Hi, everyone.
My name is Eric Goldschein and I'm an editor here at Fundera.
We're here today to help you answer two questions: How do you start an Airbnb business?
And how much money can you make from it?
I used to be an Airbnb host, and I have a rating of 4.9 stars.
Sure, it was based off of just 11 reviews.
But for a while this was a legitimate side hustle for me, bringing in hundreds of extra
dollars a month.
At the time I started my Airbnb business, my mindset was probably similar to what yours
is.
Airbnb is a popular platform, and there are people out here making hundreds of thousands
of dollars from it.
So why can't I?
If you're watching this video, or you've done any traveling at all over the past decade,
you're probably familiar with Airbnb.
It's a platform where locals can offer up their homes or their property for short-term
and sometimes long-term stays.
According to Airbnb, there are over 6 million Airbnb listings worldwide.
And on a given night, 2 million guests are staying in one of their listings.
That means there's a huge market out there for this kind of thing.
People are traveling more than ever, especially young people.
And when they do they don't necessarily want the packaged, hotel experience.
They want something real, local and authentic.
That's where people like you come in.
Maybe you have a spare bedroom or a rarely used wing of your house that you can rent
out to travelers.
Maybe your family vacation home could bring in some extra income when you're not using
it.
The question is, is this worth the effort?
Well, there are a lot of factors that affect how much you can make off an Airbnb listing.
So let's start with addressing the elephant in the room.
How much money can you make from doing this?
So according to the website Priceonomics, Airbnb hosts make an average of $924 a month
on the platform.
But just 10% of those hosts make $2,000 a month, and more than half make less than %500.
And that's a pretty wide range.
Of course, a lot will depend on your space’s size, location, amenities, and how often you're
renting it out.
You may have an idea of what your Airbnb could make, but it's hard to know exactly until
you go for it.
So Airbnb has a calculator on its website that tells you what you “can” earn.
Let's plug some details into it and see what it tells me.
Let's say I have a small apartment in Atlanta, Georgia that fits two guests.
It says you can make over two grand a month, which is pretty nice.
But Airbnb itself says that this is just an estimate.
And your earnings are going to depend on a whole bunch of factors like location, season,
and local laws.
Suffice to say, unless I'm making this my full time job, I probably won't see that much
profit from Airbnb.
But if I create a popular listing, maximize my earnings and make some smart investments,
I might get close.
So let's see how to do that by going through the five steps to starting your own Airbnb.
First, you need to decide what and where your Airbnb is going to be.
You could share the space with your guests, give them a private area of the home or give
them the whole place to themselves.
Regardless of what you choose, it's still more than likely that you're going to need
to invest a few things in your space to make it ready for hosting.
Helpful amenities such as a keyless lock, homey touches like a mini fridge, and basic
necessities like sheets and towels are all something you need to look into.
Homeowners, you need to think about what investments you could make, whether that's installing
an additional wall or putting in another entrance, or making other improvements, that would drastically
improve your Airbnb and give you license to charge more.
Okay, let's say you have everything you need to start hosting people in your space.
Now it's time for step two.
Step two is get permission.
You could call this step two, or maybe step 1B, because it's so important early on that
you figure out whether you can even have an Airbnb in the space that you're envisioning.
That's because you may need to receive proper permission from your landlord, co-op board,
or homeowners association to have guests in your home.
If you're renting your space, your lease will probably say whether subletting is allowed.
Beyond that there could be local legal restrictions that prevent you from renting on a short term
basis.
For example, in my hometown of New York City, it's usually illegal for apartments to be
rented for 30 consecutive days or fewer, unless the host is present.
In San Francisco, you need a business registration and short term rental certificates to rent
your place, and entire property rentals are limited to just 90 days.
To see what restrictions you face, contact your local Chamber of Commerce, or explore
Airbnb’s community center to talk to other hosts in your area.
Step three is, do market research so you can set your price.
Perhaps the most important factor in figuring out how much you can make from your Airbnb
is your price.
To do that, you need to do a little bit of market research.
As Airbnb says, factors like type and location of your listing, the actual occupancy rate,
season, and demand can all play a role in your pricing.
So pretend you're about to go on a trip to your city.
You can go on Airbnb, and narrow down your search to listings that are similar to yours
in terms of location, size and type.
If you see a number of listings in your area, that's a good sign that there's a market fit
for you.
(Though if there's say 300 plus listings, you might find it hard to gain traction amid
the sea of options.)
Now, take a look at what your competitors are charging and start off by charging slightly
less if you can.
Inducing a few visitors to take a chance on your new listing with low prices is a great
way to get your listing off on the right foot.
You can also use Airbnb’s Smart Pricing tool to raise and lower prices on a nightly
basis in your area, all depending on supply and demand.
Or you can check out third party dynamic pricing tools like Beyond Pricing.
Remember what you charge per night isn't what you're going to end up making on each visit.
Local taxes may apply to your Airbnb, so make sure you have automatic occupancy tax collection
setup if it's available to you, or you need to understand how to collect taxes manually.
Airbnb can help walk you through that.
Additionally, Airbnb is going to take a cut, usually a 3% service fee.
And then you need to factor in other costs if you end up using some outside help.
And that brings us to the fourth step, step four is enlist or hire help.
If you want to make this into a full time business, you'll need to either commit yourself
fully to every aspect of hosting or get someone to help you.
Many hosts enlist a “co-host,” typically a family member or friend, to help them balance
all of these tasks.
Co-hosts are particularly helpful if you don't live near your Airbnb location and need someone
to help you on the ground with all these urgent issues.
You can also hire third-party services do many of the crucial tasks that you would have
to handle otherwise.
That could be key storage, property management, cleaning, even booking your place.
By doing this, you make your Airbnb the ultimate source of passive income, as you can just
sit back and let the money roll in.
But you'll give up a large chunk of your profits when you have to pay off your third-parties.
Now that brings us to step five, consider what you want to invest both time- and resource-wise.
If your Airbnb business is just going to be a side hustle, and you don't want to farm
out any of the tasks to other people or entities, that's a great way to maximize your earnings.
On the other hand, you'll have to invest your most precious resources, time and effort.
You're going to spend a lot of time corresponding guests, interacting with them throughout their
stay, and following up with them seeking reviews or feedback afterward.
The more time you spend doing these things, the higher your reviews tend to be and the
more money you can end up charging people in the future.
But you won't get paid for all the requests that don't pan out, not to mention the time
you spend addressing people's needs during their visits, or even decorating your space.
You might think of these aspects of running your business as a fun diversion, but the
time adds up.
And it can be a real drag on your overall productivity and your ability to turn over
your space to host more people.
So take the time to crunch the numbers and decide how much you want to put into this
venture, and whether or not it would be worth it to let some other people handle it, if
that's in your budget.
Remember, at the end of the day, this is a hospitality business.
You need to love hosting and helping people, providing them with a memorable experience
or just a comfortable, safe place to stay when they're passing through town.
If you think of Airbnb as just a transactional business, you're not going to enjoy it and
it's not going to work out for you in the long run.
That about covers it.
At this point, you should have a pretty good idea of what it takes to start your Airbnb
business.
We'd love to know what other questions or comments you have about the process as you
get going.
Leave your questions down below and we'll try to answer them.
For more information about starting an Airbnb and other side hustles and businesses.
head to fundera.com/blog and of course, subscribe to this YouTube channel.
Thanks for watching.