How To Get Started With Airbnb

Interested in learning how to start an Airbnb business? Then you've come to the right place.

In this article we will show you the 9 steps to buying a profitable vacation home rental property and becoming an Airbnb host.

Make sure to also watch our most recent real estate video to learn more on the subject of how to become an Airbnb host:

Step #1: Decide on a Budget

Whether you plan to invest in a traditional rental property or an Airbnb rental, the first step is to calculate how much money you can afford to spend on an investment property. To do this, you have to look at your savings as well as how much money you expect to be making in the coming years.

As a beginner real estate investor, it is important not to leave yourself with zero cash reserves as anything can happen in the world of real estate investing. For instance, you can face an unexpected repair issue with your Airbnb income property or you might experience a below-average Airbnb occupancy rate for a few months, similar to the situation caused by the Coronavirus pandemic.

That's why when you start an Airbnb business, you should plan ahead. You need to make sure not only that you can purchase an investment property now but that you can also take proper care of it and continue covering the monthly mortgage payments in the future.

Step #2: Choose the Best Real Estate Market for Starting an Airbnb Business

The next step in how to start an Airbnb business is to select a location. As you already know as a real estate investor, location is one of the most important factors for the success – or failure – of your rental business endeavor.

When deciding on the best places to invest in real estate properties to rent out on a short term basis, you should look for the following indicators:

Tourism : The top Airbnb locations are home to numerous tourist attractions and tourist activities. This means that there will be a large number of visitors year-round which will assure high Airbnb daily rates and excellent Airbnb occupancy rate, which are the two most important factors for the rate of return on short term rental properties.
Economy and business : The best US housing market for buying an Airbnb investment property is also characterized by a strong economy and by constituting a business hub. This means that the location will attract numerous not only domestic but also foreign business travelers, many of whom prefer the comfort of vacation rentals over hotels.

During your real estate market analysis in search of the top location to start an Airbnb business, don't limit yourself to large cities only. Check out small towns as well since sometimes they emerge as more profitable destinations for real estate investors than major metropolitan cities. For example, Airbnb Joshua Tree has been one of the best places to invest in a short term rental property for years, according to nationwide real estate market analysis conducted by Mashvisor.

Step #3: Study the Local Airbnb Laws and Regulations

After conducting rental market analysis and choosing a few top locations for vacation home rentals, you should familiarize yourself with the local short term rental rules. In response to the rapid growth of the home sharing industry in the past decade, many US cities and towns have adopted restrictive legislation in an attempt to limit the further spread of short term rentals and protect the local population. As a result, vacation home rentals have become illegal in many locations, while in others they are strictly regulated.

Related: Is Airbnb a Good Investment Considering All the Regulations?

That's why the next step in the process of how to start an Airbnb business is to check out the rules and regulations governing the local short term rental industry. You need to choose a place where renting out an entire property in the absence of the owner is allowed for the entire year. These are known as non-owner occupied short term rentals, meaning that you can buy an investment property for the sole purpose of renting it out on Airbnb.

If you are not certain where to start, you will be happy to hear that the State of Florida has relatively less severe Airbnb laws and regulations than other top tourist destinations like California.

Related: The 20 Best Places for Buying a Vacation Home in Florida in 2020

Step #4: Search for Appropriate Investment Properties for Sale

As soon as you have chosen the best location for investing in an Airbnb rental property in the US housing market, you should get into investment property search. Savvy real estate investors use multiple sources of real estate listings when searching for the best properties to buy. These should include MLS listings (which you can traditionally access only through a real estate agent or broker), real estate investor websites, "For Sale" sales in the neighborhood, and your network.

If you want to streamline your rental property search process, you can sign up for Mashvisor. Our real estate app gives you access to hundreds of thousands of available investment properties for sale in the entire US real estate market. The listed properties include MLS listings, foreclosures, short sales, bank-owned homes, and off market properties listed by other users.

Importantly, each property listing is accompanied by readily available Airbnb investment property analysis showing you how good of an investment opportunity a certain property is. Our real estate investment tools make out of state real estate investing easy and feasible even for beginners. You can search for profitable Airbnb rental properties for sale in any market without having to visit the location and conduct comparative market analysis and rental market analysis.

