Running an Airbnb is a great way to earn a nice amount of money on the side, especially if you know the exact recipe for success.
Running an Airbnb requires a certain number of tasks. And it’s extremely easy to botch these tasks if you don’t know how to start or what you’re doing. That’s why it’s recommended that you find and follow an expert who knows how to run an Airbnb effectively. Or, find a platform that can simplify the process of starting and running an Airbnb.
Let’s face it, the best way to start something is to model someone who has done it or use the best resources at your disposal. That’s why in this article, we will show you why you should consider running an Airbnb business. You will get the exact recipe that will ensure that your rental business is successful.
We will also discuss how you can successfully run an Airbnb rental business by using one of the best business tools in the market, Dynamic Pricing. Plus, you will discover how to use Mashvisor’s dynamic pricing tool to ensure that you maximize your Airbnb business and make sure that you always stay profitable.
Why Should You Consider Running an Airbnb Business?
There are many reasons why you should start an Airbnb business. But with every rose comes a thorn. In this section, we will discuss some of the pros and cons of running an Airbnb business.
Pros of Running an Airbnb Business
Below are some of the pros of running an Airbnb business:
High Profitability
Starting an Airbnb business with good occupancy rates could be more lucrative than renting out to a long-term tenant. This is because you can charge a higher fee on a nightly basis when renting out a property on Airbnb. This is especially true if you use the Airbnb Dynamic Pricing tool mentioned in the introductory section of this article.
That way, your Airbnb prices can change according to the market demand, thus ensuring that your Airbnb remains profitable. Another reason why running an Airbnb can be lucrative is that if your property is in a great location, specifically one with lots of visitors, you will always have guests.
A Diversified Portfolio of Guests
Airbnb rentals attract a wide range of travelers from all over the world. This gives investors a chance to learn from other cultures. Instead of traveling to try to learn more about the world, when you run an Airbnb business, people from all over the world will come to you.
Running an Airbnb is more than just making profits, it’s also about self-improvement. Plus, you can have certain guests from all over the world who’d prefer your Airbnb because they’ve been there before and enjoyed their stay.
Free Listings
You don’t need to pay to start and list your short term rental on Airbnb. All you need to do is build a profile with great photographs and a detailed description of your property. Plus, it’s straightforward to list your products on Airbnb. Go to the Host section of your Airbnb profile and create a new listing. Ensure that your property description is attractive to potential guests.
Freedom to Set Your Own Price
As an Airbnb host, you get to choose how much to charge your visitors per week or night. You can keep adjusting the rental rate based on demand. This is the great thing about starting and running an Airbnb rental business. And, if your property is great and you provide an awesome experience with amazing customer service, you will always be profitable.
Additionally, when it comes to setting prices, you can use Mashvisor’s Airbnb Dynamic Pricing tool to help you automatically set the price of your rental property according to market demand.
Want to learn more about our new Dynamic Pricing tool? Schedule a free demo with us today.
Host Protection
The Airbnb Host Guarantee Program protects hosts in case Airbnb guests damage the rental property. This program also covers damages not only from guests but from vandalism and robbery as well.
It’s important to note that this program is not insurance. So it’s recommended that you get your own insurance coverage for your rental property.
To be eligible for the Airbnb Host Guarantee Program, you should report the incident within 14 days of the damage. This should include pictures of the damaged area and other important documentation to support your claim. Then, Airbnb will conduct its investigation and determine your compensation.
More Flexibility
As the owner of an Airbnb rental, you can block off specific dates when you wish to use the property yourself. A traditional landlord would not have this option.
The property is yours to use. Therefore, if you wish to live on the property with your family, no one will sue you. And since starting and running an Airbnb business is passive, you can spend the rest of your time as you wish.
Cons of Running an Airbnb Business
You have seen some of the pros of running an Airbnb business, and now you will discover some of its cons. Here are the cons of starting and running an Airbnb business:
Risks of Liability
As an Airbnb host, you will have to assume the liability that comes from any damage done to your property.
Yes, Airbnb has its Host Guarantee Program, but you should not completely rely on this. You have to get additional insurance coverage for your property. This is because the Airbnb Host Guarantee Program will not cover everything about your rental business.
Plus, you should let your insurance company know that you plan on using the property as a short term rental.
