Even though Airbnb is well known worldwide, the idea isn’t new. If you have a property or room, you can share that space and earn passive income from it.
Well, it works more like extra cash. You never know when the next client may appear. Maybe someone’s looking for a place like yours already but can’t find your listing.
Airbnb may not be the best play on book online, but you can’t deny it as one of the most popular platforms out there. The fact that you can become a host today and advertise to millions of users is ridiculous.
Most importantly, this is proof that anyone can make profits from rentals and outcompete hotels. When it comes to pricing and variety, Airbnb wins.
You may not want to base your whole business here, but this platform is a great place to start meeting with guests and build a reputation.
And before you complain that the marketplace is too crowded already, make sure to check the strategies we’re about to share. You might change your mind.
- How Much Does It Cost To Own An Airbnb Business?
- The Minimum Viable Airbnb Business
- AVOID These Listing Mistakes
- #1 Take verification seriously
- #2 Honesty over idealism
- #3 Underestimating renovations
- #4 Don’t try too hard to get reviews
- #5 Don’t forget to prepare for the worst
- #6 Make it official and compliant with the law
- #7 Don’t lose their attention.
- #8 Avoid dull descriptions
- #9 Don’t forget about your guests
- #10 Don’t “set and forget” this business
- #11 Don’t stop at Airbnb
- Unusual Ways To Get Clients For Your Property
- Five Hacks To Automate Airbnb For Passive Income
- Closing Thoughts
How Much Does It Cost To Own An Airbnb Business?
The Recommended Option
There are companies with properties worth over seven figures. But they’re also sellers offering a simple room rental and calling it a business.
Let’s try to answer the question: how much should you plan to spend if you want to start making decent passive income, say a $1K/month milestone? You can, of course, scale later to six figures by adding more properties.
The thousand-dollar goal is quite realistic to reach with almost any home. You only need to raise the value of the property or attract more guests (more on that later).
Here’s the list of essentials:
- A property. You can run a six-figure business without owning a property, just renting someone else’s (security deposit included). But monthly profit margins will reduce. On the flip side, you can drop the property if it doesn’t sell. We can’t give you any range as prices depend on the property status, valuation, size, and purpose.
- Insurance. According to Airbnb, “you may be protected with up to 1,000,000 USD primary liability insurance.” If you want to add 3rd party insurers as a second layer of security, include that subscription in your budget.
- Furnishing. You may have thought of furniture as a way to raise the property value. But since furnished homes cost more to rent, you may choose to buy it yourself. Although it’s cheaper long term, be ready for higher upfront costs.
- Miscellaneous items. Despite the amenities, hotels can’t compete with the comfort of your house, where everything is one room away. If you want to make guests feel like home, make sure to check this Airbnb “shopping list.” It can cost anywhere from $500 to $5000 depending on how many items you include plus their quality.
- Replenishable goods. For an extra $10-$30, you can save your guests the hassle of going to the supermarket every day. Buy enough cleaning products, tissues, bathroom, and kitchen supplies.
- Utilities. Depending on the season and number of guests, you may need $100-$200 to include gas, water, and electricity. Although this isn’t a utility, guests will consider high-speed Internet as essential as any other bill. You could make it your selling point, adding a Netflix subscription, for example.
- Services. Here, you include all the contractors that can increase the value of your property: decorators, SEOs, photographers, furniture-movers, the cleaning staff, plumbers, electricians, even a chef. For one-time projects, you could expect an entry price of around $500. Hires may cost you thousands a month but could work as a selling point in a larger property with demand.
It may sound like a lot, but as you get more experienced, you will learn what expenses are worth it, which ones you should avoid, and how to save more the next time.
If you want to offer a premium service, the range you should look for is between $5K and $10K initially. You could invest more, but you should focus on essentials before lowering your ROI. Remember that nothing you buy will make you money until you get out there and promote it to potential guests. You might want to save some money for marketing too.
