Airbnb first grabbed my attention during the 2010 Vancouver Winter Olympics. My two-bedroom condo — which I usually rented out for $1,200 per month — suddenly earned me more than $400 per night. While the world watched athletes tackle the ski slopes, I stared wide-eyed at the upward slope of my returns.
But it doesn’t take the Olympics to turn a handsome profit through Airbnb. Position yourself right and you will find your properties competing in the same market as high-end local hotels.
To capitalize on the vacation rental market back in the day, you had to optimize your home location and perform all your own marketing across multiple platforms just to get your space noticed by prospective vacationers. Airbnb did away with that model. Now, anyone with a spare bedroom, investment house or in-law suite can make a decent profit from local tourism.
Here are some strategies for getting started or scaling your Airbnb properties to achieve maximum profits:
1. Run the numbers to see if short-term is for you.
Give your property a test run. I brought what I learned in Vancouver back to Atlanta, where most of my real estate investment takes place. On Airbnb, I averaged about 70% occupancy rate and raked in between $200 and $400 per night, depending on the property. I paid down my mortgages and began scaling my business.
2. You’re now in the vacation rental business — so think like a hotel.
Hotels win occupancy through privacy and by fulfilling guests’ expectations of amenities that reflect the comforts of home. You’ll do best to follow their example.
Consider the needs of your clients before they do: cultery, an extra toothbrush, soft towels, an ironing board, bath mats, cooking essentials, a coffee setup. Help guests feel comfortable.
You should consider safety: first aid kit, fire extinguisher and functioning smoke detectors. Give clear instructions for adjusting the A/C and parking. No one wants to worry about getting towed on their vacation.
Learn to answer the questions before they’re asked as part of automating the short-term rental process.
3. Optimize design to cater to vacationers.
Give people an experience of the city they won’t forget.
Add some art that is reflective of the city guests are visiting. If your property is in Detroit, consider a “Detroit Hustles Harder” flag or some local graphic design for the walls. In Colorado, try decorating with some national parks posters. You can look for a map of your city on Etsy and frame it as the centerpiece of the living room or bedroom of your rental.
If you have a blank slate and you don’t know where to get started, then don’t waste your time. Hire professional interior designers to get the job done right.
4. In Airbnb, as in everything, lean into your strengths.
As I was saying, plan to outsource. If you know repairs may look shoddy if you do them yourself, don’t sacrifice the character of your home to save a few hundred dollars.
If your real estate portfolio boasts more than a few properties, don’t worry about the nitty-gritty. Consider with the Pareto principle — the 80/20 rule — of life optimization. As a theory, the Pareto principle is a way of looking at economics. In practice, it is an efficiency scheme that instructs you to perform the 20% of work that produces 80% of the results and outsource or eliminate the excess 80% of work. The same rule is practical in the short-term rental market.
5. Automation means saying goodbye to common rental headaches.
Airbnb does more than provide homeowners with a platform for marketing their rental space. It takes over some of the biggest headaches associated with long-term rentals.
With long-term renters, if it’s a bad fit, you have to go through the eviction process to get them out. Short-term rentals take the headache out of getting rent from your tenants in the traditional way. With vacation rentals you receive money seamlessly through the platform.
In addition to simplifying the exchange of money, the review system in Airbnb lets you and your guests read actual feedback to learn more about each other. Members tend to understand that reviews are currency in the sharing economy, so they’re less likely to trash a place or do any harm. This works in everyone’s favor.
6. Passive vs. active rental oversight: the choice is yours.
Some investors believe it is better to lease properties the traditional way because they value passive over active income.But Airbnb is still on the table if your goal is passive income. Buy a lockbox so guests can check in at their convenience. Hire a property manager to clean each house or room after the latest guest has checked out. This doesn’t have to be costly. More often than not, preparing a home for a new guest is simple.
Short-term rentals equate to higher daily earnings, making it easy to afford the extra cost of a property manager. And since they only need to stop by after someone has stayed, there’s no chance of losing money when your house hits a seasonal dry spell.
7. Market to your dream client.
Whether you lease your home for years, months or nights at a time, real estate investment is about business ownership. There are diverse demographics out there, each willing to pay vastly different prices for a place to stay. Take practical steps to appeal to higher paying guests, and charge the rates that they expect for a more luxurious experience.
There will always be a race to the bottom for pricing, but that market and approach aren’t for you. Catch the attention of vacationers willing to pay higher prices to stay in your home. These people tend to treat your property more respectfully than those who will try nickel and dime you over everything.
As you invest, stay wise, treat others well and make a killing at every turn.