How to Start an Airbnb: My Story

In 2015 my husband and I bought our first house. It was a fixer upper and we spent every penny we had on it. We were out of money for improvements. I wondered if we could start an Airbnb. In 2014 we’d stayed in an Airbnb in France for two months, so I thought – well, we could go stay with Joe’s parents in California and rent out our house on Airbnb.

We had miles for tickets, so we booked a three month trip to California and figured out how to start an Airbnb. Within 24 hours of listing we had 6 weeks booked out. Hospitality has always been such a key piece of our lives, it felt like a gift getting paid to do it!

We kept it up every time we traveled, and at the end of 2016, we realized we were on to something. We bought a second property in 2017 and I had a couple of friends who took a risk on me hosting their properties and we were off to the races!

I’ve learned a lot about how to start an Airbnb and hospitality since 2016. I’ve helped over 100 hosts launch properties (including three of my siblings and my parents)! I created this exhaustive article to not only help you avoid mistakes I made – but so you can be successful and enjoy hosting.

We have a six step plan guaranteed to get you to Superhost within 6 months if you follow our method. But if you aren’t ready to make that leap yet, we’ve mapped it out here for you as well, our steps on how to start an Airbnb.

1. Run the Numbers and Build Your Business Plan
2. Choose the Right Property and Identify Your Target Audience
3. Set Up Your Property
4. Create Your Listing
5. Build Your System
6. Welcome Your Guest

Step 1: How to Start an Airbnb Business Plan and Run the Numbers

AIRBNB BUSINESS PLAN ELEMENTS

As the property owner, you’ll need to start by putting together a brief business plan. A business plan will help you know if you’re winning or not. Without a plan, you’re making guesses, stabs in the dark, hoping you hit your target. Mapping a plan will guide you (and will evolve) as you develop your business. It doesn’t need to be MBA level, but it should include enough information so you can use it as a reference point as you move forward.  

Here are some elements your business plan should include:

• What is your financial goal and bottom line? If your mortgage is $2500/mo, utilities are $400 and landscaping is $400 – you need to make $3300 a month minimum.
• What are your startup costs? Furnishings, equipment, marketing, linens
• How are you going to finance the business? 
• Where will your business bank? This may impact your financing. You may plan on traditional real estate financing for the property, but what about the furnishings? Will you need to do any renovations? Do you want to consider hiring a designer? Good design and good amenities have some of the best ROI in short term rentals.
• Expected ROI – Your return on investment is your revenue minus expenses year on year until you sell divided against what you put into it. Your ROI should be higher than you could get on a long term tenant.
• Competition Analysis – What are your competitors bringing in monthly? There are a number of websites that will help you farm this data: strinsights.com or airdna.com are two.
• Target Market – Who is going to book your property? This is one of the more important factors to think through. If you are located next to a convention center, you probably want to focus on booking business people traveling in groups. What items will they need?
• Marketing strategy to attract guests
• Property Management Plan including maintenance and cleaning
• Any local laws you need to navigate and how you’ll do that

The business plan should also outline goals and objectives for the business as well as for you the property owner, like your ROI. If you could make 5% with your money sitting in a savings account, you want to make sure you’re getting 5% on any investments you make as well. Will you need to hire a property manager or will you self-manage? You will also want to include a contingency plan for unexpected challenges or changes in the market.

When I started our first Airbnb, I knew I needed to make $800/month + our utilities to pay for childcare. We also had to pay back $3000 in borrowed money for the floors (we’d previously just had plywood!). When I tell you we house hacked our first house, I am not joking. Airbnb helped us pay for almost every improvement we made in that space. This is why I believe so strongly in teaching you how to start an airbnb so you can build your own business.

SET YOUR FINANCIAL GOALS

Determine how much income you want to generate from your Airbnb venture. Set realistic financial goals based on your local market research and personal circumstances. This will inform what kind of experience and amenities you will need to provide for your guests to hit your goals. It will also help you track the success of your business and guide your pricing strategy.

If you’re just getting started and feel overwhelmed by that list, start with writing out your bottom line, financing, expected ROI, and marketing strategy. The other pieces are helpful and important – but these four pieces will be your main building blocks.