The Minimum Viable Airbnb Business
You may feel excited about all this Airbnb business model. The problem is, you may not have the budget to start yet. Maybe you don’t know how you will handle such a responsibility.
You’re in luck. You don’t need to add fifty different features to sell well on Airbnb. You may not even need to rent a property until you find a guest. Sure, it sounds impressive to own a property with all amenities, appliances, subscriptions, and soft goods. But the most minimalistic travelers may not need everything you listed.
Why pay for stuff you won’t use when another property has just what you need for a lower cost? After all, travelers come to visit the city and live experiences, not watch Netflix on a Smart TV.
Of course, this approach will not attract everybody. You need to define your target customer. If your property offers what they want exactly, they may book with you rather than choose an all-in-one property. By sticking to the essentials, you can do it for $2000-$5000. If it costs you anything less, consider adding more features.
AVOID These Listing Mistakes
You can offer the best property in Airbnb. If you don’t know how to communicate the value right, nobody will book. Or worse, they may take you for a scammer.
You worked so hard on this property. Why isn’t anybody booking yet? There’s a problem: the best way for guests to trust you is to pay and visit the property, but that’s a risk by itself.
Before you worry about the details, make sure you don’t make these mistakes, or people won’t even look at your listing photos.
#1 Take verification seriously
It’s normal that the beginner Airbnb host wants to start receiving guests asap. One may think that, as soon as you can publish a listing, you can get customers. Possible? Yes. Likely? No!
Understand that pricing may not be the problem. But Airbnb has so many horror stories and fake listings flooding the site that people can’t trust new sellers without verification.
We get it. Nobody likes to waste time (“we’ll review and respond in X business days”) sending documents, only to be rejected and try again next week. We suggest completing all the verification steps as the first step to establish minimal trust. What do you think that tells customers about you? If you don’t bother about completing the profile, they may expect you to treat your property and guests the same way.
Besides, we don’t think there’s a way to become a super host without doing so. Yes, that’s how they call the most booked (and reliable) people on Airbnb.
#2 Honesty over idealism
As sellers, we fall in the trap of thinking that more sales mean more money. But when comparing revenue with reviews, you’re comparing linear with exponential ROI.
Your sales grow in proportion to the amount of effort or money (ads) you spend bringing new guests to your property. But your reviews work as a multiplier: get the best feedback, and people will fight to book with you. Have none, and it may take you 100x more work to attract guests, even if it’s free.
Unfortunately, getting reviews takes as long as it takes to build a relationship. But consider this multiplier factor. What is better: get more sales with average reviews, or get five-star reviews from fewer people? Over time, the former will get fewer reservations, while the latter will become more profitable.
Believe it or not, pictures taken by you bring more confidence than professional wide-angle photos.
How do you avoid bad reviews? You don’t let the wrong people book with you. Instead of talking high of your property, you create an honest, polarized description of your listing to attract specific people. Use your listing and reviews so that people don’t end up buying something they don’t want. If you aren’t getting enough customers, that’s a different problem.
#3 Underestimating renovations
Just because you need to be honest, it doesn’t mean you should disregard your first impression. You’d better get it right the first time: otherwise, it becomes your last impression.
In theory, making money on Airbnb should be as easy as maintaining a second home. But you shouldn’t treat it exactly like your home. It’s like comparing casual and formal.
What do you do when something isn’t right with your home? Like many, you may not think much of your appliances or furniture, even if they have over a decade. You know: don’t fix what’s not broken. Even when it does, you may take days or weeks delaying the repair.
Chances are your guests treat their homes the same way. But what do you think will they say when reviewing your property? Anything less than optimal communicates low lodging quality. Given that your guests make you money, it’s not unreasonable to improve their property more than your own home (even if you’re renting a room).
Think of all six-figure Airbnb businesses out there. One permanent bad review later may cost you more than a renovation made now.
#4 Don’t try too hard to get reviews
Everybody has thought of tricking the system for a few five-star reviews. With the help of friends and family, you can gather five to ten of them. Just don’t think guests don’t know about it, and neither expect it to bring more reservations.
