Last year, my friend Brian Page told me he makes six figures on Airbnb. Every year.
My reaction was, let's say… skeptical. So, he proved it to me and this is a summary of how you too can make six figures on Airbnb.
Airbnb is a hospitality company founded in 2008. It enables ordinary people to list their homes as accommodations.
I love staying in Airbnb's over hotels when I travel because unlike staying in a generic hotel, Airbnb's let you experience the flavor of a town without paying $64 for a cup of coffee and a fruit plate in the morning.
The local hosts can connect you to events and give you the inside scoop on the town.
Here are my dogs Hank and Harper enjoying a sunny morning poolside at an Airbnb we recently stayed at in Palm Springs, California.
For people who live in popular destinations, it’s a potential goldmine.
36 percent of New York’s Airbnb scene is run by only 6 percent of listers, earning an average of $50.4 million as a group every year from 2010 to 2014.
No matter where you live, you can have a share in this lucrative market.
Here’s how you can start building your empire correctly and scale it for lasting success.
When you follow these steps you can make a killing off of Airbnb, without the madness of the Grand Budapest Hotel.
Become an Airbnb host—and do it correctly from the beginning.
First of all, take some time to research your area and the general tourist appeal.
Is there a busy season?
Are there plenty of hotels of different sizes and price levels?
You don’t want to enter a crowded market unprepared, limiting your earning potential.
But providing a lower cost or novel experience compared to the larger competition is not unheard of with Airbnb.
Once you’ve decided to become an Airbnb host, it’s time to make the first big decision: Will you rent one room in your house or your entire house at once?
Renting one room in your house may result in more frequent bookings, but you will likely have more personal interactions with the guests (i.e. running into each other outside the bathroom). This may not be appealing if you’re looking to be more of a hands-off host.
Allowing a guest to rent the entire house at once may result in a bigger payout up front.
But depending on location, bookings may be less frequent.
If this is a property you live in, frequent activity around vacating the house may cause more stress than desired.
You may also need to hire staff to check in on the property and/or clean it in your absence.
Once you’ve decided what type of property you would like to host, it’s time to start setting up the space.
Choose your price wisely.
The first important decision you’ll make is the price.
Research the prices for similar Airbnb spaces in your area and price your room according to your desire for turnover.
A cheaper rate may result in more guests, but that may require more upkeep to the space.
Airbnb’s Smart Pricing feature, should you choose to enable it, allows the price on your Airbnb rental to adjust automatically according to market demand.
This may be an asset if you live in an area with dramatic swings in tourist traffic.
Make the space inviting but not too personal. Invest in furniture for the space, but don’t spend so much that you end up with unreasonable overhead.
Adding hotel-like features such as a coffee maker or a portable fridge can make all the difference in making your guests feel at home.
Highlight the unique benefits of your space while being honest about the drawbacks.
Take pictures that highlight the appealing features of the space to your guests.
Be honest about possible drawbacks such as the distance between the room and the bathroom.
Be sure to highlight amenities, such as free WiFi.
This is one example of a feature that guests can specifically search for when exploring potential locations.
It’s easy to stand out in your area when you’re the only listing that offers a feature like locks on the bedrooms or free parking.
Think carefully about what unique offerings you can provide to guests that will set you apart from the crowd.
Can you offer breakfast to your guests? Do you have special insight into the goings-on of the neighborhood? Are you close to a transportation stop?
All of these may be appealing to potential guests.
Understanding the features of Airbnb will boost your ROI
Renting out spaces, by their very nature, have various levels of ROI.
However, Airbnb has many custom features and designations you can take advantage of to control it.
Feel free to set a minimum stay length for your guests to follow.
Bookings may be less frequent, but you may have more peace of mind about consistent payouts.
Not to mention the types of guests you may attract—if your guests are required to stay for at least two weeks, you may end up with professional travelers who aren’t interested in sabotaging or wrecking the space.
If Airbnb rentals are a true investment goal for you, a designation to aim for is that of Superhost.
These are the elite hosts of Airbnb, set apart by their high booking rate and prime customer service.
Guests searching for places to stay on Airbnb have the option of limiting their search to only Superhosts, as they are considered more trustworthy and consistent than all the rest. It’s a designation you want to have!
Airbnb hosts can also set themselves apart through the space offering itself.
The story of the man who rented out a basement with a hammock is well known.
But innovative hosts have also rented out sheds and refurbished covered wagons.
If you have a unique space that you can rework and make comfortable to guests, consider making it a second hosting space.
And if you're looking for financing to acquire more properties to grow your Airbnb empire or to provide cash now for future bookings, check out this article from Lendedu.
Use your friends’ or family member’s homes for bonus income.
This is my friend Brian's secret.
Once you have a profitable enterprise going with your home, ask around your network and see who also has a home that would fit the bill of a perfect Airbnb location.
Is your sister living in one of the top cities in America for Airbnb?
If so, would she like to make some extra money?
If you know the property in which you are offering accommodation and can provide pictures, there’s absolutely no reason not to offer up a property in another city under your Airbnb profile.
Just set up a system for checking in on the property between guests, and you’re set to go.
In negotiations, be sure to work out a payment percentage with the homeowners, giving yourself a majority percentage of the booking profits.
You’re bringing your expertise and your reputation to the listing—it’s your ranking as a host on the line.
You’re also giving a boost to the potential popularity of the listing by offering it under your name, as opposed to setting up a new account.
It’s definitely advised that you work with people you know and trust first before buying a property specifically for Airbnb profits.
Interest rates can drastically change when a property is explicitly purchased for investment, depending on the area.
If you desire to rent a space and use it to sublet, check the laws in the city where your rental property resides.
Protect yourself from future legal pitfalls.
Utilizing multiple properties also allows you to protect yourself from possible future laws around long-term Airbnb bookings (as seen in San Francisco, a popular Airbnb destination).
Spreading out your offerings, if done strategically, can make up for any lost income from long-term stays.
If you decide to use apartments as your Airbnb hosting space, ensure that you’re not violating laws around occupancy and illegal hotels.
You may need to have a primary occupant present while hosting a guest to avoid a fine.
You also don’t want to purchase a property for Airbnb rental only to find out that it’s illegal a year later.
Groups from several major cities have spoken out against Airbnb out of fear of gentrification.
New York instituted fees for people using Airbnb who violate neighborhood rules in the process of hosting others. Be careful!
Think like a hotelier, rake in the cash.
Success on Airbnb is a combination of research and gut instinct.
What works for your area, and what would make you feel at home in your city?
Research tourism trends to your city in the local news and plan accordingly.
If you’re savvy enough, you can be ready and waiting to welcome guests when the busy seasons begin.
Keep in mind that Airbnb is an unconventional investment form, and there is no set guideline on return on investment.
Your success (or failure) in running an Airbnb business is up to you. You have to be strategic and pick properties with a high potential for pleasing guests.
Running a successful Airbnb also requires consistent upkeep.
Maintaining a Superhost ranking alone requires consistent interactions with your guests.
The space you provide must be clean, hospitable and safe at all times.
Even if you’re only renting the space and subletting to Airbnb guests, you must treat the space as if it were your own personal hotel.
The future of Airbnb in certain cities is murky, and will likely contain more taxes for those looking to rent out spaces to travelers.
But keeping abreast of the law and providing a consistently positive experience for your guests may just earn you six figures in the Airbnb business!