Are you looking for a low-maintenance business that generates a steady, passive source of income? Consider listing your home or spare room on Airbnb.
What type of business is Airbnb? Is it ideal for small business owners and side hustlers with limited startup capital?
I answer these questions and more in my guide.
I wrote this step-by-step guide to teach you how to start an Airbnb business.
I’ll explain how to start an Airbnb business and maximize this online platform where most users look for short-term homestays and experiences.
How To Open an Airbnb Venture: 14 Steps To Earning Money
Decide on the type of Airbnb business.
Research optimal locations and purchase the property.
Consider your budget.
Calculate your earning potential.
Create your Airbnb business plan.
Register your business.
Open a business bank account.
Lay out your Airbnb rules.
Prepare Your Airbnb.
Sign Up on Airbnb.
Set Your Pricing Strategy.
Create and Optimize Your Listing.
Market Your Airbnb Business.
Manage Your Airbnb Short-Term Rental Business Remotely.
Here’s how to start your own Airbnb journey:
1. Decide on the Type of Airbnb Business.
If you want to know how to own an Airbnb business, the first step is to establish what type of Airbnb property you want to list on the platform. As a host, you must choose the home type that best describes your place.
These are the different types of long- and short-term rental properties:
This Airbnb property type includes a bedroom (or more), a separate dedicated entrance, a bathroom, and a kitchen.
These private or shared rooms offer amenities similar to traditional hotels, such as common areas and bedrooms.
These rooms provide guests privacy, although they must share some spaces with the host or other travelers.
These rooms are ideal for budget-conscious guests who don’t mind sharing a space with others.
You can also classify your Airbnb listing based on special categories, allowing you to attract guests looking for special accommodation.
This accommodation offers unconventional or notable features. Examples include a rustic tree house by the riverside or a beachfront collage on a remote island.
As a super host, you provide your guests outstanding hospitality and reliable services.
Your home must pass Airbnb’s strict quality checks to qualify for this category. In short, your property must provide luxury accommodations and facilities, such as a well-kept garden, toiletries in the bathroom, a fully stored kitchen, and much more.
This category has higher standards compared to Airbnb Plus. It provides luxurious amenities and high-end services like a chef, driver, and butler.
Airbnb for Professional Work
Properties in this category attract companies looking for a space for their team-building events. Consequently, you must offer Wi-Fi and designated workstations to quality.
2. Research Optimal Locations and Purchase the Property.
Like any real estate investment, your success largely depends on the location if you use Airbnb’s platform.
Most successful vacation rental owners have properties close to local attractions, such as historical ruins, national parks, and entertainment parks.
Ask yourself these questions when looking for rental properties:
Is the location popular among tourists or business travelers?
Does the number of visitors fluctuate or remain constant?
Aside from nearby attractions, does the location offer conveniences like grocery stores, restaurants, gas stations, and ATMs?
Choose a property accessible to guests, including small children, seniors, and people with physical and intellectual limitations.
Consider the competition in a given location. Ask yourself whether the market is so saturated that many hosts resort to unsustainable price wars.
Review the local laws and regulations before investing in a long- or short-term rental property. Additionally, talk with a homeowners association to know if they allow rentals in their building or community.
3. Consider Your Budget.
One way to create a realistic homebuying budget is to follow the 28 percent rule, meaning your mortgage payments should not cost more than 28 percent of your gross monthly income.
Additionally, don’t just focus on the property’s purchase price when setting up a budget. Hidden charges such as renovations and home fittings can also affect the startup cost.
|Types of expenses||Amount|
|Furniture||$2,000 or more|
|Utilities and subscriptions||$40 to $70|
|Services (e.g., home staging and photography)||$100 to $1,000|
|Home outfitting||$200 or more|
|Consumable goods (bottled water, tea bags, etc.||$50 or more|
Airbnb Startup Cost
Regardless of the rental type you want to buy, these are the startup costs you will likely incur:
If you already have a property, you can expect to pay around $6,000 to start a small business on Airbnb.
Assuming you already have a property ideal for short-term rentals, these are the one-time costs you must pay.
