02 Apr The Beginner’s Guide to How to Start an Airbnb Business
In this post, the beginner’s guide to how to start an Airbnb Business; I hope to help you get up and running in as little as 6 weeks. As you may already know, it took me about 6 weeks to go from zero to close to 3k a month.
It took me another 6 weeks to go from $3k to $12k. I have helped a dozen of new Passive Airbnb Entrepreneurs to kickstart their journey.
How to Start an Airbnb Business: Market Research
In order to get a good grasp of the market potential, you will have to spend some time to understand the current rental market. It is safe to note that not all markets are created equal. What I’m teaching you here is to spot a specific type of arbitrage- rental arbitrage.
How does this Airbnb Business model work?
It is simple math. You see an advertisement for a 1-bedroom apartment in a desirable location listed for 1500 dollars a month. A quick research on Airbnb shows a similar property near your similar location that is charging 150 dollars a night.
You quickly calculated the breakeven rate is 10 days. What if you could rent it out for 20 days or even 30 days? That means you can easily 2x or 3x your monthly rent. That money is the profit for your business.
A rental arbitrage = achievable daily rental rate( $150) > daily rental cost( $1500/30 days = $50).
You can see that this model works.
How to do Market Research
Go here for a quick estimate. This new tool came out at the beginning of 2017. You can literally get a rough estimate in 2 clicks. Pretty efficient, right?
While this tool is great for a high-level research, it doesn’t tell us how much we can charge per night, how much our neighbors are charging, and more importantly, how many listings/competitors are in your area?
( In my E-course, I will cover the more robust ways to do market research. If you’re interested in my premium step-by-step e-course, you can click here).
What is the Workload for this Airbnb Business?
There are a few things that you should consider before starting this rental arbitrage business. My top concerns were:
- Barriers to Entry
- Time Commitment
- Risk Management: landlord vs. Property Management relations
- Work Load
Barriers to Entry
What is going to make my unit stand out among the hundreds of listing that are available? Take some time to think about your ideal customer and how to craft your unit to target them. I knew that I wanted to target business travelers and families. Your ideal customer will be different depending on your rental location.
How quickly can I achieve profitability and make my money back? If you’re just figuring out how to start an Airbnb business, then 3 months is standard to recuperate all of your investments back. You’ll start generating good returns on your investment after month 4.
I knew that right off the bat, I wanted to provide the best customer service. This extra effort to provide real-time communication will help me in the long run to generate repeat customers. As you know, it also takes a considerable amount time to get your first unit up and running. Do you have the time to manage guests when emergencies come up?
Personal safety aside, how are you going to convince your landlord or property managers to allow Airbnb? If you do it on the download, what are the chances that you’ll get caught?
As a new Airbnb host, your workload will be considerably more because you’re just getting a hang of it. Once you start to automate some of the work processes, then it’ll be easier to host, thus less time required. Also, your goal is always to strive for a 5-star review. This will take more effort and time because you are trying to build rapport.
How to Perfect your Airbnb Business
In order to have the perfect listing, you’ll need to outsource these two things to a professional:
- Interior Designer
- Real Estate Photographer
An interior designer will help bring life out of your unit when figuring out how to start an Airbnb business. It is so important because she will help you find the right furniture and art decors to match the ambiance of your listing. It is your job to make your listing stand out and the only way to do that is to have the right furniture and correct art decor.
A picture is worth a thousand words. I cannot stress this enough. Do not take crappy pictures that are ill-lighted. Please read my other post on why a picture is worth a thousand words.
How to Automate Your Airbnb Business
Where can you automate your workload? There are 3 areas that you can optimize:
- Pre-check in
- During your guest’s stay
Once a new guest booked your place, do you have ready templates that you can fire off to give them detailed check-in instructions? Will you have to be there or are you planning to use a lockbox? I have saved templates that I use and a lock box that a guest can access 24/7, so I don’t have to worry about being in person to exchange keys.
During your guest’s stay
You might not need these services now, but they will be super helpful once you start and get going. The first unit will definitely be the hardest, so expect to put in a little bit more time into it.
Do you have a reliable maid to help you clean? Or are you going to clean your unit yourself? I highly recommend outsourcing this service when you have multiple units.
If you have any other questions on how to start an Airbnb business, keep reading the rest of my blog where I’ll have other tips, tricks, and tools waiting for you to enjoy.
Bonus: check out my 121+ most profitable ideas that you can start from home.