Overview: Airbnb which is called Air b&b or Air b-n-b. It comes from “air mattress b&b”. In this article, I will tell you how to start an Airbnb business. It is an online marketplace for offering or providing accommodations, lodging, spare rooms, etc. Airbnb acts as a broker between property owners, who want to rent out their houses and the people who are searching for accommodations in those specific areas. Its network is available in more than 81k cities and above 190 countries worldwide. Interesting information about the company is that it does not have any real estate listings. As explained earlier that it works as a broker and receives the commissions from both sides.
Commissions: It takes 3% commission of each booking from the property hosts and 5% to 12% from guests.
What is Includes in Airbnb: Toilet papers, Soaps, Towels, bed sheets, pillows and most probably kitchen wares?
How to Start an Airbnb Business, Important Steps
Friends here in this article, I’m sharing with you very important steps to starting an Airbnb business. These steps can be implemented into anyone’s life and anybody could act on them. Anyone who wants to start an Airbnb business must take in his consideration before starting the Airbnb business.
Select the Market:
The 1st step about how to start an Airbnb business is to find out what your target market is. What will be the cost for you? How long will it take you to recoup your profits or make your money back? How long will it take you to break-even the work? So, you have all that under consideration. I wouldn’t necessarily say go write a 2-page business plan. Just have an idea of what the business model is to look like in your situation and structure, that appropriately for whatever market you’re in.
Create a Legal Entity:
Once you’ve done about marketing search, Next step, and a very wise step, it would be to go create a legal entity. This is not necessary. Yeah, don’t need an LLC. But it is highly recommended, because you’re protecting yourself from the guests, from the people you have coming into your home. Those are very wise to set up a legal entity and that way. That legal entity will give you access to a business bank account to a business profile, which is essentially what you want to build, that right from the start. So, go create an LLC or some legal entity of some sort. And once you’ve done that you are now ready to move on to the next step.
You have to file for an EIN number. Once you’ve created that entity you’re able to register it with the IRS and you’re able to create an employer identification number or an EIN number. So, once you have your EIN (employer identification number). Now next in the queue is BBA.
Business Bank Account:
After finishing LLC and EIN you will step forward to the Business bank account. Carry all the information and document you have, submit all the information and you can open up a business bank account. The business bank account has its benefits. It keeps a very detailed account of your expenses and you could track everything very easily.
I highly recommend you don’t mix your personal and business bank accounts that just cause confusion when it comes time for tax season. This is step four by the way and these four steps that I’ve shared. You’re already halfway there, as far as getting started. There’s no reason why you shouldn’t be able to start today. So, you go to the bank they will give you your business bank account and most likely there’s gonna be some kind of monthly charge. They’re gonna charge you a service fee and depending on the bank. It could be cheap. It could be like a little on the higher end. I’m spending $10 a month to keep my businessman account open here in Springfield Missouri.
Super cheap I think it’s on the lower end of bank accounts. I know some bank accounts charge like 30 or 40 a month, regardless you want to keep track of those expenses and that’s the easiest way to do it.
A lot of people don’t know how to deal with this stuff and a lot of people run away when they hear this during research on how to start an Airbnb business. So, guys, this step is honestly to get your listing, get the property permitted. Get the proper licensing. That it is required for Airbnb and short-term rentals. Without these permits and without the legal regulated side of Airbnb you’re probably going to face heavy fines.
So, guys go to City Hall, speak to whoever sitting there at the building and development desk and ask them what is required for you to operational tremendo, for the zone or for the zip code. They’ll be more than happy to show that information with you.
That’s their job. They’re paid government employees, they’re sitting there waiting for you to come by and ask them. Simply go there tell them, that you have this property, at this address. And you want to know what it will take for you to have this license for short-term rentals. So, once you’re regulated, that’s half the battle right there.
This is important because you’re gonna end up having employees maybe. You want to hire cleaners in the future. Go ahead and do the research, go ahead and look into the business insurance aspect of everything. Once again if you’re doing rental arbitrage you might need to get renters insurance and this is probably required. I want to say that the Airbnb hosts guarantee is not insurance.
