If you want to become a successful Airbnb entrepreneur, you need to know what elements make up a profitable hosting business. On average, Airbnb hosts earn around $924 a month, but some hosts earn more than $1 million per year. One host even earned $15.6 million in a year from renting out his properties on Airbnb.
So, what is the secret formula for success for these hosts? Discover how to transition from a regular host to a professional Airbnb entrepreneur and make your business profitable.
Airbnb is no longer a community where individuals rent out properties on their own only. Traditional property management companies now account for as many as 1,000 listings at a time on the platform. These are businesses that are employing hundreds of people to manage other people’s vacation homes and second properties.
The ongoing COVID-19 pandemic has seen a decline in short-term rental bookings, but hosts who have remained flexible have been able to weather the storm. By being adaptable and offering longer stays, alternating cancellation policies, and making their rental work-friendly, many hosts have still turned a profit, despite the pandemic.
Now that you know who’s making the most money on Airbnb, you can start working to achieve the same success. The key is discovering what skills the top hosts and managers have mastered. You’ll then be able to replicate their business model for success.
Anyone can become an Airbnb entrepreneur with some careful planning and preparation. Remember that growing a business takes time and does not happen overnight. Make sure that you are making a profit on your first rental property before purchasing or subletting more properties. Whether you’re starting an Airbnb business, or are already hosting, these essential 5 steps can grow your business.
Before you take any decisive action, make sure what you’re doing is legal. Remember that states have different legal requirements when it comes to Airbnb hosting. Certain zones and cities have limitations and even bans on Airbnb properties. Take the necessary time to research the zoning regulations of the town or city in which you want to let.
It’s also illegal to sublet a property without the owner’s permission. If you don’t own the property you want to rent out as an Airbnb, make sure you first get written permission from the owner. You may need the homeowner association’s permission if you want to rent out an apartment or a property in a complex.
Make sure you research the best places to invest in real estate before buying your property, as your location can influence your target guest and revenue.
Remember that your target guest won’t be the same for all your properties. Consider the property’s size, amenities, and location when identifying what type of guests you want to attract. A one-bedroom apartment would be more suitable for a solo traveler than a family on vacation. Likewise, a 3 or 4-bedroom house near the beach would be more appealing to a family or younger group travelers.
Once you have selected your rental and target guest, you can begin to market your property. It’s a good idea to market on as many OTA platforms as possible, such as Airbnb, Vrbo, and Booking.com. Doing this will ensure your rental reaches as wide an audience as possible. You can also use Pinterest and Instagram to market to Millennial travelers.
After completing these steps, you can then replicate them to expand your Airbnb business.
Now that you know how to establish yourself as an Airbnb entrepreneur, you can begin to work at becoming successful. So what do the most prosperous Airbnb entrepreneurs have in common? Here are the 7 most important core competencies of an Airbnb entrepreneur.
The majority of hosts are only part-time hosts who see listing on Airbnb as a way to earn extra money. Vacation rental hosts that earn the most are those who are primarily driven to build wealth. Being driven by success can make a dramatic difference in your business. The more time and investment you put into your short-term rental business, the more you can earn.
Employing automation is one of the first steps to do this. Most Airbnb management companies utilize vacation rental software, like iGMS, to streamline tasks. Using third-party services to handle cleaning and maintenance tasks can also simplify management. This will make it easier for you to control your costs and position your business for growth.
Unlike 80% of hosts who have a single listing, most Airbnb entrepreneurs have multiple listings. Having only one listing means you will hit a revenue ceiling sooner or later. Creating more than one listing increases your workload but also your earning potential. This means you need to be willing to scale your business to increase your profits.
Becoming a top Airbnb entrepreneur isn’t only about having more properties. Top-performing hosts have a high occupancy rate for all their properties.
How are they able to do this? Sound business management when it comes to operating listings is one of the main reasons why. These Airbnb entrepreneurs have perfected their hosting to achieve excellent reviews and ratings.
Although you should always strive for 5-star reviews from your guests, remember that it’s fine if you don’t hit the mark every time. If a guest is unhappy and has left a negative review, try reaching out to them to rectify the situation. If a guest leaves a 4 or 4.5-star review, thank them and ask them what you could do better to provide a better experience.
Although it can be difficult to compete with rentals that already have a 5-star rating, you shouldn’t give up. As long as you strive for excellence, your reviews and rating should reflect this. Even if your rating isn’t currently 5-stars, you can work towards achieving it in the long-term.
Although a great service is essential, the quality of your Airbnb property also counts. 60% of the gains for higher earning Airbnb entrepreneurs is partially due to the fact that their properties are in better locations. It’s worthwhile researching some of the best places to invest in property before purchasing.
Before COVID-19, some of the highest-earning host cities were London, Havana, and Sydney. The ongoing pandemic has seen a shift in demand for vacation rentals in more remote areas. Despite this, there is a redeveloping interest in urban short-term rentals, and there is a consistent demand for beachside vacation rentals.
Remember that your real estate choices can impact the future earnings of your Airbnb business. Always take your rental’s location into account before purchasing.
Successful entrepreneurs are also exceptional at weeding out bad guests. While you should be open to receiving as many guests as possible, you should also take the time to vet them.
This is apparent from a study that reported that concern about theft and damage was a major concern for 18.5% of hosts when they started on the platform. After being hosts for just two months, only 1.6% of Airbnb hosts see these issues as their biggest headache.
Creating a guideline for guests who can stay at your property can improve your ratings. The sooner you perfect this guideline, the better it will be for your bottom line. Things you can look out for include:
These criteria will help you to determine if your potential guest could be a ‘problem guest’. Fewer guest-related problems will also make it easier to earn Superhost status.
If you want to become a top Airbnb entrepreneur, you need to have a plan for growing your Airbnb business. Research has shown that businesses that have been created from a detailed business plan tend to grow at a 30% faster rate than those that aren’t.
Some things to include in your business plan are:
The top Airbnb hosts are professional companies. So if you want your Airbnb business to turn a profit, model it after management companies.
If you don’t own any properties, the number one question is how to start an Airbnb business without owning a house. The answer is indeed yes! The solution is Airbnb rental arbitrage.
Airbnb rental arbitrage refers to the practice of renting properties with the intention of subletting them on Airbnb. It’s an ideal solution for anyone looking to start an Airbnb business but doesn’t own a rental property. Keep in mind that there are legal considerations related to rental arbitrage, and you will need to obtain the property owner’s permission before you sublet their property.
Another option is to become an Airbnb property manager. By managing other people’s rentals, you can build a career in the vacation rental industry without owning property.
You can either study how to become a property manager, or you can manage a few rentals as favors, to build up experience. Keep in mind that rental management is not a walk in the park. You need to be aware of rental laws and stay on top of each property’s requirements. Becoming a qualified manager also means you can charge higher property management fees.
As an Airbnb entrepreneur, you will be spending most of your time growing and scaling your business. So, you will need to invest in tools that will encourage this growth and development.
If you’re managing your rental business, it’s essential to use vacation rental software, like iGMS, to simplify the management process. With iGMS you can streamline your daily tasks by: