How to Start an Airbnb Business

How to Start an Airbnb Business


Thinking about renting out your home, or a room in it? Wondering how to start an Airbnb side hustle? You’re not alone. According to Airbnb, there are 2.9 million hosts worldwide on the platform, with 14,000 new homeowners joining each month in 2020. Not only that, but more than 200 countries have Airbnb listings now!

Here’s how to get in on the action.

Starting an Airbnb business opens you up to a market with over 300 million customer reservations this year and a value of $31B. You’ll find tremendous schedule flexibility as an Airbnb business owner and, according to Earnest, can experience average earnings of about $924 a week in extra income. (Imagine if your earnings are above-average!)

The benefits don’t end there. Starting this business is easier than other models because there are no massive upfront costs. You can set your rental pricing to whatever you think people will pay, which makes this work worth your time. 

Finally, no degree or special training is needed to get up and running as an Airbnb host. All you really need is time and dedication. Plus, Airbnb has a great guide to making money with Airbnb, so the revenue is transparent from the start.

Starting an Airbnb business is pretty simple. The steps are as follows.

Checklist for How to Start an Airbnb Business

  1. Create a Business Plan
  2. Choose Your Business Structure
  3. Determine Your Business Costs
  4. Create a Business Name
  5. Register Your Business and Open Accounts
  6. Purchase Equipment
  7. Market Your Airbnb Business

A business plan is vital. It’ll help decide what you need to start your Airbnb business, how it’ll operate, and whether it will succeed. As challenges and opportunities crop up, you’ll refer back to the plan to identify strategies for addressing them. Here are the elements needed for your Airbnb business plan: 

  1. Clearly state your business idea and the problem it solves
  2. Identify SMART goals (Specific, Measurable, Attainable, Realistic, and Timely)
  3. Foresee potential problems that might pop up
  4. Create a target client profile
  5. Build up Airbnb profiles for you and your rental property
  6. Stay at some Airbnb properties yourself to gain a full understanding of the system
  7. Check for tax breaks and local grants

Thinking through your costs will be a big part of your business plan. We’ll provide more help with that in the “Determine Your Business Costs” section below.

In the U.S., all active businesses must be registered with the IRC. An Airbnb business can take a few different company structures. Consider your legal and tax situation to choose the best business structure for your situation. Airbnb businesses are generally small, so they’re registered as either:

  • LLCs (limited-liability companies), which offer liability protection and tax flexibility
  • Sole proprietorships, which are easier and cheaper to set up but don’t offer the same protection

The liability protection of an LLC structure shields your personal assets from lawsuits against your Airbnb business. By having an LLC, you can also avoid the double taxation of a corporation structure.

You can file for an LLC online, but first research what business license you may need.

There’s a lot to think through when figuring out the costs you’ll face as an Airbnb host. Do you have the time to be a landlord, or should you plan to hire and pay a manager to handle bookings, visits, and cleanings? Is your area seasonal, and how may that affect the number of bookings you have each year?

How many rooms do you want to rent out, or will it be the entire property? Will you offer amenities like parking, air conditioning/heat, breakfast, a swimming pool, hot tub, etc? What about pets? If they’re allowed, what deposit will you charge? How will you manage access and security of the property both when you have tenants and when the place is empty?

The list below will help guide you in determining your business costs:

  • Calculate small business costs such as fixed costs, on-going expenses, and one-time costs such as equipment, lease/rent, and business taxes
  • Select the type of Airbnb business model/market in which to operate (single room vs entire home)
  • Identify equipment and material costs such cleaning supplies, food amenities, 3% Airbnb fees, and damage costs
  • Check for tax breaks and local grants
  • Obtain insurance estimates for liability insurance (you may need homeowner’s insurance, and Airbnb offers dedicated host insurance)
  • Research costs for preparing and maintaining your property between guests (a 2,000 sq. ft. home costs $150 to $250 to clean, but figure on regular maintenance and yard care too)

Thinking through these questions will help you figure out how much your Airbnb can earn, and what it will cost to earn that money.

How do you fund your startup costs?