They make it seem like that they sell that like as you know walked in 1 million hours of coverage, but what you actually need to do is. Get proper insurance, they don’t cover a lot of little things that you’d probably expect them to. The structure that 1 million dollar guarantee in a way to where it’s very difficult to get your stuff covered. Try to keep it safe and secure from missing and damaging. Otherwise, be sure to do your research once again.
The next step for you during the research on how to start an Airbnb business is, to have an action plan. So, take action on these things. You’ll have a listing before you know it. Now, I didn’t really go into detail on how to pitch the landlord and go to details on how to acquire the listing. I’m assuming you’ve already done that. You’ve done the market analysis all that stuff. So from step one to end any of you guys reading this right now, He could take action.
So, taking action has been a thing I’ve battled within the past. I’ve learned and I want you guys to take note of this. I’ve learned that the best time to act is now. Don’t wait until tomorrow. Don’t wait till the next day, there’s no such thing as perfect timing the perfect time is now. So, these steps are the answer to the query of how to start an Airbnb business properly.
Advantages and Disadvantages of starting an Airbnb business
I will give you only a small list of advantages and disadvantages. But it will cover both hosts and guests. You can also visit this post of Investopediafor details.
Hosts: property owners get earning from their properties. But on the other hand, they have the risk of property damaging by the guests or customers.
Guests: For guests, it is an inexpensive and cheap facility but on the other hand they have the risk of changing the property with low grade or less appealing than in the advertisement or listing.
More Selection Options: Airbnb hosts have many options or flexibility to include a vast range of properties. For example Apartment, Complete Houses, Spare rooms, Boats, Single and suite rooms, etc.
Listing without charges: There are no extra charges to list any property. While a host can use different ways to promote his property, like photographs having information captions, description in writing or user profile where guests/ customers can easily get to know about the properties and hosts.
Charges according to host wish: There is no restriction to fix the charges about the property. It is a total host’s discretion to decide the charges for days, weeks or monthly basis.
Hosts’ Hospitality: Guests enjoy informal and incredible hospitality compared to commercial hotels. Because Commercial hotels only follow their set rules but Private owners have no boundaries, they are more generous to their guests/customers. An important thing that you are not bound by the time schedules like hotels and restaurants regarding check-in and check out. Guests feel more flexible with the Airbnb owners.
Free Guidance: Local hosts have more than enough knowledge about the locality. They can provide proper and better guidance about transportation, Restaurants, and atmosphere.
Cheap than a commercial hotel: It is the best saving platform for travelers and searchers for short rentals. Normally it is considered about 50% less than commercial hotels. It can be more when you need just a bed for sleeping only.
Save money by self-cooking: It is observed that most of the Airbnb rentals provide the kitchen facility, unlike most of the commercial hotel rooms. So, you can cook food by grabbing some groceries from the local market. It is another way of saving money while traveling.
Property Damage: One of the main and biggest disadvantages is the risk of property damage. Although it does not commonly happen, there is a genuine and strong threat of potential damage that is always like a hanging sword on property owners.
Although there is a Host guaranty program, which provides some assurance, it may not include all, such as jewelry, cash, Pets, or rare artwork, etc.
Fee or Charges: Listing of property is free but property owners or hosts have to pay a service fee at least 3% per reservation, to accommodate the expenses of the transaction process.
Taxes: Hosts have to spare a part of their income as tax money. It depends according to country or region, where the property is located.
Extra fee & minimum stay for guests: For guests, sometimes they encounter unusual circumstances while finding properties with an extra fee for short rents, like one night. They are forced to stay more to avoid extra fees.
Privacy issue: One important thing you should keep in mind when you are going to share a house with the owner or host. Privacy will be limited.
Extra fees for guests: You have to face numerous difference small issues while using the Airbnb facility. An additional fee is one of them, where guests may have to pay up to 20% in the name of service fee and for customer support.
The property, not the same as advertised: There is no guaranty like hotels, where you get the same, what is committed with you. Although most of the Airbnb hosts provide the same as advertised but the fear of unusual happening is always there. So, one tip can help you more, that you must consider the previous guest’s reviews, which can help you more to make a better decision.
I tried to frame a valuable content about a query of how to start an Airbnb business. These steps are very valuable pieces of information. I am sure you have got enough guidelines and information about starting an Airbnb business. Stay blessed and successful.