term renters. Generally speaking, guests are turning to Airbnb instead of booking a hotel room so they can save money or have a more authentic stay. Moreover, these short-term rentals also tend to be more affordable and give guests greater flexibility, for instance by allowing them to cook their own meals in a kitchen (thus saving them some money).
How Does Airbnb Work?
When homeowners create an account on the platform, they list their property and announce its availability. Then, when Airbnb guests browse the search results page for that city, they choose where they would like to stay and pay for the accommodation (often with a credit card). On the check-in date, the homeowner meets with the guest to hand over a key.
Because of the coronavirus pandemic, a few things have changed in this key-exchanging process. Now, more and more homeowners are choosing contactless check-in methods.
Is Airbnb Lucrative? How Much Money Can You Make?
If you have a spare bedroom or even an extra property, would you consider renting it to strangers just passing through town? Is Airbnb lucrative, and is it worth looking into? Absolutely!
On average, homeowners who rent their properties on Airbnb make about $924 per month. Of course, how much money you can make depends on location, location, location. Plus, if you’re renting an entire property, you can fetch much more than if you were to rent out a single room.
If you are looking for investment opportunities, you may want to pick up some Airbnb shares (their IPO went live in late 2020, so you can invest away). The Wall Street Journal has reported time and time again on the profitability of this home-sharing giant.
Can I Use Airbnb as a Host for Free?
While you don’t have to pay to post Airbnb listings, the platform will take a cut from your rental income. This makes sense, since you won’t have to do any marketing on your property’s behalf. In other words, Airbnb will recommend your home to guests without you needing to do anything. All this for a 3% fee.
7 Tips on How to Make Money with Airbnb
So you see the benefits of renting your home on Airbnb and want to take the next step. Congrats! This platform can really help you build a savings account and achieve financial freedom. Here is how to become an Airbnb host in just a few days and start earning money:
1. Create Your Airbnb Account
Setting up an Airbnb account is the first step. Enter your name, upload a flattering picture for guests to see, and fill out all the necessary information the platform asks for.
2. Post a Listing for Your Property
Then, comes the time to upload Airbnb listings. You will be asked all sorts of questions about your rental property and it’s crucial that you answer honestly and truthfully. You’ll have negative ratings coming in hot if there is any false advertising involved!
Are you renting a single bedroom or the whole property? What type of property are you renting (e.g. a cabin, cottage, apartment, and so on)? How many people can comfortably stay there? Where is your place located? What amenities does it have? Does it come with a strong wifi connection? Is it pet friendly?
The questions don’t end there, but they branch out based on your answers. Don’t worry, answering them won’t take you more than five to ten minutes.
You should also upload good pictures of the property. Make sure they’re well-lit and have that charm to appeal to guests. They often make decisions first and foremost by looking at pictures, so get your camera out and shoot some professional-quality ones.
3. Publish Your Property’s Availability
The third step is publishing the occupancy availability. You will be asked to select from a calendar when your property will be ready to take guests. If you can, add dates during the peak season—you will be able to charge a lot more then.
4. Set a Competitive Price
Speaking of pricing, it’s time to set how much a stay at your property costs per night. Location is key here. Hosts in cities with a hot rental market and high occupancy rates can charge quite a bit. For instance, hosts in Los Angeles, San Francisco, and New York are asking for $200 per night, on average, for early May 2021 stays.
Luckily, you don’t have to go in blind and guess at how much you can charge per night. You can browse other Airbnb listings similar to yours in your area to see how much other hosts are charging. Then, you can either set your listing price at the same rate or slightly lower to be more competitive.
Alternatively, if you are serious about making your Airbnb investment a serious side hustle, you can purchase a membership to AirDNA. This platform will tell you the cost breakdowns of Airbnb and VRBO listings in your area.
5. Prepare Your Airbnb Property
Even before you start booking stays, you should make sure your real estate is ready for guests.
This typically means having several pairs of spare keys, a working fire detector in the property, basic amenities (such as towels, bed linens, and so on), supplies essential during the pandemic (for instance, hand sanitizer and disposable masks), and whatever else you find your guests might need during your stay. Make sure you clean the space meticulously before the guests arrive!
A well-stocked home will garner positive ratings (more on that in a bit).
6. Set Details with Your Guests
Now that you have done all the hard work, it’s time to wait for guests to take the bait. You should stay on top of your messages and answer within twelve to twenty-four hours. Take longer than that and potential guests are likely to book another property.
Then, once your property is rented, you will need to work out the details with guests. For example, when and where should you meet to hand the keys over to them? Make sure to keep open a good line of communication with your guests!
7. Keep Your Ratings Up, Always!
Finally, the last step in becoming a successful Airbnb host is monitoring your account. Fortunately, Airbnb has built-in metrics to judge how good your properties and stays are. Guests can leave you feedback and a rating.
As you can imagine, keeping your host rating up will bring in more guests. Similarly, a bad guest experience can tank your Airbnb rental business for a long time. This is why it’s important to ensure everything is up to par on your property.
What You Need to Know Before Hosting on Airbnb
Before you dive head-first into the vacation rental business, there are some things you need to know about Airbnb.
Airbnb Isn’t Legal Everywhere
No, you can’t rent all kinds of properties on Airbnb everywhere. Some places have local laws restricting these kinds of stays. New York, for example, places caps on many short-term rentals in the city. Before you land yourself in legal trouble, read up on your local laws—and stick to them.
The Platform Has Strict Policy Guidelines
Besides laws enforced in your area, you also have to abide by Airbnb’s policies. If you break them, your listings will either be completely removed from the platform or restricted for a time period.
You Will Be Covered by an Insurance Policy
Homeowners rejoice: Airbnb has a primary liability insurance policy in place to protect you and your guests. The home-sharing platform will cover up to $1,000,000 in damages.
Moreover, you as a host can ask for a security deposit from your guests. If the property is in shape by the end of their stay, they will have their money back.
Hosting Takes Time and Effort
Airbnb may be a source of passive income, but that doesn’t mean you won’t have to put some time, effort, and investment into it. At least at the earliest stages of you renting out your property.
As you have seen, creating a lucrative listing can take some time—from writing captivating descriptions to taking professional pictures of your home. Plus, there is the effort and commitment in getting back to guests quickly and giving them the keys when they arrive. If you don’t have any time whatsoever to dedicate to hosting, maybe Airbnb isn’t for you. Or, if you have the means, turning to a property management company may be the way to go.
On top of all that, you need to make sure the unit you’re renting is in good shape. Providing a good stay is often about keeping the unit cleaned, having up-to-date appliances, and sometimes investing in a full remodeling. In a way, it’s a bit like real estate investing: you have to spend money to make money and have a good cash flow. If you are going for a ‘rustic’ look, that’s fine, you don’t need to modernize the place, but you do have to make sure it has all the basic essentials guests may need during their stay.
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