an airbnb home with a pool

Comprehensive Guide: How to Start an Airbnb

Traveling in 2023 has changed. Short-term rental platforms like Airbnb and VRBO have revolutionized the way travellers book their accommodations. Twenty years ago, travellers were limited to hotels, motels, and resorts. No unique and personalized experiences. Limited options. Short-term rentals have changed the travel industry. From cozy apartments to sprawling villas, short-term rentals can cater to different traveler needs. As the traveler’s preferences shift towards more choice and flexibility, there are more opportunities for setting up short-term rentals. This is a detailed guide on how to start an Airbnb.

In this article, we will cover these topics:

      • First steps to start an Airbnb

      • Starting the process

      • Getting to work

      • Start hosting

    FIRST STEPS TO START AN AIRBNB

    Setting Expectations

    The first step in the process is setting expectations. Will this be passive income or is the goal to transition completely to being a short-term rental property manager? Have you evaluated the financials Understanding your goals will help guide you to determine the best path forward.

     

    Making the choice between Short-Term Rental and Long-Term Rental is a tough one.
    Both have pros and cons.

    From a passive income perspective, the choice of short-term rental versus long-term rental is important to understand. Traditional 12-month long rentals have more protection from a local law and regulation perspective as it’s a more established form of rental. There are large single and multi-family property management companies that have created successful businesses around this form of rental. Short term rentals on the other hand is a new-ish class of rentals. In a relatively short period of time since Airbnb started in 2007, it has continued to gain traction and become increasingly popular with over 1 million monthly rental units available in the US. In comparison, there are about 5.4 million hotel rooms available. Regulators only recently have started to establish local laws and regulations around short-term rentals [ Example article]. This presents an opportunity to enter an industry at an early stage to capture more value as long as the proper steps are taken.

    Understand the risks

    When becoming an early entrant, there are of course associated risks to it. Always remember that in the event you feel unsure or have questions, please consult lawyers and professionals to make sure you’re on the right track. There are several things to be aware of as we think of potential risk.

        • Property damage

        • Preventing guest injuries at your rental

        • Theft of personal belongings

        • Squatters taking over

      These risks can be mitigated but you do need to be aware of them to address them accordingly.

      STARTING THE PROCESS:

      After doing the initial assessment and research, you can start the process. It can be overwhelming and exciting but we highly you spend more time understanding the whole process first. Do not rush into it. There are 3 key things that need to be completed before you start hosting.

      Choosing the space

      Whether it’s part of your space or an entire new one, you want to do your research. What is the startup capital that you have available? How many people could you comfortably host in the space? Will it be an apartment unit or a house? The more people that stay in the unit, the higher the upfront and maintenance costs. For example, you may have a 1-bedroom apartment which will include a queen or king sized bed with a living room that has a sofa bed and a small dining room. On the surface, the most optimized answer is that this unit can sleep up to 4 people. While the space can host 4 people, this also means 3 sets of towels per person, 3 sets of bedding for each sleeping space, and enough cutlery for them as well. There is also additional laundry that needs to be done when there’s 4 people using the space instead of just 1 person.

      Two other key things to consider are the competition in the area and the target market.

      Competition

      With over 1M short-term rental units available on the US market, there are a lot of data points that can help in figuring out how your space fits in with the competition. Whether there are many units or none, this helps you determine the price point. Neither make it easy but there are strategies that you can use based on the situation. To analyze short-term rental data in your market, take a look at the analytics tool from AirDna.

      how to get started with hosting on airbnb

       

      Short-term rentals aren’t just for budget travelers. Professionals, families, and couples all use Airbnb and other STR platforms

      If there are many units in the area, you’ll need to start segmenting them to understand how you can differentiate your space from the others. If you notice clusters in the area, does it make sense to target a different demographic or to do the same?

      Let’s just say the space is in Gainesville, Florida. It’s in close proximity to a university or college and most of the guests are visiting for collegiate sports on weekends and willing to pay $200 a night for a two bedroom apartment. Does it make sense to compete for this customer segment or design for business travelers to differentiate from the other units? It, like other businesses, will be a decision that you’ll need to make. It could go to the extreme in either direction or tilt more to one side than the other. Understanding the community in which your space is located will be instrumental in how you design the space, which we’ll discuss later on.

      Short-term rental hosts a wide array of guests. From people traveling on business trips, vacations, or just passing through, each group has a willingness to pay range and optimizing the unit will allow you to maximize your income potential. Designing for the customer and making sure there is strong value being provided to your guests is important. Choosing a target market doesn’t necessarily deter other segments from booking your space but it will help forecasting your rental income and expenses.

      Target Market

      Within the target market, there are three important factors – who is most likely to book your space, what are they willing to pay, and how can you create the best experience possible for them to keep the bookings filling up the calendar. Like we just mentioned, understanding the competition in the area will help with what target market you’ll be wanting to attract to your listing and how to differentiate.

      If your space is in a resort or cottage region for example, you could be targeting families on vacation, friends looking for a relaxing getaway for the week or weekend, or in today’s new work environment, a group of professionals who have flexibility in their work situation to be able to work remotely. Each target market group will have their own requirements or preferences that you could cater towards, depending on the price point and group you’ll like to focus on. Perhaps it’s a vacation short term rental that has spaces where you’ve created work areas and got high speed internet for remote meetings. Or maybe the vacation rental will be focused on families so you’ll have bunk beds as sleeping options. But designing for the space will lean into what you anticipate as the target market for the area.

      Building your financial projections

      Ultimately, operating a successful short-term rental listing is going to be about understanding the numbers. Whether you have a financial background or not, you’ll want to do the number crunching to ensure that you’re putting yourself in the best position possible to de-risk your time and financial investment into this endeavor.

