If you don’t mind sharing your space with others, Airbnb is a great way to earn some extra cash. Depending on where you live, you could earn anywhere from a few hundred to several thousand dollars each month. Now, that’s what you call a lucrative side hustle.
Happen to have rental properties sitting idle and costing you money each month? Airbnb may be exactly what you need to get them occupied and start earning money again. And even if you don’t own your place outright, Airbnb is still a viable option to beef up your earnings (if your landlord is cool with it, of course). Read on to learn the ins and outs of making money as an Airbnb host.
Airbnb Host Overview
Airbnb allows you to make money by renting out your property when it’s convenient for you. You can choose to only host on select days, and the platform also gives you the option to specify how many guests you prefer to welcome at once and if you wish to rent out your entire space or just a portion of it.
The entire process, from reservations to booking and payment, is handled online. And you should expect to be compensated the day after you guest checks in.
It only takes a few minutes to get up and running with Airbnb, and they have a built-in payment processor on the website so you won’t ever have to worry about collecting cash from your customers. Plus, you won’t have to give out your personal contact information as you can communicate with guests via the messaging tool.
Airbnb also extends insurance protection to hosts of up to $1,000,000. This means you’ll be protected in the event of a major incident, so you can rest assured that you’re in good hands and covered while others are occupying your property.
Even better, you have the option to request a form of government identification, a valid phone number, and a positive review from another host, just to name a few, as a condition for renting out your property. Doing so could minimize the chances of things going left during their stay.
Another major perk Airbnb has to offer is the earning potential feature found on their website. When you select “Become a Host” from the navigation menu, you’ll be directed to another page to learn more about the opportunity.
Upon arrival, simply enter your location, select the portion of your property you’d like to rent out (i.e. entire place, private room, shared, room) along with the number of guests that are permitted. The monthly earning potential will be generated and automatically appear on the screen.
If you like what you see and would like to give Airbnb a test drive, select “Get started”. The next step is to create your profile, draft up an enticing listing, and all you be all set to start hosting.
Getting Started as an Airbnb Host
Step 1: Do Your Research
What are other Airbnb hosts in your area charging to rent out their space? You want your rates to be competitive, but not too high that they scare prospective guests away. But don’t sell yourself short either as there are individuals who are more than willing to pay you a fair rate, particularly if they’re booking in a high-traffic area with lodging rates that are through the roof or if there’s a special event.
The easiest way to conduct your search is by using the website as if you were shopping for a rental. When analyzing rates, be sure to compare apples to apples. If you’re only offering a room in your home and the guy down the street is offering his single-family home or entire condo, you’ll have to consider that. Also, keep in mind that more in-home amenities, like swimming pools, could work in your favor with regards to how much you’ll earn.
You can also use the Smart Pricing tool to get recommendations on pricing. It adjusts with demand in your area but it’s ultimately up to you to decide how much you’ll charge your guests.
Important tip: when working on pricing, don’t forget to factor in the costs, which you’ll take a closer look at in the next step. After all, the goal is to turn a handsome profit when renting out your place.
Step 2: Run The Numbers
It won’t cost you any money to list your property on Airbnb. However, you can expect to pay a host fee of 3 percent per transaction. But instead of remitting payment electronically or sending Airbnb a check, they’ll automatically deduct this amount from your earnings at the time of the booking.
Along with hosting fees, you’ll need to provide basic supplies, like toiletries, beverages, and snacks for your guests. Be sure to factor these costs in when running the numbers.
Also, include the costs of insurance in your projected financials should you decide to purchase a supplementary policy. More on that in step four. And don’t forget about Uncle Sam as he’ll want his cut of your earnings. So, it’s a good idea to speak with an accountant to learn more about the tax implications of becoming an Airbnb host as laws vary by state and county.
Step 3: Register Your Business
You also want to check with the Department of Business and Professional Regulation in your respective county of residence to determine if there’s any particular licensure you need to obtain before listing your property. There may also be requirements and additional fees at the state level and the customer service representative should be able to provide you with this information.
A quick tip: if you don’t own the property, it’s a good idea to speak with your landlord first to avoid any issues later on down the line. And if you live in a community with an HOA, you want to speak with the leaders as well to confirm you’re able to become a host.