Home safety features, including smoke alarm and carbon monoxide detector
Renovations (if applicable)
Variable Recurring Costs
The vacation rental business also includes ongoing expenses, such as the following:
Repairs and maintenance
Property manager (ideal if you have multiple properties)
Expect 10 to 15% of every booking to go towards ongoing maintenance, repair, and operational costs, such as insurance, management fees, and utilities (e.g., electricity, water, and heating).
Fixed Monthly Expenses
Running an Airbnb business also involves these fixed monthly expenses:
Utilities such as electricity, internet, heating, and water
Rent or mortgage (if you loan to buy a property)
Streaming services like Netflix and Amazon Prime
Airbnb Fees and Taxes
The online platform has two fee structures: a split fee and a host-only fee.
The split fee is the most common structure in which the host and the guest split the service fee. Many Airbnb hosts pay a 3% fee, although there are some exceptions to the rule.
Hosts with listings in Italy pay higher fees.
Hosts with extra strict cancellation policies also have to pay higher service fees.
On the other hand, host-only fees typically range 14-16 percent of the payout. This fee structure applies to all traditional hospitality listings, such as hotels and serviced apartments.
The host-only fee also applies to software-connected hosts unless most of their listings are in these countries:
Aside from service fees, Airbnb hosts also cover the sales tax.
4. Calculate Your Earning Potential.
One of the most effective ways to increase earning potential is to set the appropriate nightly rate. List every expense you incur to get the profit margin you deem reasonable.
Once you calculate common and ongoing expenses, let’s say they total around $1,000 per month, divide them by 30 days to get the estimated cost.
$1,000 / 30 days = $33.33
Knowing your daily expense is around $33 will help you determine the nightly rate to generate a decent Airbnb income.
Next, research the Airbnb market in your area. When making price comparisons, use similar properties to ensure you stay within the rough ballpark of what your direct competitors charge.
Alternatively, you can set your price based on the amount you want to generate at the end of the month. With target-based pricing, you don’t have to worry about the price war.
For example, if you want a clean profit of around $1,000 a month and your expenses are $1,500, your property should bring in at least $2,500. Based on these figures, you’ll want to charge $83.33 a night.
Aside from your nightly rate, your earning potential will also depend on these two factors:
If your property is near or in the heart of a tourist area, you can expect higher potential revenue because of the volume of travelers. You may even raise your price around certain times when the travel demands peak.
Despite the growing demand for Airbnb’s short-term rentals, hosts usually face a seasonal swing in demand. For example, vacation months and holiday seasons are the most popular times.
You can use Google Trends to know the trends in search volume for a particular location. Simply type the location + Airbnb (e.g., Sierra Nevada Airbnb) to see the yearly seasonal peaks.
5. Create Your Airbnb Business Plan.
An effective business plan guides you through each stage of launching and managing your business. Think of it as a GPS directing you towards your goals.
Know Your Target Market.
Most Airbnb customers seek a more personalized experience than a hotel or want to visit a town without traditional hospitality. They often stay briefly, between two and five days.
Set Your Goals.
Having a clear set of goals gives you more focus and motivates you to work hard. Plus, goal setting provides a list of criteria determining whether your business is succeeding or stalling.
Define Your Brand.
Your brand is how customers view your business, so take the time to define it thoroughly. In short, you need to craft your company’s image in a very strategic and intentional way.
6. Register Your Business.
Becoming a legal business entity can give you credibility and protect you from certain legal issues or debts arising from your operation.
Here are the steps to register your business:
Choose a Business Name.
These are some tips to help you come up with a name ideal for your Airbnb short-term rental:
Select a name that is short, simple, and memorable.
Consider using terms or words that highlight the unique qualities of your home.
Look at other listings on the platform to get inspiration.
Go to the Airbnb website to use its name generator tool.
Once you’ve selected a name, check if it’s available for your future website.
Check if another company uses the name you want for your business.
Choose a Business Structure.
