Airbnb Hosting for Beginners: What to Do BEFORE You Start 

By Jenny Javitch, Airbnb Superhost | Founder & Travel Planner at Global Game Plan

Disclosure: Please note that some of the links below may be affiliate links, and at no additional cost to you, I earn a commission if you make a purchase.

This article is part of a series on Airbnb hosting tips.  Having been an Airbnb Superhost for over 4 years, I am excited to share my expertise in order to help you become a successful Airbnb Host.  Click here to see all of the articles in the series.  

 

Does the idea of starting an Airbnb sound exciting, but you’re not sure where to begin?  This Airbnb hosting guide will take you through the steps of what to know BEFORE starting an Airbnb.

First, you need to define your Airbnb goals. Ask yourself, “What are my reasons for starting an Airbnb?”  Are you looking for an investment rental property, or thinking about starting a career into real estate or hospitality?  Do you have an extra room in your home you’d like to rent out to help offset your mortgage?  Are you interested in purchasing a vacation property for yourself, and putting it on Airbnb when you’re not using it?  Have you stayed in an Airbnb and just loved the concept?

Even though there are currently over 4 million Airbnb Hosts, with new listings created every day, it doesn’t mean that it’s easy to be a successful Airbnb Host.  Understand that starting an Airbnb business is a large undertaking that requires careful consideration and a lot of hard work. 

As the Airbnb Superhost of two Airbnb apartments in the charming town of Stillwater, Minnesota, I have used these principles and strategies over the last four years to build my successful Airbnb business. 

 

Airbnb Hosting for Beginners:  Treat your Airbnb as a business

 

Whether your reasons for starting an Airbnb are personal or professional, it’s important to think of starting an Airbnb business as just that, a business.  Even if you are “just renting out a room in your house,” you should think of this as a business from the beginning of the process.  Like any business, you will need to invest in your product and service, implement business systems, and create an Airbnb business plan in order to be successful.     

To create a business infrastructure, consider including the following as part of building up your Airbnb business:

  • Open a separate bank account exclusively for your Airbnb business.

  • Open a business credit card.

  • Keep track of all of your business receipts.

  • Use Quickbooks (there is an online version and a less expensive desktop version) and hire an accountant for your taxes.  Hosting an Airbnb is commonplace now, so accountants are more familiar with what you will need to report on your annual tax return.  

  • Create an LLC from the beginning – it’s not required, and may not be necessary if you are hosting a room in your home, but if you’re going to buy Airbnb property then an LLC will offer you some liability protection.   

  • Purchase insurance (the correct type for your property) and talk to an insurance broker to ensure you have the proper coverage. 

 

Airbnb Hosting for Beginners:  Know what type of Airbnb property you want to operate

 

If you are in the market to buy Airbnb property, consider these factors carefully. Understand that it may take longer than you think to buy the perfect property as an investment in Airbnb.  If you are renting out a room or other space in your home, or you already have a property, then you can skip this step because the decision has already been taken care of. 

Location, Location, Location

This old marketing saying is one of the most important things to consider when you’re looking to buy Airbnb property.  Is there something to draw Airbnb guests to your area, independent of your individual Airbnb?  Is it located in a popular New York City or Chicago neighborhood that has a constant stream of visitors? Are you near a National Park or a University, in a vacation spot on the lake, or in the middle of Main Street in a charming tourist town? 

How much competition is there in your desired location?  If there are already a number of short-term rentals in your area, this could be a good thing (showing there is demand) or a bad thing (indicating lots of competition). 

Target Audience

Identify your target audience.  Is it families, couples, remote workers, tourists, or traveling nurses?  Try to match your target audience with the location and the style of the Airbnb you would like to own, so you can get an idea of who your guests will be. This will help you later on with furnishing and decorating your Airbnb, as well as marketing to potential guests. 

If you already own property that is currently being rented monthly or has an annual lease, you likely already have a sense of the answer to these questions. In that case you should do some additional market research to determine whether you can increase your profits by turning it into an Airbnb.

Short-Term Rental License

Legal and regulatory issues, including the ability to obtain a short-term rental license in your desired Airbnb location, is something to research BEFORE you buy Airbnb property.  Having this license (if required) is vital to starting an Airbnb business. The location of your desired Airbnb can have short-term rental requirements, ranging from not being allowed at all, to having a certain number of licenses allowed per year, to no restrictions (in which case you lucked out).  You have to figure out which category your location falls into, so you can determine what your process would be like for acquiring a short-term rental license. 

Some cities are very strict with short-term rental licenses, so it will be challenging to enter that market.  Don’t assume you can buy a cool condo with a waterfront view and rent it out on Airbnb, as there might be a condo association that doesn’t allow subletting or short-term rentals in their building.  If you want to buy a Tiny Home RV or Airstream trailer and park it on your new piece of land, you need to be sure that type of housing is allowed (and that there would be utilities available in that area).  

 

Airbnb Hosting for Beginners:  Clarify your profit goals

 

At its core, operating an Airbnb is a business and should be situated in the market to (eventually) turn a profit.  This won’t happen right away, as there will be lot of upfront costs, and it takes time to build up solid bookings from Airbnb guests. 

Start by creating a spreadsheet of the projected revenue and expenses to help you determine how long it will take you to turn a profit with your Airbnb.  Include your Airbnb startup costs (initial investment expenses) and monthly expenses so you can get a sense of the annual operational costs. For example:

Initial Expenses

Annual Expenses

  • Insurance

  • Licensing fees – these will likely need to renewed every few years

Monthly Expenses

Additional Expenses

Project your annual revenue

You can use a tool such as AirDNA, which shows different pricing in your area for short-term rentals, or you can do a search yourself to see how much other vacation rentals are charging for a comparable space.  Check on both Airbnb and VRBO, as they are the two most popular vacation rental companies.  “Comparable space” is important to determine how to price your Airbnb compared to your competition.  If you have a one-bedroom condo and the majority of your local Airbnb rental competition is 3-bedroom homes, then your pricing should reflect that.  If you want to charge a higher rate than your competition, there should be something that sets your Airbnb apart from the others.

Keep in mind that you can have a different pricing structure for various seasons, weekday/weekends, holidays, and special events that occur in your Airbnb rental market.

Airbnb Hosting for Beginners:  Decide how you will manage your Airbnb

 

Do you have the capacity to host and manage an Airbnb yourself, or will you hire a team to help?  Do you live nearby, will you plan to hire a property management company, or will you manage your Airbnb remotely?  If you do not plan to do everything yourself, you will need a cleaning service and an on-call maintenance company.  Keep a list of technicians and vendors (plumber, electrician, HVAC Heating/A/C repair company, lawn care and snow removal) that you may need to assist with regular duties and unforeseen problems. 

Your Next Steps

Reviewing all of the information above and using it to create a solid Airbnb business plan will help you take the next steps towards reaching your Airbnb goals. To further assist you, sign up for my Airbnb Hosting Newsletter and check out these helpful blog posts:

Sign up for my Airbnb Hosting Newsletter to be the first to know when these resources are released.  You will also receive a FREE DOWNLOAD that will share the top five things you must include on your Airbnb listing.