More Competition
Airbnb has gained popularity over the years, and more people are joining the bandwagon of running an Airbnb business. This means that you will have more competition. And you may find it a bit hard to stand out in the market.
With more people entering the short term rental business, you will need to invest more in your marketing and advertising if you wish to remain competitive. Furthermore, you could use the dynamic pricing strategy mentioned earlier to set competitive prices for your Airbnb.
Bad Guests
While most of your guests will be respectful, some just won’t. These are the guests that throw parties all night, disturbing the neighbors. And, because the house does not belong to them, they treat it without care and don’t mind if they damage anything. Getting these guests once in a while is not unheard of.
That’s why it is recommended that you get insurance for your Airbnb rental property to cover the damages done by these types of guests.
But, even with your insurance, having these types of guests can be stressful and time-consuming. Plus, it can hurt the profitability of your business.
Wear and Tear
This is unavoidable. After a time, you will notice that your property isn’t in top-notch shape. If you’re not ahead of this through periodic renovations and upgrades, it can lead to bad customer experiences and bad reviews, which will harm your profitability.
What you should do here is inspect the property every month or every quarter to see which area of the property needs to be upgraded. If you can’t do this because you’re from another state, you can hire a trustworthy property manager.
Legal and Regulatory Issues
Every city has its legal and regulatory issues that govern how the Airbnb rental business is conducted. Some of these laws, which include zoning laws and taxes, may be time-consuming and, sometimes, even hard to understand.
In this case, you may have to hire a real estate lawyer who is conversant with the laws and regulations of the city you want to invest in. What this means is that you will have to spend more money getting familiar with the rules and regulations of the city.
Unpredictable
When running an Airbnb business, you cannot be 100% certain that you will always get guests. This means that your rental income can be unpredictable.
This is something you have to brace yourself for as an Airbnb host. Plus, your guests can cancel at the last minute. You will then have to spend time looking for another guest, leaving your Airbnb rental without an occupant. All of these can lead to a loss of income.
How Much Can You Make Running an Airbnb Business?
First of all, you can make a nice sum of money running an Airbnb rental business. That being said, many factors can affect how much you can make from running an Airbnb business. Some of these factors include the location of your property, its occupancy rate, the size of the property, and its amenities.
According to AlltheRooms, the average annual earnings for an Airbnb host in the United States is around $44,235 in 2021. This is an improvement from 2020, which was $25,553.
From the above, you can tell that Airbnb can earn you a nice sum of money. Plus, the cost of starting an Airbnb, according to Projectionhub.com, is $6,000. Compare this to the amount you could earn from the previous paragraph and see that it is a no-brainer decision to consider running an Airbnb.
How to Run an Airbnb Successfully
Thinking of successfully running an Airbnb rental property? Here is the recipe for how to run an Airbnb rental business successfully:
1. Find the Right Airbnb Property to Buy
The first step you must take to successfully run an Airbnb rental business is to find the right property. Without it, the chances of being successful are slim. However, finding the right property can pose a problem. That is why you need tools.
Mashvisor provides real estate investors with the necessary tools needed to find the best Airbnb property in any city. Some of these tools include Market Finder, Property Finder, Real Estate Heatmap, and Airbnb Calculator.
Market Finder
Mashvisor’s Market Finder is a real estate tool that helps investors locate profitable properties quickly. It sheds more light on cities and neighborhoods and shows you areas you should invest in and areas you should avoid. Plus, it’s simple to use:
- Go to your Mashvisor account dashboard
- Click “Identify” or the magnifying glass icon. A list of options will appear.
- Under Market Finder, select “Top Markets”. It will direct you to the Market Finder tool.
- Click on any state on the map, or type in a city in the search bar.
You can also find the best markets on the right side of your screen.
With these steps, you can easily find profitable markets to invest in that wouldn’t cost you a lot in the long run.
Use Mashvisor’s Market Finder if you’re still looking for a city where you plan to invest in Airbnb.
Property Finder
As the name implies, Mashvisor’s Property Finder tool helps investors find profitable properties in up to 10 markets at once. If you choose to find a property yourself, it could take you weeks to find a good one. But with Mashvisor’s Property Finder tool, it will only take you 15 minutes.
Plus, this tool provides you with properties according to your search criteria and investment goals. This means that the type of property you are shown will match your budget and return on investment.
