If you are considering becoming an Airbnb host, this is a one-stop-shop for everything you need. We run down the top considerations including earning potential, getting started, and how to succeed.

How Much Can You Earn as an Airbnb Host?

There are lots of reasons to go into business, but the main one is to earn money. The average U.S. Airbnb host earns a monthly profit of $1,000. Some earn much more and some earn less. By the way, Airbnb as used in this article is meant to include other players in the short-term rental market such as Vrbo and Homestay.

Profit is defined as revenue less operating expenses such as mortgage payments and utility bills. The great thing about investing in real estate is someone else pays off your mortgage. That means you're in for another big payday at some point down the road when you sell the property.

How to Become an Airbnb Host

Becoming an Airbnb host is a process. Here are the six major milestones on the road to becoming an Airbnb host:

Step 1: Determine Your Target Area

Look around for nearby areas where you might like to stay if you were looking for an Airbnb to rent. You can find important data about short-term vacation rentals on AirDNA. The site lists average daily rates, monthly occupancy, and number of active rentals for any location in the world.

Step 2: Check Local Laws and Regulations

Before you do anything else, it's important to do your due diligence. Investigate local laws and regulations that pertain to short-term vacation rentals. With the increased popularity of these rentals, some cities such as New York and Paris have enacted strong measures to discourage the practice.

Step 3: Purchase a Rental Property

As discussed in Investment Property, real estate investing is not a pauper's game. You need serious bank and excellent credit. Shop around and select a few good candidates, then examine the HOA documents to see if there are any restrictions against short-term leasing.

Step 4: Décor and Furnishings

Your short-term vacation rental should be fully-furnished and tastefully decorated. Depending on the property you choose, this may include renovations or upgrades. Every bedroom should have at least a queen-size bed and the master bedroom should have a king. Choose a couch that folds out into a bed and dress all the beds in luxurious materials. 

The kitchen should be equipped with new appliances and a complete set of dinnerware, silverware, cookware and everything necessary for a fully-functioning kitchen. The family room and every bedroom should be outfitted with a large flatscreen TV with premium satellite/cable service and Netflix. Amenities should include high-speed internet/WIFI and all the things typically found in hotel rooms such as hair dryers and ironing boards. Everything has to be top-notch in order to earn good ratings. Airbnb hosts live or die by the reviews guests leave on the Airbnb site.

Step 5: Create Your Listing

Hire a professional real estate photographer with access to wide-angle lenses and drones to produce high quality images and videos of your property. Research other comparable properties in the area and list yours for less (at least at first). Write a listing that accurately describes your Airbnb including all the amenities.

Your listing needs to stand out to attract guests. If writing is not your thing, seek help. Include any restrictions such as minimum stay, check-in/out times, and policies regarding pets and smoking.

Step 6: Hire a Cleaning Service

Hire a professional cleaning service that can reliably turn over the property in a day or less. Don't fool yourself into thinking that you can handle the cleaning chores yourself, you will have your hands full dealing with guests. Especially if you plan to keep working which is the case for the majority of Airbnb hosts.

How to Succeed as an Airbnb Host

As an Airbnb host, you are first and foremost in the people business. Ask yourself how you feel about dealing with people, and be honest. You must truly enjoy dealing with people to succeed as an Airbnb host. If you merely tolerate them in limited doses, this is not for you.

As mentioned, ratings based on guest reviews are everything. You need high ratings to succeed and that begins with great customer service. You will receive far more inquiries than guests and how you deal with them is critically important. Being unresponsive or less than cordial is a big turnoff to potential guests.

People have come to expect "extras" when staying at Airbnbs. If your property doesn't meet those expectations, it might be reflected in your reviews. It's not enough to stock the kitchen with cookware and the bathrooms with clean towels and toiletries, your guests need to be wowed!

A welcome basket filled with goodies like champagne and chocolates and gourmet cookies is a good start. Other ideas include providing complementary robes and slippers, books, magazines, firewood and fresh flowers. Many Airbnb hosts provide personalized guides to local restaurants and entertainment. Toys and games are a nice touch for families traveling with small children.

Conclusion

Hosting an Airbnb is an alternative to the more traditional route of long-term leasing. As an Airbnb host, you can charge more for your property but it comes with a tradeoff. You're trading long-term stability for what could be spotty or seasonal occupancy. The other major consideration is the fact that an Airbnb requires much more day-to-day involvement than a traditional rental.

The biggest risk factor facing Airbnb hosts is the potential for change in local laws and regulations. The popularity of short-term vacation rentals has impacted the hotel industry in a big way, and that effects tax revenue. Many municipalities are looking to shore up lost revenue by shifting some of the burden to short-term rentals. As an Airbnb host, that could impact your profitability or even tax you out of business.

Photo credit: Pixabay The Eggstack Blog will never post an article influenced by an outside company or advertiser. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future.