Even in sky-high rental markets, landlords can profit by listing rentals on Airbnb as an alternative to long-term leasing.
A single-bedroom apartment that rents for $1,850 in touristy Santa Cruz, California, can fetch $150 to $200 or more per night during the summer as an Airbnb listing. That’s a 50% to 100% bump, assuming it’s occupied five nights a week. Even in the off-season, running an Airbnb can be more profitable than leasing month-to-month.
1. Check Your Local Regulations
If you’re considering turning a rental unit into an Airbnb, the first step is to become familiar with codes, regulations, and taxes that apply to your municipality. While some cities require a business license, others, such as San Francisco, levy short-term occupancy taxes to the tune of 14% of the rental income.
The Airbnb website lists information for 50 major U.S. cities.Your local planning department is the best source for information if your city isn’t listed there.
Local Short-term rental regulations:
2. Consider Whether It’s Right for You
If — after taking all applicable taxes and regulations into account — it makes financial sense to rent your unit as an Airbnb, making the switch isn’t necessarily a slam dunk. It’s important to think carefully about some of the ramifications of running an Airbnb before making any commitments.
Paula Pant from AffordAnything.com summarizes her Airbnb Experiment as “42 Guests, 1 Police Visit, and $19,000.” It’s a great look into the intricacies of hosting with Airbnb.
Other great resources that review the pros and cons are:
- Real Estate Investing: Traditional vs. Airbnb Investments– Mashvisor
- The Pros and Cons of Airbnb, and Why We Only Host – Wanderlust Marriage
- The Pros and Cons of Using Airbnb – Investopedia
- Top 10 Tips for First-time Airbnb Hosts – Lifehacker
3.Be a Great Host
The Airbnb experience creates more opportunities for interaction than landlording. Hosts with people skills tend to get more recommendations, better reviews, and more repeat customers than those without.
Put hospitality first and the revenue will follow.
Guests need privacy — especially when they’re jet-lagged and tired — but they also need and appreciate responsiveness. The ideal host offers refreshments, gives directions, adds local color, and they do all those things with a touch of discretion.
Some hosts go the extra mile by leaving a gift basket or a bottle of wine on the table for new guests.
Not everyone is rich in people skills. If you’re one who isn’t, you might want to consider partnering with, or employing, someone who is. This makes especially good sense if you have multiple units.
4. GetInsurance (If You Don’t Already Have It)
Leasing a house, apartment, or room involves a certain amount of risk — even with background checks. Risks potentially increases 365 times when you rent on a nightly basis to different people.
The Airbnb Host Guarantee Program offers up to $1 million protection against theft and damages, but it doesn’t cover valuables, such as rare artwork or jewelry.
Your homeowner’s insurance may provide that coverage, though, so it’s important to read it carefully to ensure you have the liability and damage coverage you need before the guests start arriving.
5. TreatAirbnb as a Business
Airbnb digs can be basic or elaborate — from a tent in the backyard or an air mattress on the floor to a private apartment or an entire house. No matter what type of listing you have, you need to keep abreast of local rates if you want to turn a profit.
Airbnbprovides a location-sensitive calculator on its hosting page to help you price your listing competitively.
Airbnb also provides a booking calendar, which helps you keep track of your upcoming rentals, predict your revenue, and keep track of how much you’ve made. Along with overhead, which includes providing fresh bedding and towels and paying people to clean and help with the guests, this is essential information at tax time.
6. Keep Things Simple
If you’re ready to give it a go, a simple approach gets you off to a smooth start. You don’t have to have a castle to start listing on Airbnb. The easiest way to get started is to rent out a spare bedroom.
Once you’re rolling, you can adjust your direction by paying attention to guest comments and feedback, and look to expand to the entire house, or buy a rental for the sole purpose of using Airbnb.
Related:How to Make Extra Money by Allowing Tenants to Sublet with Airbnb
7. Decorate
No need to go overboard with decorations or amenities; a minimalist approach makes lifeeasier for you and provides a blank canvas for guests to embellish with their own imagination.
- Paint with light colors and a monochromatic or two-tone theme.
- Provide simple, functional furniture and a comfortable sleeping area with blinds or curtains.
- Stock the kitchen with a few dishes and utensils. Nothing fragile. No heirlooms.
- Make sure the bathroom has shampoo, soap, towels, and extra toilet paper.
8. Make the Listing Attractive, Yet Accurate
A good listing consists of flattering — yet accurate — pictures of the rental and a well-written description. Truth counts; misleading portrayals will be duly noted in the user reviews.
Your listing also compellingly introduces you, the host, to your target clientele. Know who you want to attract before you start writing.
Related:
- How to Attract Tenants on Craigslist with Irresistible Pictures
- How to shoot real estate photos like a pro
9. EncourageGood Reviews
Good reviews are the secret to success. To encourage them, many new hosts offer deals such as reduced rates or extra goodies to the first few guests. Some hosts even leave personalized notes.
In general, though, friendliness and a quality space speak for themselves and are the main ingredients in the recipe for a five-star review.
10. Use a Seasonal Approach
The transformation from long-term rental to Airbnb listing does not have to be permanent. A seasonal approach may be the most profitable one in a city such as Santa Cruz, which has a large university.
Students typically need housing from September to May or June, which leaves your unit available for tourists to enjoy in the summer months. Approaching your rental creatively may do more than increase your cash flow; it may introduce you to scores of new friends.
Source: Landlordology
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