Real Estate Heatmap
Mashvisor’s heatmap tool helps investors quickly analyze neighborhood data of many real estate markets. This data is displayed in a color-coded form. This heat map collects data from many sources and puts them all in one place for you to conveniently analyze neighborhoods. This eliminates the need for tedious spreadsheets and rummaging through countless data sources online.
This is a sophisticated tool that uses property data and predictive analysis to find the most profitable properties for you to invest in. Plus, it allows you to modify your search results based on the criteria you entered. The map lights up from dark blue to white. Dark blue means the area is good to invest in, and white means you should stay away.
Airbnb Calculator
Mashvisor’s Airbnb calculator is a tool that helps investors calculate their potential return on investment on a rental property. Furthermore, this tool lets you know how long it would take for the property to pay back your initial investment, as well as when it will start making pure profits for you.
Furthermore, this tool lets investors plug in their expected costs and expenses for the property and subtract them from the revenue. You can do this before you even buy the property so that you don’t waste money.
Start your 7-day free trial with Mashvisor’s tools to guarantee success when running an Airbnb.
2. Set Competitive Rental Rates
Pricing is an important element in how to run an Airbnb. The main reason why people prefer Airbnb rentals is that they are more affordable compared to staying in a hotel. Find out what other similar rentals (Airbnb comps) in your neighborhood are charging and set a realistic rate. Only charge higher rates if your rental property has unique features that make it stand out from the competition.
Setting a reasonable rental rate will enhance your chances of attracting guests and having a high Airbnb occupancy rate. However, you can’t keep manually changing prices to match the market demand. It can be cumbersome. What you need to do is use pricing software that tracks market demand and automatically updates your prices. This tool is Mashvisor’s Dynamic Pricing tool.
Firstly, what is dynamic pricing? Dynamic pricing is a pricing strategy where companies set flexible prices based on the current market demand. This ensures that they remain competitive in the marketplace while maximizing profit.
The tool uses an AI-learning algorithm to set competitive market prices based on the current market demand. You can connect your Airbnb account to your Mashvisor account with ease. All of these ensure that you remain competitive and that you maximize profits.
Schedule a free demo to find out how our Dynamic Pricing tool can help you succeed.
3. Create a Strong First Impression
First impressions are important when running an Airbnb. And this begins with your Airbnb profile. Make sure the description mentions all the unique features of your Airbnb property, as well as the attractions in the neighborhood. Don’t forget to use clear photos that show your property from all angles. This will increase the likelihood of guests choosing your rental property over another.
Before guests come to your short term rental, make sure it’s clean. You could even have flowers, a welcome note, a gift basket, or any other thoughtful expression. These will leave your guests with pleasant memories of their visit. And these small touches can encourage positive reviews. When guests leave a good Airbnb review, you’re likely to attract more customers.
Don’t forget about customer service. Your guests might have some questions about the property and the neighborhood, and it would be pleasant if you could provide them with that information. If you’re not in town, you could provide this information in a laminated format and place it on a table where they can easily see it.
The point is, do everything within your power to ensure that your guests love you right from the get-go. This will make them rave about you to their friends, which will, in turn, increase your occupancy rate and profitability. Plus, imagine the positive impact it would have on your Airbnb business if these guests gave you a glowing review.
4. Respond to Airbnb Guests Immediately
When travelers visit the Airbnb site and see some interesting properties, they’re likely to contact several property owners simultaneously. The faster you respond, the higher your chances of getting the guests. Successful Airbnb hosts respond to booking inquiries within 8 hours or less. If potential guests don’t hear from you quickly, they will simply go somewhere else.
As an Airbnb host who plans on running a successful Airbnb business, speed matters when it comes to replying to your guests. One of the best ways to do this is by creating a quick response feature and programming it with all the basic and frequent questions they ask. This way, when a guest asks some of these questions, the response will be provided to them immediately.
One of the major questions they ask is whether the property has access to the internet and streaming services like Netflix. You can easily provide this answer in the description of your Airbnb rental property. Some hosts include a picture of an internet speed test in their listing. This helps potential guests to know if the internet speed is to their liking.
5. Automate Check-Ins
As you move through this guide on how to run an Airbnb business successfully, you might start to notice that there is a lot to do. That’s why one key to Airbnb’s business success is automation.