Step 2: Choose the Right Property

Choosing the right type of property for your Airbnb is crucial to your success. If you pick the wrong property, it will not book. Airbnb is not a panacea, it’s a great opportunity, but only if done well. Here are some factors to consider to help you buy the right type of property:

1. Location: I look for properties in desirable locations with high walkability, something that attract tourists or business travelers. This could be in a popular city center, near tourist attractions, or close to business districts. The location should offer convenience and accessibility to amenities like restaurants, shops, and public transportation. You either need to be BY a popular destination or you need to BE the destination (this means a lot more upfront costs). If you don’t do this, you’ll sacrifice occupancy, price and it won’t be sustainable.
2. Amenities: Think about the amenities that will appeal to your target audience. If I’m targeting business travelers, I make the property as tech savvy as possible. If I’m targeting families, I have kid’s toys, a trampoline and a swing set. Aside from basic amenities, I am always thinking about what else I could add to my listings to improve my guest’s lives. Most recently I added a basket of snacks in the kitchen, a jar of chocolates in the living room and a bowl of candy at the desk. 
3. Safety and Security: Make sure that the property is safe and secure for your guests. Install good locks, smoke detectors, fire extinguishers and security cameras. My life got so much better once we had cameras. The cameras will be as much for your benefit as theirs.
4. Licensing and Permits: Check local regulations and requirements for operating a short-term rental business. Obtain any necessary licenses or permits. 

IDENTIFY YOUR TARGET AUDIENCE

After choosing your property, you need to understand who your guests will be. This will help you tailor your listing and marketing strategies to attract the right people. Here are some of the key factors I think through when I identify my target market: 

1. Trip Purpose: Why are they coming? Are they business travelers or leisure? I make sure the location and amenities of my property are the first indicator for which type of travelers I target.
2. Demographics: Consider the age, income level, and interests of your target audience. For example, if my property is located near a popular hiking trail, I target outdoor enthusiasts and adventure seekers. For my properties near hospitals, I make sure visiting patients have things they may need while receiving treatment.
3. Local Events and Attractions: What will bring guest to your town? Are there a lot of conferences near by? Or are you the event? If so, that will impact how you outfit your property. Research local events and attractions in your area to determine if there are specific groups of people that your property can cater to.
4. College Students: If your property is located near universities or colleges, target families visiting their student.

Once you have identified your target audience, you can start crafting your marketing messages and creating a listing that appeals to them

Step 3: Set Up Your Property

FURNISHING AND DESIGNING YOUR PROPERTY

Every property needs the basics. You can download our free checklist here (with links!). It’s very long and has lots of options, but don’t let that overwhelm you.

The goal is to make sure your space is fully equipped for what a guest may need. Not every living room will need a couch and two chairs. But every living room needs an appropriate seating area and places to put drinks.

Make sure you have appropriately outfitted your property, it’s better to have too much and then edit down then to have too sparse a place. Guests know when you are trying to be cheap and it will show up in your reviews, bookings and price points.

If you need design help, reach out here. Our team is excellent and we’d love to help!

OFFERING TOP AMENITIES FOR GUESTS 

When it comes to your Airbnb property, including the top requested AND SCARCE amenities make all the difference in attracting guests and ensuring a positive guest experience. The basic amenities to include are: wifi, AC, heating, a comfortable bed and a well equipped kitchen.

But to set yourself apart in the market you’ll need to offer top amenities for your location. And you should prioritize based on scarcity and demand in your area. Here are the top amenities I’ve seen work in Atlanta:

1. Pool : A pool is the number one searched for amenity in the Atlanta short term rental market, and the vast majority of rentals do not have them.
2. Hot Tub : In cooler climates, a hot tub can be a major attraction for guests. And you will almost certainly be able to charge more on your nightly rate.
3. Sauna: Another luxury amenity that can attract guests, especially in colder climates, is a sauna. It offers a relaxing and therapeutic experience for guests. It’s currently having a moment in the health world and because supply is so low, you create instant demand for your property.
4. Pet-friendly: Allowing guests to bring their pets can open up a whole new market of travelers. You will lose some travelers who are allergic, but on a whole this amenity is in low supply.

ANALYZE THE MARKET

Research the demand for accommodation in your area. Is there a shortage of rentals during peak tourist seasons? Is there a specific event or attraction that draws visitors? Understanding the local market dynamics will enable you to set competitive prices and ensure a steady flow of bookings.

Step 4: Create an Engaging Property Listing

Your Airbnb listing is your virtual storefront. It’s the first impression potential guests will have of your property, so make it count.

