How to Start an Airbnb Business Is one of your goals to purchase an Airbnb investment property, but you have no idea where to start? Well, look no further! I've outlined exactly how to research and purchase your first Airbnb investment property in this article. Read on to find the details on how to accomplish this goal and purchase your first Airbnb investment property. Why you should start your own AirBnb business The first benefit to owning an Airbnb rental property is making extra money. Starting an Airbnb business is a great way to bring in extra income each month. Most rental properties are much more profitable when rented out as a short-term vacation rental, rather than rented out per month. This means that the potential return on your investment in a short-term rental property is much higher than a long-term rental. Also, another benefit is that listing on Airbnb is free, and guests love to stay in a home and experience a local-style vacation, which means business is booming. You only pay Airbnb when your guests book a stay, and even then, the costs are minimal. Finally, Airbnb also protects the homeowner for up to one million dollars in damages from renters. Airbnb is a great platform to utilize when thinking about purchasing and renting out a short-term rental property. How does AirBnb hosting work In order to host a stellar Airbnb experience, make yourself available to your guests. Make sure you are responding quickly to messages, helping them check in, and making the property as comfortable as possible. You can use services like Guesty or Airbnbsmart to automate the process. If you really knock it out of the park with your guests, you can become a "SuperHost," which will help you secure even more bookings. In order to receive amazing reviews and become a "SuperHost," it's essential to have accurate descriptions of the property in the listing, keep the property ultra-clean by hiring cleaners, and have a quick response time to guest messages. How to start an AirBnb business if you don’t own property In order to start the search for an Airbnb property, you'll need to check with local zoning regulations first. There are some cities that do not allow short-term rental properties. Once you've established an area that allows Airbnbs, you can start researching the market. At Modern Lending, our CEO Brian Decker owns nearly a dozen short-term rentals and loves using Airdna.co. This monthly subscription helps analyze not only a specific city but also individual property addresses, letting you know the approximate annual income they can generate. Finding a location that drives tourists or business travelers year-round is essential to the success of the property. Furthermore, you'll need to establish a budget for your property. Calculate the costs of the property, mortgage, homeowners' insurance, taxes, utilities, and the cost of furnishing the property to decide what properties will be within your budget. Most investors aim for a 10% cash on cash return. This means if you invest $120,000 into the airbnb between your 15% to 20% down payment, closing costs, furnishing and permitting costs; you want to cash flow a minimum of $12,000/year after all expenses. This of course does not factor in the income tax benefits and appreciation on the home's value. Once those are added most investors get between a 15% and 20% cash on cash return annually. This sure beats the 3% to 5% the stock market aims to hit annually! Buying property and options at Modern Lending If you'll need a loan, look for a loan office that has experience dealing with short-term rental properties, like Airbnbs. As qualifying for and purchasing a short-term rental is completely unique when being compared to purchasing a traditional long-term rental home. It is very important the loan officer understands occupancy rates, average daily nightly rates, markets that are overheated (too much inventory) as well as has a referral network of property managers. This will ensure that everything is properly budgeted and that you are in compliance with local laws when it comes to taking out a loan for a rental property. At Modern Lending, every single one of our loan officers owns a primary residence, as well as at least one rental property. Working with us ensures that you will be working with a seasoned professional who knows the ins and outs of short-term rentals. How to start an AirBnb business as a property owner If you already own a property that you're looking to transform into an Airbnb, your first step is to check local zoning laws. About 60% of the cities in the U.S. either do not allow short-term rentals or have very strict provisions on them. Once you're good to go with local laws, you'll move into getting specific permits, licenses, and insurances to host a short-term rental at your property. Then, start planning how you will furnish and decorate the property to get it vacation-ready. Next, you'll need to create a listing for your property. Consider hiring a freelance copywriter and a professional photographer to help you create the perfect listing. Finally, you'll need to maintain the property and keep it clean. Hiring cleaning services is usually the best way to ensure a clean space. Options at Modern Lending when wanting to renovate the existing property If you already own a property, but need to renovate it in order to make it the perfect Airbnb rental property, Modern Lending can help you get the money you need. There are many aspects of starting an Airbnb business from an existing property, so looking to experienced property owners would be the best practice. Our loan officers have experience in every aspect of creating the perfect short-term rental property, so having a consultation with us will help you reach your goal of becoming an Airbnb business owner. General tips and things to consider before starting an AirBnb business When starting an Airbnb business, there are a few things you should research before hosting your first guest. Here's a list of some general tips and things to consider before opening your first short-term rental property through Airbnb. Guest Rules You will need to create a list of things that are allowed and that are not allowed at the property, but expect the list to change as you host more guests. Try to get as specific as possible when creating your list. For example, if you allow dogs, you might want to specify that "no dogs can be left unattended at the property," or something similar. Creating a digital guest book is a great tool, as well. Maintenance You will need to make sure all aspects of the property are working properly, like making sure your smoke and carbon monoxide detectors are up to date. Many hosts hire a property management company to handle the day to day management of the property. Having a local contractor/handyman that you can turn to regularly is crucial. Listing Names In order to stand out as a potential vacation rental for future guests, make the location stand out with a unique name. For example, properties titled with names like this, "Jimmy's Mountain Retreat," or our CEO's most famous Airbnb "House of Fashion and Fame" tend to perform better than just, "mountain retreat." Capitalize on what makes your location unique. Starting an Airbnb business is a profitable option to diversify your income, but it can become confusing without the right resources. You also must have the capital to take on this investment. Traditionally you will need about 20% of the purchase price of the home plus about $30,000 to $40,000 in additional capital for furnishing, operating costs and marketing. There's a lot to know about starting an Airbnb short-term rental property. If you are looking to take the next step towards starting your own Airbnb business, check out more guides offered on our website, or reach out to our team to schedule a consultation. Any client pre-approved by Modern Lending will get a comprehensive review for the city in which they are interested in starting an Airbnb business in. This is a complete 15-25 page report that is completely free. Most companies charge up to $1,000 for this, but we do it for FREE! You can also click the link below to download the best selling book Modern Lending's CEO published "Generating Massive Wealth with AirBnBs." Learn how to secure your first Airbnb loan by downloading CEO Brian Decker’s PDF tutorial today! Download now Contact us today to see how the Modern Lending Team can help you finance your short-term rental investment. Brian Decker Senior Loan Officer Click to Call or Text: 844-4-Modern This entry has 0 replies Comments are closed.