At times, your guests will be late in arriving due to traffic or flight delays. One of the best ways to save time is by automating check-ins and installing a lockbox or smart lock. This way, you won’t have to hang around until late to give guests their keys. With a lockbox or smart lock, guests can easily check themselves into the Airbnb rental property.
Another way to automate check-ins is to add a self-check to your listing. This option is available in your Airbnb account. All you need to do is go to your listing and activate the self-check option. This lets your guest check themselves in without ever getting to meet with you. Then, you can provide them with check-in instructions through messaging.
You can automate messaging tools. This feature can be activated in your Airbnb account. To do this, go to Hosting Inbox, click on Schedule Messages, and click on the ‘+’ icon to create a new template. This will make communication between you and your guests easier and faster.
6. Hire a Great Cleaning Service
Having a clean and sanitary rental property is a very important part of learning how to run an Airbnb real estate investment. Though you could clean the house yourself and cut costs, it would be advisable to hire professional cleaning services. This not only saves time but also ensures that your property gets a thorough cleaning.
There’s nothing worse than your guest coming to your Airbnb property and finding it dirty and unkempt. This will reflect in your reviews, which is bad for business. Instead, book a cleaning service for when a guest checks out.
Furthermore, you could hire a personal maid to reduce costs. A personal maid can provide you with a more customizable experience because you only have to train one person to know the ins and outs of your property. But, if you would rather hire a professional cleaning service, there are many out there, like TaskRabbit.
Note the cost of hiring a cleaning service can range from $30 to $200 per hour, depending on the coverage. In addition to that, the cost of supplies needed may be a factor in the overall cost of the cleaning service.
Alternative: Hire an Airbnb Property Manager
If you’re not up to running an Airbnb business or if you’re wondering how to run an Airbnb remotely (and successfully), consider hiring a professional Airbnb property management expert.
A property manager is a person or a company that is responsible for managing an Airbnb property. This is the case when the investors do not want to run the property themselves or if they don’t live in the same location as the property.
Hiring an Airbnb property manager can be a good use of your money, especially if you run Airbnb remotely. But you should vet the property manager so that you are not taken advantage of. One way to get a good property manager is to ask other Airbnb hosts who operate remotely. They can provide you with a trustworthy property manager whom you could work with for years.
The property manager handles the day-to-day operation, including—
- Updating your Airbnb listings
- Advertising the rental property on other platforms and managing different channels
- Screening potential guests
- Handling rental bookings
- Supervising other workers such as cleaners and security personnel
- Handling property maintenance and repairs
- Staying updated on the local Airbnb laws and regulations
Final Thoughts on Running an Airbnb
Running an Airbnb business is a great idea for anyone thinking of starting a real estate business. Becoming an Airbnb host can be a great source of extra income or even a full-time income for investors that are willing to put in the hard work. Just remember the recipe for success—the right property, the right price, and great Airbnb property management!
In this article, you discovered why you should consider running an Airbnb business, as well as its pros and cons. Plus, you learned how much you could make running an Airbnb business, which is based on many factors. We also showed you how to successfully run an Airbnb business, even if you are working remotely.
You also discovered some tools that will make running an Airbnb business easier, like Mashvisor’s Market Finder, Property Finder, heatmap, Airbnb calculator, and its dynamic pricing tool. Finally, you learned how to hire an Airbnb property manager if you do not plan on running the business yourself.
With this information, you will find running an Airbnb business easy. Especially when you use Mashvisor’s real estate tools.
Schedule a free demo to learn how you can use Mashvisor to make the process of running an Airbnb seamless.
Frequently Asked Questions
We try to answer some of your questions about running an Airbnb:
Is Running an Airbnb Profitable?
Yes, running an Airbnb business is profitable. This is because you could have a steady stream of occupants season after season, earning you a nice profit.
In addition to that, running an Airbnb can be passive. All you have to do is hire a property manager with experience in the industry and sit back and collect your money.
Is An Airbnb Worth Owning?
Yes, an Airbnb is worth owning. This is because the amount of money you can make from owning an Airbnb property is significantly more than the amount you earn from long term rentals.
While long term rentals have a fixed rate, you can vary the prices of your Airbnb rentals almost every day and earn a nice sum.
How Much Money Do You Need to Run an Airbnb?
According to ProjectionHub, the average cost of running an Airbnb is $6,000. This number was achieved by reviewing three sources, SixFiguresUnder, PassiveAirbnb, and BiggerPockets.