PHOTOS

If you take nothing else away from this entire article, take this: hire a professional photographer. It is the most important thing you will do for your business. Pay for someone who will get you high quality pictures.

Nothing you do matters more, it is the difference between getting booked immediately and frequently or having to hustle to get any bookings, much less filling up. It also significantly impacts what you’re able to charge.

You’ll also need to request drone shots as well as twilight pictures. If the professional photographer doesn’t offer those, keep searching.

Look at these two pictures – all things being equal, which are you going to book?

You’re going to book the second one. The first one is good, but now that short term rentals are mainstream, if you want to have a competing business, you need to operate at the next level. You can have the best experience in the world, but if you can’t get someone to click on you, you can’t host them. Guests will click on you because you have a picture that stands out.

LISTING DETAILS

You’ll need to keep it under 500 characters for this section, so you want to share succinctly but effectively what makes your property special. If guests like your pictures enough, they’ll read this section. 

Describe the experience your guests can expect. Do not include information that is already filtered for them automatically when they search ie: how many bedrooms/bathrooms, what city your property is in etc. 

Do include information on things that set you apart from others. I have Frette linens in my property, this is where I include that information. We have a Jura coffeemaker for our guests as well, this information is included in the amenity section, but I highlight it here since guests can’t filter for these types of amenities.

SET COMPETITIVE PRICING STRATEGIES 

Nailing the pricing game will help your Airbnb business thrive. Pricing your property competitively attracts clicks, guests, maximizes your occupancy rate, and ultimately increase your revenue. Here are some tips to help you set competitive pricing strategies:

1. Research Comparable Listings: Start by researching other listings in your area that are similar in size, amenities, and location. Pay attention to their pricing, occupancy rates, and guest reviews. This will give you a better understanding of the market and help you determine a competitive price range for your property.
2. Consider Seasonal Demand: Almost every location will have seasonality in some regards. Even in New York City, where general demand is high, there are higher seasons versus a lull. Take into consideration the seasonal demand in your area. We highly recommend optimizing your pricing with tools like PriceLabs. There are many reasons to use Pricelabs, but this is among the top. It assesses the demand for you and adjusts your prices on a daily basis for you.

3. Analyze Costs and Expenses: Map out all the costs and expenses associated with running your Airbnb business. This includes mortgage or rent, utilities, property maintenance, cleaning fees, property management company fees (if you plan to use one), insurance, service fees, supplies (toilet paper, paper towels, etc) and any other related expenses. By understanding your costs, you’ll be able to determine the minimum price you need to charge to cover your bills. Then look at average nightly rates for your area. Will you be able to charge that? This is the most important piece to get right from the outset. You’ll save yourself a world of hurt by evaluating this correctly.
4. Use a Price Tool. We use Pricelabs. They’re able to assimilate data for competition in not just your city but your specific neighborhood. They can help you determine a competitive price.

Step Five: Build Your Systems

Once you’ve got your listing published you’re almost ready to welcome your first guest! To do that, you need to get your systems in place. There’s always one more thing to do in this business, so systematizing as much as possible is optimal. Here are a number of things you need to manage in your systems.

HIRING A CLEANING SERVICE 

The second most important piece (after photos!) is finding a cleaner who can be a good partner to you. After you’ve got bookings, you need to build your good reviews. You cannot do this without a quality cleaner. Do not try and get a good deal, and don’t go with someone who charges too little. There’s a reason they’re charging too little – they either just started out, or aren’t thorough enough. You are also just starting out, finding a good cleaning service will save you a world of pain. Your cleaner should do the following:

1. Laundry. I generally recommend laundry be done on site, wash, dry, fold and put away. You could consider having your laundry done offsite to speed up the clean in between. You’ll need to have a good tracking and inspection system. 

I have found even the most well meaning cleaners can get linens mixed up and if they’re outsourcing the laundering, it’s another added step you need to inspect for quality control. Stained linens will immediately make your quality suffer.

2. Inventory linens
3. Assess and report damages or missing items. Report on guest cleanliness.
4. Report on normal wear and tear.
5. Refill toiletries and other amenities (coffee, waters, wine, dishwasher tablets, toilet paper, etc). Report low inventory.
6. Clean and sanitize your unit, remove trash.
7. Clean under the beds and sofas/chairs. In my experience, this is an item many cleaners may overlook and after a month there are definitely dust bunnies building up and a guest will notice.
8. Address particular items as needed. Sometimes the fan blades will need to be dusted, other times a baseboard will need a wipe. They should not nickel and dime you for this.
9. Deep clean at least once a year (for an additional fee).