When you register your business, you need to decide its legal structure or entity.
|Business Legal Structures or Entities||✅Pros||❌Cons|
|Sole proprietorship||– Cheap and easy to establish|
– Full control over the business
– You have access to all profits.
|– Unlimited liability|
– Your business depends on your life and health.
|Partnership||– Minimal cost in set-up|
– Easy to operate
– Shared responsibilities
– Control, privacy, and flexibility
|– Unlimited liability|
– Potential conflict between partners
|Limited liability corporation or LLC||– Protection from personal liability|
– Tax benefits
– Easy to operate
|– The protection is “limited.” Employees and entities claiming that you break intellectual property law can still sue you.|
|Corporation||– As an employee, you can draw money from the company’s profit.|
– Tax benefits
– Protection from personal liabilities
|– Complicated and costly to register|
The best way to start an Airbnb business is to register it as a limited liability company or LLC.
LLC is the ideal legal structure for your own Airbnb business because it protects you from personal responsibilities for business debts and liabilities. It’s a legal entity that is separate from its owners.
Secure Your Business License and Permits.
Once you register your business, obtaining state and local licenses and permits is the next step.
Register for Tax Purposes.
You must register for different state and federal taxes before you open your Airbnb business. To do this, the first step is to visit the IRS website to apply for an employer identification number (EIN), which is a social security number for businesses.
Whether you’re a full-time Airbnb entrepreneur or a side hustler who makes extra income from this platform, you must carry these insurance policies:
Cyber Liability Insurance
Commercial Property Insurance
Home-Based Business Insurance
7. Open a Business Bank Account.
You can simplify cash flow tracking and federal tax return filing when you have dedicated business banking and credit accounts. Moreover, separating your business finances from your personal bank account can protect your personal assets.
8. Lay Out Your Airbnb Rules.
When you lay out a clear set of Airbnb house rules, you protect your property and create a better experience for your guests.
House rules also help potential guests evaluate whether your property is a good fit for them.
No open flames & candles
No pets in the house
No loud parties and events from 10 pm to 7 am
No extra or unregistered guests
No eating in the bedroom
Relax and enjoy your stay!
9. Prepare Your Airbnb.
As an Airbnb host, you want to give your guests the best experience you can offer, which you can achieve by maintaining an organized calendar. You may also consider hiring a property management professional if you have multiple vacation rentals.
These are the other steps to prepare your property to impress your guests.
Clean the Space.
Whether you’re a small-time Airbnb host or an owner of multiple rental properties, one of your most critical tasks is ensuring your house’s cleanliness and hygiene.
Furnish It with Comfortable and Aesthetic Pieces.
Your furniture and home fittings should match the aesthetics of your property and provide a welcoming vibe.
Decorate the Space.
Decorate your space to create a more comfortable and welcoming atmosphere. Remember, your Airbnb business is not just about offering accommodation; more importantly, it’s giving your guests a fun and memorable experience.
Prepare the Amenities.
Before the guests arrive, check the water heater, AC, sink, and other amenities. You want to give them the best experience possible by removing inconveniences like clogged drains and leaking pipes.
Stock Essential Supplies.
Buy-bulk these basic supplies to save money:
Soap and other basic toiletries
Coffee and tea
Provide a House Manual.
Provide your guests with check-in instructions, which include these details:
Your contact information
10. Sign Up on Airbnb.
Follow this guide on how to set up an Airbnb business account:
1. Go to Airbnb.com.
2. Select Account.
3. Click Yes, I work for or run a hospitality business.
4. Click Next to save your answer.
5. Start listing your space on the platform.
Here’s how to add your company’s information to an existing Airbnb account:
1. Go to Airbnb.com and click on your profile photo.
2. Select Account.
3. Select Professional hosting tools in the list of options under Account.
4. In the Company section, select Manage.
5. Under Business details, click Add Your Business Details
6. Add your company’s information and click Save business details.
To update or remove your company’s information:
1. Go to Airbnb.com and click on your profile photo.
2. Select Account.
3. In the list of options under Account.
4. In the Company section, click Manage.
5. Under Business details, update your info.
6. Click Save business details
7. To remove your company account, select Remove company account.
11. Set Your Pricing Strategy.
Pricing your nightly rate appropriately is one of the keys to your success. You don’t want to price your space too low if the demand is high in your market or rate it too high during the low season.
There are two ways to come up with your pricing strategy:
If you opt for target-based pricing, you must list all the costs of running your property business. Next, establish the profit that you want to achieve.