Starting an Airbnb business does require some up-front money. If you’re concerned about where it’ll come from, consider these ideas: 

  • Government assistance: The government has set up several forms of assistance for small business owners who need financial help. 
  • Business credit cards: Be careful with this one since using cards without a payback plan could leave you with long-term debt (and that won’t help your credit score). 
  • Loans: The Small Business Administration (SBA) offers different loans together with banks and other lending institutions. You might also check with your own bank to see if there are loan options available. 
  • Friends and family: Start with your inner circle — the people who know you and believe in you. Tell them about your business idea and see if they can loan or invest. You can probably get better terms from them than you will elsewhere.

Now for the really fun part — name your business! As you go through this process, test your Airbnb company name ideas for understandability and memorability. Some owners use words that evoke an emotion, like cozy, luxury, or charming in their business names. Others choose names that reflect the character of the area they’re in.

Check local business registration services and online services to make sure you don’t pick an Airbnb business name that’s taken. Otherwise, you may end up facing lawsuits. 

Check to see if matching URL (website address) and social media handles are available for your chosen name. You can use GoDaddy’s domain search tool to make sure your hideaway’s name is fresh.

Here are the legal and licensing requirements for starting an Airbnb business:

  • Register your chosen business structure (LLC vs sole prop) 
  • Get an employer identification number via the IRS
  • Secure general liability insurance. Airbnb provides some insurance, but you may consider getting your own as well.
  • Open a business bank account: Avoid mixing business finances with personal assets in case of an audit or lawsuit.
  • Consider registering your property with the local municipality or state. Read up on your local laws and regulations regarding Airbnb or short-term rentals.

Great news! There isn’t much equipment you’ll need to start an Airbnb business, and what you do need is easy to get. 

First, create an organized workspace where you can keep track of your property and guest details, including everything from cleaning fees and cash flow to house rules and occupancy rate. A disorganized landlord often makes for a poor guest experience and your reviews will make or break you on Airbnb. 

Second, consider the ongoing supplies you’ll need. Think cleaning (do it yourself or hire a cleaning service), guest snacks, linens, paper supplies (toilet paper, paper towels), light bulbs, etc. 

You may also consider purchasing security cameras for the property and lockboxes that allow for contactless check-in. Airbnb has a great guide on sprucing up your space.

Airbnb says it has over 7 million property listings on its site. You’ll need to put in the work to make your property stand out! 

First, consider the story of your property. Does it have an intriguing history? Can you paint the picture of how a guest will feel when staying there? Stories are effective, so make yours sing. Then, see if you can find a URL that supports the story. For instance, maybe your house is where President Lincoln ate a meal. You could buy the domain “www.thehousewherelincolnate” or something similar and then redirect it to your Airbnb listing.

Next, go social. Check out the inexpensive advertising options offered by Instagram, Pinterest, Twitter, Facebook, and YouTube. These platforms can help you get the word out about your Airbnb offering. Consider joining vacation rental groups and forums so you can collaborate with others and learn from them. Submit your property to design sites or something similar where readers are interested in properties with stories. Consider incentivizing your Airbnb guests to recommend your property on their own social media. 

Now, think physical — location, that is. Sign up for Google My Business and local business and tourist directories. You’ll get most of your business through Airbnb, but to catch locals looking for a close-to-home experience, Google is still king. Make flyers and business cards too, then share them with others both locally and when you travel.

Like marketing, your property listing on Airbnb is a crucial deciding factor for guests to choose your property over another. When writing your listing, think about what others have said about your property in positive reviews. Did they particularly love the water view? The way the sunrise kisses the windows in the morning? Something else? 

Pay attention to the pictures of your property. Do they communicate what you intend, such as it being clean, spacious, cozy, warm, unique, etc. If not, retake them or hire a professional. 

Be sure to describe and show all critical rooms of the property (kitchen, bedroom, bathroom). If your property has a unique feature (hot tub, wraparound porch, etc.), include it in your photos and the description. Your renters want to know they’re getting a special, suitable place for their stay. 

Finally, include information about the surrounding town. Let your guests know what they can do in your town for a fun, memorable experience. Airbnb’s guide to writing a listing is a great starting place.

Opening an Airbnb business is a good side hustle that can be grown into a full-time gig. It doesn’t require special training or degrees, and it has low startup costs, yet offers a good, quick monthly income if you’re willing to put in the time and dedication.

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