There is no arguing when it comes to the financial benefits gained from smart real estate investing in Airbnb. Nowadays, Airbnb – aka short term rental investment – has become a popular real estate strategy to earn extra money on the side or make it your main source of income. Whether you want to start an Airbnb business or make it a part time job, rest assured that you can make money with Airbnb either way. Here are the best tips and tricks you must keep in mind before you start making money with Airbnb.
1. Becoming a Host
Every host’s worst nightmare would entail approving the wrong tenant and/or getting his/her place trashed. Now, this is a rare case and Airbnb tries to mitigate these occurrences as much as possible to protect the host. But, this doesn’t mean that you can’t do anything to protect yourself and your property first and foremost.
When becoming a host, make sure to:
- Protect your identity
- Keep your bookings short to avoid potential squatters
- Exercise due diligence to screen the right tenant via the profile page, reviews, social connections, etc.
- Get pricing right from the get go (more about your pricing strategy is available below)
2. Time Commitment
Whether you decide to make Airbnb a full time job or a part time hobby, you must put in the right amount of time to make your hosts happy and accumulate good reviews on the website. Unlike hotel bookings, here there is more back and forth interaction between the host and the guest. Try to respond quickly to emails and adhere to your guest’s demands and questions as much as possible. Making money with Airbnb is not a passive job; it takes time to earn good reviews and check in/check out guests.
3. Insurance Coverage
The Airbnb liability insurance policy may not be enough to protect your rental property from future damage. Hosts are highly recommended to buy an additional insurance plan if there are items or risk factors not covered by Airbnb. Better safe than sorry!
4. Do Not Forget About Your Neighbors
Making money with Airbnb starts with a quiet area. Pay attention to your surroundings to keep those good reviews coming, having bad neighbors can seriously hinder your Airbnb success. It is recommended that you choose an area with quiet surroundings and/or try to manage your relationship with your neighbors to keep everything under control and commotion-free.
5. Landlord’s Approval
If you are not the owner of the apartment that will be rented out short term, make sure to keep your landlord in the loop regarding your Airbnb business. It won’t be surprising if your landlord forbids short term subleasing, but you can better your odds if you approach your landlord in the right way. If your current residence is not an option for an Airbnb rental, consider finding a new place that would allow you to host guests for the short while.
6. Do Not Disregard Your Competition
Making money with Airbnb requires you to keep an eye on your competition and to have the right pricing strategy. Watch out for price changes to stay competitive, take note of special offers given out, and find out which rental properties are most appealing and why. The more you know about your competition, the better suited you are to set the right pricing and make your rental property stand out in a good way.
7. Do Not Neglect the Facade and the Interior Furniture
This is a no brainer! You want your income property to look nice from the inside out if you are planning on making money with Airbnb. Do not underestimate a nice decor, people like to stay in nicely decorated and renovated homes. Keep it modern and most importantly CLEAN. Consider hiring a cleaning service if you cannot manage cleaning on your own.
8. Set Clear and Simple House Rules
Making money with Airbnb is about having a clear communication between the two parties. Do not set too many rules as that might deter people from booking your home. Set reasonable expectations and clear house rules to avoid miscommunication between you and the guest. For example, having a no smoking rule is completely acceptable.
9. Put an Effort Into Your Listing
Making money with Airbnb is all about the little details:
- Provide detailed and well thought out title and descriptions
- Know that good quality and attractive photos go a long way
- Do not take too long to respond to emails
10. Lockbox
To streamline your check in process, consider installing a lockbox to save time and guarantee a happy guest not waiting around for the keys. Making money with Airbnb requires a smooth and easy check in process.
And here is a little bonus in the form of a tip how to set the right pricing strategy for making money with Airbnb:
A Pricing Strategy to Maximize Rental Revenue
To be on top of making money with Airbnb, make sure to avoid the following mistakes:
- Pricing Too High Too Early. If you are starting out, your best bet is to price below the market price to gain credibility and compete against established hosts.
- Pricing Too Low Too Long. After you build a repertoire of good reviews, up the pricing accordingly to increase your profits. Tip: Increase prices until you are (at least) 75% booked 2-4 weeks in advance.
- Pricing the Same for Weekends and Weekdays. Maximize your revenue by setting higher prices during peak periods, i.e. weekends (and holidays). Making money with Airbnb is all about a smart pricing strategy.
- Not Factoring Special Upcoming Events. Up your pricing during high season and special events throughout the year, i.e., Christmas, the summer season, festivals, etc.
- Use Rental Comps on Mashvisor. To stay competitive, check out Mashvisor rental comps for Airbnb and traditional rental properties. This way, you can be informed about the average rates hosts are charging for similar properties in your neighborhood.
Conclusion
Investing in real estate is a great way to make money, and most are getting on the Airbnb wagon to materialize financial independence. Selecting a prime location in a good neighborhood is a prerequisite for successful investing. Strategize your pricing throughout the year to maximize rental income. Keep an eye on your competition and try to find your competitive advantage to earn good reviews and reach high occupancy throughout the year. That’s what we can say about making money with Airbnb.