Your cleaner is your #1 partner in hospitality business models and  it takes both of you to prepare a delightful experience for your guest. You cannot succeed without them. You need to be a good partner to them as well, when they report something is low or empty, fill it quickly. 

MAXIMIZING INCOME AND REVENUE 

Now that you’ve got the basics in place it’s time to maximize your revenue. One of the key strategies to maximize your income and revenue as an Airbnb host is to optimize your listing. Here are some tips on how to do that:

1. Determine your minimum price amount. This number should be what you would prefer it to be empty than receive this amount of money. Airbnbs are the most perishable product, every day its empty you throw away money. 

You should also consider the type of guest too low will attract, sometimes this takes a little trial and error.

2. Optimize your calendar: Keep your calendar up to date and make sure to block off any dates when your property is unavailable. This will help avoid double bookings and ensure that potential guests see accurate availability when searching for accommodations.
3. Use a dynamic pricing tool. As I mentioned earlier, we use Pricelabs for our properties. Pricelabs can also help you determine market trends and finds a competitive rate for your neighborhood. 

They automatically research similar listings in your area to determine an optimal price range for your property. You have the option of opting in to their suggested price range, or choosing your own. 

It then adjusts within that range daily to optimize for revenue based on what is happening in your area. An added benefit is most OTAs feature more prominently listings whose calendars are updated consistently. When we started using Pricelabs it helped us raise our nightly rates $30-50 on average.

CALCULATING OCCUPANCY RATES AND CASH FLOW

Financial Planning, like we talked about earlier, is essential to have a solid financial plan and know your break even number. Calculate your upfront costs, including purchasing or leasing the property, furnishing, renovating, and marketing expenses. Determine your expected monthly expenses, such as mortgage payments, utilities, maintenance, and cleaning fees.

Analyze your expected income from rental bookings to understand your potential profitability. It’s important to have a realistic projection and to set aside extra money for unexpected expenses or periods of low occupancy.

One of the biggest things that drives hosts from operating a short term rental business is the inconsistency in cash flow. Drilling down on your numbers counter balances this. This will help you focus your energy as you work on pricing. I know for one of my properties, I need to make $2500 a month before I cash flow, I optimize my nightly rates to hit this number as quickly as possible. 

Likewise, you should be calculating your occupancy rates on an ongoing basis. On a macro level, when do you cash flow – if it’s at 70% and everything else is gravy – chase that number. Add promos, make adjustments to maximize your occupancy rates. And remember, higher occupancyw ill generally mean more clicks, which overall will mean higher rates.

Legal and Financial Considerations

Some of the best advice I’ve ever been given is, “don’t let a $500 solution be the reason your business fails.” This is an important system to have under control and there are a number of pieces you’ll need to think through.

OBTAINING BUSINESS LICENSES AND INSURANCE

Before officially launching your Airbnb, it’s important to get your legal and financial ducks in a row. Here are some considerations:

1. Business Licenses: What does your local government require? Check with your local government to see if you need to obtain any business licenses or permits to operate a short-term rental. Each city or municipality may have different regulations, so it’s important to make sure you are a legal business entity to avoid any legal issues. Research the requirements and make sure you follow the necessary steps to obtain the licenses needed.
2. Insurance: It’s crucial to have proper insurance coverage for your Airbnb property. Regular homeowner’s insurance may not provide adequate protection for short-term rentals. Look into specialized insurance policies that specifically cover vacation rentals or consider adding a rider when possible to your existing policy. This will protect you from potential damages or liability claims should anything go wrong during a guest’s stay.
3. Tax Obligations: You will need to pay income and sales tax on your listing. Many OTAs handle this for you, some do not. If they do not handle it for you, research what you need to charge and how to report and pay it on your secretary of state’s website. Additionally, consult with a tax advisor or accountant to understand your tax obligations and ensure that you are meeting all the necessary requirements. The STR landscape is still the wild west in many regards and as such is changing all the time. Congress recently passed a law  allowing significant tax benefits for having an STR. Make sure your CPA is familiar with these and that you get the credit if it applies to you. Your CPA  can also guide you on how to properly report your Airbnb income and any associated expenses, helping you to stay compliant with tax laws.
4. Property Taxes: Check with your local tax authority to understand how hosting short-term rentals may affect your property tax liabilities. Some areas have specific regulations or tax rates for properties used for short-term rentals like an occupancy tax. Make sure you are aware of any additional taxes or fees that may apply to your short term rental property.