For example, if your total monthly expenses are $1,000 and your goal is to make a clean profit of $1,500, your property must generate a gross revenue of $2,500.
On the other hand, market-based pricing means you base your rate on your direct competitors’ pricing strategy. The goal is to offer more competitive prices than most hosts with the same property as yours.
Additionally, make sure you include these recurrent charges in your pricing computation.
Security Deposit: This refundable deposit covers any damage that may occur during the stay.
Cleaning service fee: It covers the cost of cleaning.
Incidentals: They typically include shuttle fees, parking, and valet fees.
12. Create and Optimize Your Listing.
If you want to know how to start a successful Airbnb business, one of the first things you need to do is optimize your listing using SEO and keyword strategy.
To find the best keywords for your Airbnb SEO strategy, look at your competitors in your area with high rankings in the platform’s search results.
Alternatively, you can use these SEO and keyword tools:
Note that Airbnb keywords are the foundation of a good listing strategy. For this reason, always include the location and provide a complete and relevant description of your space.
Listing Title and Description
When crafting your title and description, make sure you follow these tips:
Write clear and relevant information.
Include a brief introduction of your property.
Use proper spelling and grammar.
Provide each room with a clear description.
Describe the outdoor space and neighborhood or surrounding area.
Consider including your property’s top features.
Examples of excellent Airbnb titles:
Cozy Treetop House in Yosemite National Park
Insta-Worthy Midtown Studio in New York
Spacious 3 BR near the Eiffel Tower
Luxury Beach House for a Romantic Getaway
Hidden Gem w/ 4 BR near Sierra Nevada
If you have the budget, it’s ideal to work with a professional photographer to capture the best features of your space. Alternatively, you can do it yourself and get inspiration from other listings.
General Property Type
You must set clear expectations about your space. That’s why your Airbnb listing should define the property type you offer.
Here’s how the online platform defines each general property:
House: It’s a standalone structure that may share walls or outdoor areas (e.g., duplexes and townhomes)
Apartment: This multi-unit building includes lofts and condos.
Secondary Unit: It’s usually a shared property with a private entrance (e.g., guest suites and guesthouses).
Unique Space includes treehouses, farm stays, and other unconventional accommodations.
Bed and Breakfast: This business model offers breakfast with an on-site host.
Boutique Hotel: An accommodation with a unique style or theme.
13. Market Your Airbnb Business.
You must market your property outside Airbnb’s platform to attract more guests. These are the marketing strategies and formats you can try:
Create a Website.
Having a website is important for your business and can add credibility to your business and provide more opportunities to showcase your brand and the unique features of your property.
When creating a website, there are three main components you should look into:
Domain Name: This is your website’s address. Ensure that you pick one that is short, simple, and descriptive.
Hosting Service Provider: Your hosting provider gives you space to store and run your website. We recommend HostGator and BlueHost because of their affordable prices and easy set-up process.
Design elements include the layout, content, and navigation of your website.
Sign Up on Social Media.
When promoting your Airbnb listing on social media, use a visual story (e.g., Instagram carousels and Facebook reels) to highlight the unique features and experiences the space offers your guests.
Do Content Marketing.
When creating content for your Airbnb property, ensure it’s relevant and interesting to your target audience.
Leverage Customer Feedback.
Social proof is an effective marketing strategy because it motivates people to perform an action that others are doing. For this reason, you need to leverage positive customer feedback by sharing it on different platforms.
14. Manage Your Airbnb Short-Term Rental Business Remotely.
Do you want to know how to run an Airbnb remotely? Hire a reliable team.
It may come as a surprise, but hiring reliable and trustworthy cleaners is one of the most critical things you can do to manage your Airbnb property remotely.
These are the other things you can do to streamline your process:
Stock up on supplies.
Install smart locks to let your guests enter your property even though no one is present.
Set up an automated message flow using a tool like Host Tools. That way, your guests can receive timely and personalized messages.
Add house rules to your Airbnb listing and print them out so you can frame a physical copy.
Maintain Your Property.
As an Airbnb host, you must ensure your property is safe and convenient. Consequently, you or your property manager must perform these tasks:
Check structural items such as the driveway, attic, roof, etc.