Although you can’t sell without positive social proof, it’s not enough to stand out. Before you start receiving guests, you should have a transparent method to show your property and establish trust. Many guests may value these more than unnatural reviews:
- Respond instantly whenever a guest shows interest or asks a question.
- Show yourself open for interaction. Some people may prefer to reach out via social media, while others prefer video calls.
- Make a video of you showing the property and sharing basic features, rules, suggestions, and contact information.
Make it easy for guests to know what to expect. Because of your transparency, they can make an informed decision based on your honest review.
Best of all, informed customers recognize both the good and bad of a property. If a competitor, scammer, or blackmailer leaves you an unfair bad review, other users will deny it, report it, or defend you.
#5 Don’t forget to prepare for the worst
Guests may feel nervous because they don’t know how hospitable the host is. But owners should be more concerned since they’re letting dozens of strangers live in their place every month. Before Airbnb makes you big money, you may go through at least one terrible experience.
Due to uncertainty, one has to prepare for the worst while expecting the best. If you have an emergency plan in place, insurance, and know how to leave the guest without harming your reputation, you have nothing to worry about.
It may feel more frustrating on Airbnb, but everyone deals with these situations in any successful business, no matter the sector or model.
Accept you won’t make profits from that one stay and do your best to minimize damages to take the next opportunity.
#6 Make it official and compliant with the law
Each state may apply different regulations to define what you can or can’t do when renting. For example, New York considers it illegal to rent for less than 30 days when the owner is absent from the property. For other states or countries, this may not be a problem.
The matter is so specific that it may take us another article to cover the ins and outs of Airbnb conditions. The fastest way to resolve a specific case is to ask Airbnb, an attorney, or the online community.
Before you get the first property, research about the licenses and taxes you’ll need to cover.
You only have to ignore one small rule to receive a fine of over $2,000. Consult an expert to make sure you didn’t forget anything.
#7 Don’t lose their attention.
With so many listings out there, it can be hard to get noticed on Airbnb. Almost every host has good reviews and professional pictures. But what they may not have is a convincing selling point.
If you have one, make sure it’s the first thing you mention. It could be the location, some amenities, a cash refund policy, fast connection, free subscriptions, maintenance staff, whatever.
After you organize and optimize your listing description, mention this selling point and place it in the first line. This feature will get people’s attention, and everything else they read later will likely leave them a good impression. It may be the only reason they clicked on your ad.
Ideally, you want to show your potential guests the main benefits of the property, even if they don’t click on the listing (which will be the majority of them).
When writing the title, use all the space available, but place the best features first: location, selling point, property type, adjective, purpose (e.g.perfect for party groups, concerts, lodging for seminar events).
#8 Avoid dull descriptions
You should reach the maximum character number of any text field to rank better with Airbnb’s algorithm. But you shouldn’t write the typical filler description everyone skips. You want to cover all the features without being redundant.
We don’t think descriptions will make or break your business since most guests will contact you to make questions anyway. But without a compelling message, they won’t consider you in the first place.
Hire a copywriter or get more creative with visual, descriptive adjectives. Avoid the overused “beautiful, nice, premium-quality, fantastic, really,” among others. Try contemporary, breath-taking, luxury, king-sized, custom-built, landscaping, or remodeled.
Visual words help your guests imagine themselves in your property, making it easier to feel like home and book.
#9 Don’t forget about your guests
Although they come to stay in your property, it’s an opportunity to meet interesting people. Keeping good relationships may not fix the defects of your home, but guests may be more considerate when rating their stay.
Guests may be kind with hospitable people by leaving four and five-star reviews but then talk in person about what they don’t like or should change. Be available for them to contact whenever they need it and leave good guest reviews. They may return you the favor.
It may not be what they were looking for, but you can still offer superior quality service to avoid a negative experience.
#10 Don’t “set and forget” this business
It’s amazing how passive Airbnb can become when having so many automation tools. But you still need to do minimal maintenance to manage the staff (if any) and update prices.