ESTABLISHING A LEGAL BUSINESS ENTITY FOR PROTECTION

There are varying opinions on this, and a good lawyer on your team is critical for protecting yourself. We are not lawyers, this is not legal advice, you should always consult a lawyer. Putting your properties in an LLC can add a layer of legal protection. You should ask your lawyer if this is a good move for you and how many properties per LLC you can have.

Step 6: Hosting and Guest Experience

CREATING HOUSE RULES FOR A POSITIVE EXPERIENCE

Creating clear and reasonable house rules facilitates a positive experience for both you and your guests. Your rules will serve as guidelines for how guests should behave during their stay and help set expectations upfront. Here is what you want to consider when you decide which rules to include:

1. Be Clear and Specific: Make sure your house rules are easy to understand and cover all the important aspects of staying in your property. 

If you are renting out your townhome, no guest wants to have the cops called on them for being too loud when they weren’t aware they couldn’t be loud. Include rules regarding noise levels, smoking, pets, check-in and check-out times, and any restrictions on the use of certain areas or amenities.

2. Be Realistic and Fair: While it’s important to establish boundaries, it’s also crucial to be fair and realistic with your rules. Avoid creating rules that are too strict or unreasonable. 

You want your guests to feel like they can make themselves at home. So while it may be important to you that a guest not bring more than 1 suitcase, this is unreasonable and will make a guest feel like they aren’t welcome. You need to strike a balance between protecting your property and creating a comfortable and enjoyable experience for your guests.

3. Communicate Expectations: Make sure your guests understand the rules you’ve created. Clearly communicate your house rules in your listing description and also during the booking process. I recommend when a guest books if they don’t have much experience with a platform, confirm they’ve read and agree to your rules again. I recommend highlighting the important rules in the house manual as well.

AFTER YOUR GUEST CHECKS OUT 

Once your guest checks out, you have one last opportunity to offer hospitality.  This is your chance to leave a lasting positive impression and hopefully receive a great review. Here are a few tips on how to provide a great post-stay experience:

1. Prompt Communication: Send a thank-you message to your guest shortly after their departure. Thank them for coming, you might offer them a discount or a unique incentive to book with you when they come back. 

This shows your guest that you care about their happiness and opens the door for them to provide feedback.

2. Review Request: If your guest seemed satisfied with their stay,  ask them to leave a review on your Airbnb listing. Reviews are one of the best ways to help other guests find you and it helps you create the best possible experience when they return
3. Solicit feedback from your guest. You need to always have an approach of leveling up.  This can help you identify any areas of improvement and course correct before the next guest.

RESPONDING TO REVIEWS AND FEEDBACK

Responding to reviews and feedback is important. It not only shows your guests that you value their opinions and are committed to providing a positive experience, but it also helps build your reputation and attract more guests in the future. Here is what I do:

1. Be prompt (again): I respond to feedback as soon as possible. I thank them for taking the time to leave me feedback (even when I disagree). 

Future guests watch to see how you respond and this shows that you are proactive and attentive. For reviews, I aim to respond within 24-48 hours after the review has been posted.

2. Thank your guests: Start by thanking your guests for taking the time to leave a review. This simple gesture goes a long way in showing your appreciation for their feedback.

3. Address any concerns: If my guests have mentioned any issues or concerns in their review, I let them know what I will do to fix it and I apologize if necessary. I take the opportunity to address them. 
4. Stay professional and relational: Remember to always maintain a professional and courteous tone when responding to reviews, but remember your guests are human. Keeping your tone as relational as possible while still being professional reminds guests of that.

It’s a lot, I get it. If you feel overwhelmed, take a deep breath, it doesn’t happen overnight. It takes a lot of thought, consideration, planning and work. But we’re here for you in the process. If you, like many others, want more hand holding to make sure you get it right, sign up here. We’ll walk you through how to start an airbnb, every step of the way. You’re not alone!