Search #5: Analyze the Return on Investment on Airbnb Rentals

The next step in how to start an Airbnb business is to analyze the rate of return on the rental property which you are planning to buy. You should conduct rental property analysis on a few of the most promising listings which you found during your property search.

Typically, using Airbnb spreadsheet for analysis requires months of Airbnb data collection, gathering, input, and analysis. By the time you are done with the analysis and ready to move forward with the purchase, all profitable opportunities will be gone.

Since the emergence of the Mashvisor real estate investment software platform, things have changed. Now you can quickly and efficiently analyze any residential property in the US housing market with our investment property calculator to see what Airbnb occupancy rate, Airbnb income, Airbnb cash on cash return, and Airbnb cap rate you can expect on our Airbnb analytics platform.

Related: What's the Best Airbnb Data Analytics Platform for 2020?

The properties listed on the Mashvisor real estate investor website come with readily available analysis. For off market properties which are not listed on our platform, you can simply enter the street address, and you will get access to the rental property analysis.

Related: The Airbnb Profitability Calculator: The Best Friend of the Short-Term Rentals Investor

For both experienced and beginner real estate investors, it is important to know that all numbers and figures are based on rental market analysis and Airbnb rental comps.

Step #6: Buy an Investment Property

You have done everything to be ready for buying a rental property with confidence that it will bring you a positive cash flow and a high return on investment. If you are an experienced real estate investor who is now switching to starting an Airbnb business, you can purchase the property on your own.

However, if you are just getting into real estate investing, you might want to consider hiring a real estate agent to help you out. Buying an investment property is a somewhat complicated process for someone with zero previous experience. An agent will be able to negotiate the best possible price for you and close the deal quickly. Meanwhile, you don't have to worry about increasing the closing fees as agent fees in the US real estate market are paid for by the property seller, not the property buyer.

Step #7: Fix Up the Airbnb Property

Next in the process of how to start an Airbnb business is to make sure that your short term rental property is in a good rentable state. During the home inspection before buying the vacation home rental, you should have gained a good understanding of the current state of the property and what repairs are needed before you can rent it out on Airbnb.

Now is the time to implement those fixes. Don't overdo it. Remember that this is not your home but an investment property. At the same time, you should assure that it is in as good a shape as other Airbnb rental listings in the neighborhood so that you can ask for a decent Airbnb daily rate and achieve a high Airbnb occupancy rate.

Step #8: Choose the Best Short Term Rental Platform

Although short term rentals are commonly referred to as Airbnb rental properties, Airbnb is not the only website where you can list and market your vacation home rental. There are dozens of other home sharing platforms such as VRBO, Booking.com, and many others.

As a first time Airbnb host, it is important to explore a few different websites and choose the best one for your particular case. Check out whether they have a listing fee or you only pay a percent of your bookings. Make sure that you know exactly how much you will be expected to pay and what you will get in return for this fee.

Step #9: Create a Listing

The last step in how to start an Airbnb business is to list your property on the platform or platforms that you have chosen. Remember to use high-quality photos which show your Airbnb rental in the best possible way and highlight its advantages over other similar short term rental properties.

In addition, write a truthful description which emphasizes the experience – not only the property – which you offer. Talk about local attractions. Don't exaggerate because the last thing you want as a new real estate investor in vacation rentals is to disappoint an Airbnb guest and get a negative comment.

In terms of listing price, choose an Airbnb daily rate which is comparable to the average rates in the area or even a bit below. It's important to get the first few reservations and Airbnb guests as quickly as possible and make your guests happy so that they give you positive reviews and ratings. This will help you achieve a good Airbnb occupancy rate which is one of the most important factors for good Airbnb rental income, cash on cash return, and cap rate.

This is how to start an Airbnb business in 9 steps. According to nationwide real estate market data analysis by Mashvisor, in the vast majority of markets Airbnb rental properties offer a significantly higher return on investment than traditional investment properties. Buying an Airbnb property is totally worth it. To get started, sign up for a 7-day free trial of Mashvisor to search for and analyze Airbnb rental properties across the US.

Daniela Andreevska

Daniela is Marketing Director at Mashvisor. She has been writing about real estate investing for a number of years. Previously, she worked in economic policy research and fundraising. Daniela holds a Master degree in Middle East and Mediterranean Studies from King's College London.