Airbnb, as part of the travel sector, has some impressive statistics. With 5.6 million global listings, the app booked over 900 million nights, with the average host earning $9,600 per year.
Airbnb concluded one of their most difficult years on record, 2020, with an IPO worth an astonishing $100 billion. The global pandemic hit the travel business especially hard, with all of the stay-at-home orders from around the world. According to a 2020 survey, 70% of guests were reluctant to stay at an Airbnb, and 47% of owners were apprehensive to rent out to strangers.
However, a more recent Mashvisor analysis indicates that the industry is on the mend. As we continue to fight the global pandemic and stay-at-home restrictions are lifted, more individuals want to take a holiday. In fact, a survey indicated that approximately 62% of respondents plan to travel.
With the travel sector recovering from the pandemic, this post will go over how to start an Airbnb business and earn a piece of the pie, with a special emphasis on our Airbnb financial prediction. You may also watch our video on how to prepare financial estimates for an Airbnb business or property.
The Steps to Starting an Airbnb Business
The first and most important step is to set a budget that covers property investment, furnishing, upkeep, repair, and equipping goods like kitchen and bathroom equipment.
Choose the greatest real estate market, which will include conducting research on the area where you intend to purchase a property. Look for tourist-friendly places with plenty of attractions and activities.
Research local laws and restrictions for hosting an Airbnb in the area where you intend to invest.
To secure your personal assets, name your firm and form a legal structure, such as an LLC.
Post an Airbnb listing that requires certain property information but allows the host to set their own price.
Also Read: Top 5 Ways You Can Make Money on YouTube
The Steps to Starting an Airbnb How much does it cost to start an Airbnb business?
- The average cost of starting an Airbnb business is $6,000.
We calculated the average startup cost by analyzing three sources (SixFiguresUnder, PassiveAirbnb, and BiggerPockets). The following initial costs can be expected.
- Minimum launch cost for an Airbnb business is $3,900.
- The maximum beginning cost for an Airbnb business is $30,000.
- The average launch costs for an Airbnb business are $6,000.
How much can an Airbnb host make?
The typical Airbnb host in the United States earns $41,026 per year, according to AlltheRooms.
Of course, the potential for earnings with an Airbnb business is determined by a multitude of circumstances. All of these are important considerations to consider and discuss before embarking on the Airbnb experience.
Airbnb Business: Factor 1: Rent and Security Deposit
Typically, your landlord or property management firm will request a cashier check equivalent to the first month’s rent plus a variable security deposit.
If you are renting in a city like Las Vegas, I would expect rent to be significantly lower than in a city like San Francisco. The exact sum varies from city to city or town to town.
I have units in Mountain View, California. My rent fluctuates from $1800 to $2800 per month. Then you add a variable security deposit that runs from $500 to $2000 dollars. A landlord often asks for one month’s rent as a security deposit.
Airbnb Business: Factor 2 – Insurance
Fortunately, I didn’t have to worry about anything because I was covered by Airbnb’s one million host guarantee. Now, if you are a landlord, you may want to consider getting double coverage. It’s also worth noting that if your clients are largely large groups of people since your residence is designed to accommodate them, you should search for an insurance coverage that will cover you as a business.
Pro-tip: While a larger group can result in more earnings, the revenue is just incremental when compared to the difficulties of a larger group.
ISO developed comparable forms that are used by all major insurance companies. These forms have varied over the years, but one thing has stayed constant: all homeowner’s insurance have a “business pursuit exclusion”. In other words, any business-related claim would be refused on the HO form.
Insurance can be confusing, so if you want to learn more about it, look into these two options on the market today.
Airbnb Business: Factor #3 – Furniture Costs
According to my calculations, my furniture expenses were between $2,000 and $3,000. This would be determined by the number of bedrooms that you need to furnish. One-bedroom flats will cost less to furnish than two-bedroom apartments, and so on.
Here’s a link to my comprehensive cost breakdown by unit. You may check it out. Again, my costs will be different than yours.
If you’re wanting to employ an interior decorator, I highly recommend taking a look at one of our Design Templates.
Airbnb Business: Factor #4: Utilities and Subscriptions
Utilities can change from month to month. Heating bills will be higher in the winter than during the summer. My bills ranged from $40 to $70 per month.
You should always purchase internet service for your new device. This is something you must do. If you could only chose one, it would be the internet. It also allows you to rank higher in Airbnb’s search algorithm.
For my second unit, I settled on a Smart TV. Getting a smart TV now required additional subscriptions to services such as Netflix and HBO. I pay $10 per month for Netflix and $15 for HBO. You don’t need both, so I’d recommend Netflix if you’re just starting out.
Airbnb Business: Factor 5 – Soft Goods
What are soft goods? It includes items such as pots and pans that you may already have in your home. The reason Airbnb is superior to hotels is that guests have access to the kitchen. Access to a kitchen will help a modest family save money.
Airbnb Business: Factor #6 – Refillable Goods
I refer to toilet paper and paper towels as replenishable items. Make sure to add these fees when calculating your cleaning fee. For example, if you want to charge $40 every clean, add an additional $10 to cover these costs. I add another $20 because I also offer green cleaning supplies for my maid.
Airbnb Business Factor #7: Services
These services include interior decorators, furniture assemblers, and professional photographers. Rates will fluctuate based on market conditions…
If I had to pick only two, I’d choose an interior decorator and a photographer over a furniture assembler. While having a furniture assembler can be beneficial, it is not necessary.