Every month or year, make a price calendar based on the holidays, travel season, and demand. Optimize your profits by raising prices on demand, still getting enough guests to cover the month.
#11 Don’t stop at Airbnb
Let’s fast forward a few months. Imagine you succeeded with your first property. What comes next? Research for other locations and list them on Airbnb as well. Repeat.
After doing so a dozen times, you may find it harder to grow your revenue. After all, you can only increase it linearly by adding new places.
But if you ever get that good at rentals, you may not need Airbnb anymore. Why pay over 10% in commission when there are better sites out there? One day, you could create your own website with guests and pay no commissions.
The most successful do this but still appear on 3rd party sites to boost visibility.
In fact, the ultimate objective of any side hustle is to regain control. Unless you run the place, you don’t own a real business. Besides, Airbnb is well known for shutting down super hosts for no good reason (permanently).
By the time you reach that level, you’ll probably be thinking of bigger things than Airbnb. Or just supplement that business with another passive income so that you don’t rely on one basket.
Unusual Ways To Get Clients For Your Property
In case you didn’t notice yet, listing your property will not get you, clients. It takes a few minutes to open a host amount and a few more to post a listing. If you’re faking or duplicating listings, it may take a few seconds.
Airbnb has over ten million people. At least 4 million of them are hosts, and around 14,000 join every month. Do you expect a brand new listing to stand out from the other 7 million? Assume in a conservative scenario that 1% of them could be ranking for the same keyword you are: thousands of hosts competing.
Hopefully, you know more about getting clients than the majority who just wait and hope for guests to call them. Give a chance to some of these strategies, and you may grow your traffic in a few weeks:
#1 Become a guest!
Be honest: we are more likely to read bad reviews word by word than listing descriptions. Why do we trust reviews so much? Because customers trust other customers who think like them.
If the profile shows you as an experienced traveler, that may get people out of the doubt and book your place.
We recommend you reserve the best listing you can find. While you’re on vacation, you can see first hand what other super hosts do differently, why they have so many reviews, and how you can copy those features creatively.
We can only teach you so much with articles, after all. Superhosts will give you the most accurate advice for success.
#2 Rank with Airbnb’s search algorithm
It’s common knowledge to optimize and advertise listings. But some people have heard of hidden mechanics that may give you an edge.
- A high and fast response rate
- How often you log into the app (preferably daily)
- When you update your booking calendar
These may give you the boost you need. But if you’re promoting a low-quality property and listing, don’t expect these tricks to save the business.
#3 Offer one and two-night stays
If you do what others won’t do, you’re getting an unfair advantage. We know many people who may want to stay for a few days only, but the minimum night stay is over two days.
Because of their size, bigger Airbnb businesses may consider short stay unprofitable or inefficient for SEO. But as a brand new host, it can become your selling point. You can use it now to build rapport with the community, and then stop doing it if you want.
#4 Get free advertising from happy guests
When your guests leave and thank you for the stay, you can ask them to share their experience in social media. Most satisfied guests won’t mind doing it. Most travelers have memory books showing the best of their trips.
If people love your home, chances are they have shared on social media already. It doesn’t hurt to ask for feedback anyway.
#5 Set referral offers
You will get more clients when you start seeing guests as communities instead. If a customer refers a friend, anybody from his circle will likely love the property too, or at least have high expectations.
“Would you like to refer friends to book a few nights here? For every reservation you get, we can offer a 30% discount on future bookings.”
If they liked the place, they might want to come back or invite people. So that people can share it, you could create a shortened link with a catchy title linking to your listing.
#6 Ask influencers and travel bloggers to stay for a discount
You can find blogs of people who have traveled over 50 countries. Give them a nice place and an offer they can’t refuse: they may find a reason to visit your city.
The only condition, of course, is to document, review, and link to your listing. Since influencers work on commission, you could as well them the way you do with referrals.
At the very least, you will get reservations and more reviews, which grow your revenue long term.