Step 4: Get Insured
Although Airbnb offers up to $1,000,000 in coverage for damages sustained to the property, it may be a good idea to purchase another policy. Why so? Well, their policy doesn’t cover tangible assets so if the guest has a wild night and tosses images from a fancy art collection into the pool or uses your glass table as a stage and breaks it in half, you won’t be covered. You get the drift.
Step 5: Draft Up a Marketing Plan
How do you plan to get the word out about your new side hustle as an Airbnb host? Will you rely solely on the site referrals or do you plan to explore other options? If it’s the latter, are you willing to invest in marketing or would you like to explore options that won’t cost you a dime, like social media marketing and word of mouth? But if you want to let your listing do the work for you, it’s safe to skip this step.
Step 6: Create Hosting Policies
Simply put, it’s time to set some ground rules to ensure guests are on their best behavior and you won’t have to pull your hair out each time you have a reservation.
Some important considerations when creating your hosting policies:
- Is smoking allowed inside the home? On the premises, and if so, how far away from the property should the guest go to smoke? You may need to add a cleaning fee for those who plan to smoke inside the home.
- Are guests allowed to invite other guests over that are not listed on the reservation?
- Can guests hosts events on-site?
- Are pets allowed? If so, consider adding a fee and be sure to disclose it in your listing. More on that in the next step.
Step 7: Write Your Listing
You’re almost to the finished line. Some best practices to be mindful of when writing your listing:
- Be specific and thorough. Prospective guests will have several options to choose from, so you want to be as specific as possible so they’ll know if you have exactly what they’re looking for. If you have a one-bedroom apartment available, say that and include the square footage as well. And don’t be vague on the features; mentioning upgrades and other amenities are a plus and will get you booked sooner than later.
- Keep your target market in mind. If you’re catering to families with small children, have furniture they’ll need on hand (i.e. high chair, pack and play, crib, etc) and mention it in the listing. And if you’re trying to attract career professionals, emphasize that you have a dedicated workspace that they can use. Most importantly, if you aren’t willing to make any adjustments to your space to cater to a particular group, think about who your space is most ideal for and target your listing to them.
- Transparency is a must. While it’s important to be as detailed as possible, you don’t want to overdo it to the point where the entire listing is a lie. If the living room furniture is a bit worn, say that in the listing and adjust the price accordingly. Sounds a bit scary, but if the guests are looking for a place to crash after a huge concert and everything is overpriced or sold out, they probably won’t have an issue giving your place a shot.
The listing will include the rate you decided on in step one. Also, consider tacking on a cleaning fee or rolling it into your current rate. Chances are you’re not going to want to go in and clean up each time a guest completes their reservation, and it’s much more convenient to pay someone to do the dirty work for you. And if even if you don’t mind getting your hands dirty, cleaning supplies still cost money that you shouldn’t have to come out of pocket for, and your taking time out of your busy schedule to tidy the place up.
Step 8: Start Hosting!
It’s showtime, which means you can publish your listing and wait for the reservations to roll in. But if a lot of time passes and you still aren’t getting any hits, it may be a good idea to return to the drawing and make some adjustments until you start getting the results you want.
Bonus Tips for Success
When booking a hotel, you wouldn’t like it if the guest service representatives never answered the phone or weren’t available to address the questions you had before your arrival. So keep this in mind when dealing with guests, even if you have a super hectic schedule. They are using their hard-earned cash to rent out your place, which means they deserved to be treated with respect. And if you run into an issue and need additional support or guidance, Airbnb has representatives standing by 24/7 to assist.
Perhaps you’re well versed in the history of your city and enjoy giving tours? Consider offering this service as an add-on to your guests at a price so good that they’ll want to take advantage.
Rent Out Equipment
Maybe your guests had a sporting adventure, fishing trip, or excursion of some sort in mind? If you have the equipment on hand lying around in your garage, clean it up, snap a few shots, and offer it is an upgrade in your listing. At least you’ll be putting the equipment to good use while earning a little dough on the side.
The Bottom Line
Becoming an Airbnb host is one of the more lucrative side hustles out there. Even better, the income is passive for the most part so you’ll have time to explore more money-making opportunities.