Comprehensive Guide: How to Start an Airbnb

Michael Van

Published:

September 17, 2024

Traveling in 2024 has evolved significantly. As more people rely on platforms like Airbnb and VRBO to start an Airbnb or book short-term rentals, the way we choose accommodations has been transformed. Two decades ago, travelers were limited to hotels, motels, and resorts, often missing out on unique, personalized experiences. Today, short-term rentals offer a diverse range of options, from cozy apartments to luxurious villas, and emphasize unique experiences and interesting neighborhoods. This shift has redefined the travel industry, providing more tailored and flexible accommodation choices that cater to various preferences and 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.

Ready To Start Your Short Term Rental?

1. 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.

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. 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.

2. 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 an Airbnb.

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 1 million short-term rental units available on the U.S. market, there are many data points that can help you when you start an Airbnb and figure out how your space fits within the competition. Whether there are many units or none, this will help you determine the right price point. Neither option is easy, but there are strategies you can use depending on the situation. To analyze short-term rental data in your market when starting an Airbnb, take a look at the analytics tool from AirDNA.

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

When you start an Airbnb, understanding the target market involves three key factors: who is most likely to book your space, what they are willing to pay, and how you can create the best possible experience to keep your calendar filled with bookings. As mentioned, knowing the competition in the area will help you identify the target market for your Airbnb and how to stand out.

For instance, if your space is in a resort or cottage region, you might target families on vacation, friends seeking a relaxing getaway, or professionals who can work remotely. Each group will have different needs and preferences, which you can cater to based on your focus. Perhaps it’s a vacation rental optimized for remote work with dedicated workspaces and high-speed internet, or it could be a family-friendly space with bunk beds. Designing the space according to the anticipated target market will help set your Airbnb apart.

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.

3. Preparing the space

Designing for your guests and region

Now that you’ve done a lot of pre-work to start an Airbnb, things are getting real. Most of the previous steps were part of the research and planning phase, but now the implementation stage makes it a reality. This phase can be overwhelming and expensive, so it’s essential to break things down.

Assuming you’ve secured your space and completed research on your target customers and market, designing the rooms can be more of a checklist function. You’ll need to have the following furnishings at a minimum:

Living Room

TV
Lighting
Coffee table
Sofa, sofa bed, or sectional

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

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

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.

Other items

Starting an Airbnb can involve meticulous planning, but it’s important to remember that things may not always go as expected. As a host, preparation is key. Even with a great space, a solid check-in process, and clear expectations, issues can arise. A simple FAQ one-pager can be a lifesaver, saving you time and ensuring a smoother experience for your guests.

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 2 key elements:

Photography
Descriptions

Photography

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

Descriptions

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

4. 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.

Start a design project for your Airbnb!

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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