#7 Leverage with paid traffic
If you’re going serious with this rental business, the best time to build a customer base is now. It takes time to create a reputation, but the leverage you can get from other people is ridiculous.
With generous profit margins, you can run ads and create an email list. Why would people join? So that they can be the first ones to get your best deals and get insider updates about Airbnb.
If you send traffic to a website, it would be a crime to forget about retargeting campaigns. What these do is “pixel” every person who has visited your site.
Now, whenever these targeted people visit any website, they will see your Airbnb advertisement.
But before you get excited about scaling, make sure your listing is profitable already.
Five Hacks To Automate Airbnb For Passive Income
After funding the business and doing all that work, your business finally works. Not many hosts can say that about their properties, so congratulations.
Whether you want to keep expanding, retire, or try other businesses, you can’t do it if you spend all your time managing Airbnb. If your properties make enough profit, you can use that money to buy time.
#1 Upgraded images
There are two types of professional images, and most Airbnb pictures are the first type. In other words, they choose the best angle, add some filters, and give the best appearance to each room.
Then there are wide-angle photos or 360º images. The latter allows guests to do a virtual tour around your house. This way, instead of looking at pictures skeptically, they can check every corner of the house with detail. Of course, the 3D view should reflect the updated version of those rooms.
If that sounds too complicated, make a Youtube video to attract potential guests. But not those lifeless picture slideshows: record yourself showing the property as a realtor would do. You don’t need to be formal, only conversational and honest on your review. Do talk about your experience with past guests.
#2 Create an email list
Friends listen to their friends. If you get thousands of people to trust you, you can sell them anything with a very high chance of conversion (as long as the product has real value). Use every opportunity you have to expand your network and community.
Once you can afford more properties for your rental business, you can use this list to promote whenever you get a new one available. When the business is moving slower, you can share a promotion with your contact base and get reservations.
Later, you could use that list for other businesses because of the loyalty you’ve created. Or you could sell it to other Airbnb hosts.
#3 Automated check-ins
With platforms like Everydoor.io, you can receive guests and handle them the property keys without having to be there in person. Yes, you could also ask someone to do it, but you neither need to rely on other people in this case.
These smart locks allow guests and staff members to access after verifying their identity on the phone. A simpler but riskier variation is to set up a pin code on a keypad instead.
Not only is it automated but works better than keys. You always know who’s accessing your property and get notified whenever your guests are having issues.
You can program when each person can enter, so that the cleaning service doesn’t enter when guests are at home, for example.
#4 Hire contractors on demand
It’s unrealistic to expect your house to meet all guests’ expectations. Funnily enough, maintenance issues always come up in the worst moment. BUT you could use it as an opportunity to show people who quickly you can solve those problems.
Imagine a pipe is blocked, the wifi is glitching, the AC stopped working, the dishwasher got stuck, or a lamp went out. What if, as soon as you got the message, you called an emergency number, the staff arrived at the place and solved everything within the first hour? Many would consider it impressive: not even hotels do that.
Rather than stressing for the whole day, just call the right people. Or leave them a list with those emergency numbers.
Think of everything that could go wrong, and get a trusted group of professionals ready to help at any time. Superior service can and should be one of your selling points.
#5 The Last Touch
What’s left isn’t hard to do, but guests will appreciate it a lot: Internet service and a welcome book.
Getting a fast connection and subscriptions can make the place feel more comfortable. Maybe your travelers want to relax at night or work from home for a few days. Yet, many hosts overlook this simple upgrade.
If you add a welcome book, guests can find all the references they need without having to call the host every time. You can add the rules page, troubleshooting tips, FAQs, transportation schedules, places to visit, emergency numbers, even a summary of everything included in the property. On the last page, you can ask them to leave you a review.
Now, if you put all that work on your guests, how do you think they will feel? You’ll certainly get more reviews.
Although this business requires money, time, and attention, you don’t need the fortune to start making passive income from rentals. And no matter how much you invest, there a few factors that only depend on you: how you treat your guests or promote the listing.