      There will be a few key areas to build out your assumptions. Please make sure these are included in your forecast. We recommend having at the minimum these in your checklist:

      By putting together these assumptions into a financial model, this will create sophistication that will help you determine whether it will be just the one unit you manage or if it financially makes sense, to scale the operation.

      There are some great templates out there that you can leverage. Furnishr does have one here that you can use to start.

      PREPARING THE SPACE:

      Designing for your guests and region

      Now you’ve done a lot of pre-work, it starts getting real. Most of the steps leading up to this point are part of the research and planning phase. Getting to the implementation stage is where it becomes reality. It can become overwhelming and expensive so it’s important to break things down.

      Assuming that you’ve secured your space, completed the research on the customer and market, designing for the rooms can become more of a check list function. You’ll need to have furnishings for the follow as a minimum:

          • Living Room
                • Sofa, sofa bed, or sectional

                • Coffee table

                • Lighting

                • TV

            • Bedroom
                  • Bed frame

                  • A good mattress

                  • Dresser

                  • Nightstand

                  • Bedding

                  • Lighting

              • Kitchen Essentials
                    • Plates and bowls

                    • Cutlery

                    • Cups, glasses, and wine glasses

                    • Can opener

                    • Pots and pans

                    • Cooking utensils

                    • Toaster

                    • Kettle

                • Bathroom Essentials
                      • Hair dryer

                      • Bath towels

                      • Hand towels

                      • Hand soap

                      • Shampoo and conditioner

                      • Body wash or soap

                      • Toothpaste

                      • Mouthwash and disposable cups

                      • Extra toilet paper

                We dive deeper into the furnishing checklist here as look at the needs to get started.

                In terms of designing for the audience, the personalization of the space is important in creating a unique space and experience. Designing a space for the target market that the space is focused on will definitely help with that. Here are some ideas.

                Family Vacation Guests

                Most family-friendly places will have the basics. Going above and beyond will set your place apart from your competitors and create a great experience for your guests. There are features that often get overlooked but would be advised to consider. Here are some ideas:

                    • Safety

                      • Outlet plugs

                      • Nightlights

                      • Non-slip bath mats

                      • Bath tub spout cover

                      • Stair gates

                      • Sunscreen

                      • Flashlights

                        • Kid-Friendly Items
                              • Baby bath tub

                              • Childproof dishes, silverware, and sippy cups

                              • Bottle Warmer

                          • Cleaning Supplies
                                • Broom and dustpan

                                • Mop

                                • Vacuum

                            • Low-tech Entertainment
                                  • Boardgames

                                  • Deck of cards

                                  • Activity books

                                  • Books

                                  • Sports equipment

                                  • Season outdoor equipment or Yard games

                            Check-in and Check-out Processes

                            As part of the setup, it’s highly recommended to implement a way to check in guests in a more streamlined manner. Whether it’s using a lockbox or opting for a smart lock, it will minimize situations where guests lose the key and having multiple spare ones handy. 

                             

                            Smart Locks are a great way to streamline the check in process.
                            [Smart Locks featured by BBC Science Focus]

                            Other Items

                            While we can plan and hope for everything to go according to plan, in reality, it rarely happens. It’s important for you as the host to prepare. We’ve gone through the process of creating a great space, having a check-in process, and setting up your expectations, things can still go astray. Having a simple FAQ one-pager will save you a ton of time and your guests will appreciate it.

                            Marketing

                            Before you list, like most things, marketing is going to be one important aspect of creating demand for your listing. The marketing efforts will consist of 3 key elements:

                                1. Photography

                                1. Descriptions

                                1. Reviews

                                  1. Photography

                                 

                                A decluttered living room photo improves click throughs from prospective guests.

                                Getting good photos is essential for the listing. You don’t need to have 100 photos that a platform like Airbnb allows. It’s better to have 10 great photos than 50 grainy ones. So how can we take the best Airbnb photos? Here’s a quick checklist:

                                    • Clean and declutter

                                    • Stage each room

                                    • Shoot the photos with lights on and during the day

                                    • Frame photos to include corners to add more dimensions

                                    • Add a 1-2 photos of amenities but not too many

                                    • Add photos of the neighborhood

                                      1. Descriptions

                                     

                                    Here’s an example of an Airbnb listing with a 4.99 rating.

                                    Listings that have good descriptions are able to market the listing without having to be selling it all the time. It’s becoming increasingly important to put this together earlier in the process so that you’re able to attract potential guests as soon as the listing goes live. Here are some tactics that will help in creating descriptions that will create a good first impression.

                                        • Present clear information about the property towards the target audience

                                        • Anticipate the negatives instead of avoiding it

                                        • Title for the listing should be unique

                                        • Use an intuitive description structure so potential guests can follow along

                                        • Avoid over-selling the space to set expectations and generate positive reviews

                                        • Test descriptions and titles to see what works best for occupancy rate and for the type of guests that it’s attracting

                                      Start hosting!

                                      Once the space is listed, your time will shift towards how to ensure the listing increases its booking rate and maintains it. Managing against potential risks is also important. Especially early on, it might seem like a good idea to start booking long term bookings over 30 days. But it has been shown to be a potential squatter scenario. Focus on starting with shorter stays to get to know guests and have some guest turnover to develop guest turnover processes.

                                      There you have it! Our guide on how to start an Airbnb and make it available for other short-term rental platforms as well. Have any other tips that we didn’t mention? Feel free to share it with our team at hi@furnishr.com and we’ll be sure to add it to this guide!

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