Address pest infestations immediately.
Keep mechanical systems such as plumping and electricity in good condition.
Check the cleanliness and safety of the property.
Conduct routine and exterior inspections.
Respond to repair requests promptly.
Ensure that smoke and carbon monoxide detectors are in good working condition.
Provide Excellent Guest Service.
If you want to give your guests a top-notch experience, follow these tips:
Establish great communication with your guests by responding to them promptly.
Maintain a clean and comfortable space for your guests.
Provide guests with inside tips to help them get around like a local.
Respect individual needs and preferences.
Be available when necessary.
Is Airbnb a Good Business? Why or Why Not Should You Invest?
Here are the pros and cons of Airbnb business to help you decide if this hustle is for you.
|Higher income than long-term rentals||Service fees|
|Flexible||Income fluctuates significantly|
|Manage remotely||More involvement than long-term rentals|
|Increasing market demand||Risk of property damage|
Benefits of Having an Airbnb Business
Short-term rentals generate more income than long-term stays on average.
As an Airbnb host, you can pick and choose your hosting dates.
You can manage your property remotely.
Travel demands remain robust, which many experts suggest will continue in the coming years.
Challenges of Owning Airbnbs
As an Airbnb host, you must pay service fees. If you opt to use full-service property management, expect higher operating costs.
Your income may fluctuate drastically, depending on your location and seasonality.
It requires a lot of time and energy if you do everything yourself (cleaning, check-ins, etc.).
There is a risk of property damage and theft.
How To Become a Superhost on Airbnb: 5 Tips
Being a Superhost gives you more visibility in search results. Plus, you earn bonuses and travel coupons for new users you bring to the platform.
Follow these tips to become an Airbnb Superhost:
1. Install a Keyless Lock System for a Seamless Check-In.
This feature lets guests unlock rooms or houses using a digitally encrypted key you send to their smartphone, tablet, or dedicated hotel app.
2. Stock Toilet Paper and Clean Sheets.
As an Airbnb host, your job is not just about giving guests a place to stay. It’s equally important that you provide them with a comfortable experience.
Ensure your guests always have access to clean towels, toilet paper, and basic toiletries. Also, provide them with dining basics like cooking utensils and essential cooking supplies.
3. Consider Smart Pricing.
Airbnb has a tool called Smart Pricing that automatically adjusts your nightly rates depending on the travel trends in your area. Fret not. You can pre-set the minimum and maximum prices to ensure you still earn a decent profit.
4. Automate Your Airbnb Business.
If you have little time and energy to manage your Airbnb rental business, you can work with a property management company and automate some functions using the tools below:
5. Customize the Customer Experience.
The success of your rental business boils down to your ability to create a pleasant and memorable experience for your guests.
These are some of the most common practices that improve customer experience:
Offer local tips.
Offer welcome packs (e.g., light snacks and cold drinks).
Provide complimentary amenities.
Frequently Asked Questions (FAQs)
What Is Airbnb Business?
This business model lets you list your space and connects you with travelers looking for accommodations worldwide.
How To Start an Airbnb Business with No Money?
If budget is an issue, you can profit from the Airbnb entrepreneurship model in several ways.
Use your own vacant property.
Become a property manager.
Look for property owners who want to list their extra space but don’t have time to manage it on their own.
What Do I Need To Start an Airbnb?
You must secure these things before you can list your property on Airbnb.
Rental permits and legal documents
Fire extinguisher, smoke detector, and carbon monoxide detector
A secure, clean, and comfortable space for guests
How To Start an Airbnb Business as an Investor?
If you’re serious about making a hefty investment in vacation home rentals, first, conduct market research to identify top cities and neighborhoods.
How Much Do Airbnb Owners Make?
According to data, Airbnb owners in North America had average annual earnings of $41,026. The US has the highest average earnings for hosts at $44,235.
The Bottom Line
I hope my guide made it easier to understand the process of starting an Airbnb business.
Airbnb is a great way to earn extra money (or even recurring income), especially if you have unused space. You risk property damage and theft as a host, so ensure you carry sufficient insurance coverage.
If you still want to start your own business but want something much less risky, consider learning how to start dropshipping for free.