How to Start a Profitable Airbnb Business

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Room for Growth

Airbnb is the leader in home rental marketplaces that make it possible to turn a guest room, investment property, or even a yurt into a cash cow, with the average host earning $13,800 a year. But between local laws, taxes, and the platform’s intricacies, transforming a spare room into a steady stream of income can be difficult on your own. We sifted through Airbnb’s documentation, firsthand host experiences, and unofficial guides to make the process simpler and find out how to start an Airbnb business.

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Check Local Laws and Regulations

Some local governments have strict regulations when it comes to rental properties. Santa Monica, California, for instance, requires hosts to live on the rental property, apply for a business license, and pay a 14% occupancy tax, making it one of the most well-regulated cities for homestays in the U.S. You can find a list of local regulations on Airbnb’s website. If you don’t own the property you plan to use, ask your landlord for permission; some leases preclude subletting.

Related: Amazing East Coast Beach Houses to Rent

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Explore the Market

Before you revamp your guest bedroom with cute tchotchkes from Ikea, research the rental market in your area on Airbnb’s website. If you live in a big city such as Los Angeles, you won’t have trouble finding business travelers willing to pay top dollar. More rural, isolated listings might not be worth the effort. Airbnb has a handy tool for estimating how much you could earn from a short- or long-term rental. “You may want to price yours a few dollars less a night at first so you can get a few bookings under your belt (not too low though, or you’ll attract the type of guest you don’t really want),” one host writes.

Related: Airbnb Guests Share Their 'Most Common Complaints'

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Make a Budget

You have to spend money to make money, as the saying goes, and Airbnb is no exception. Plan ahead for expenses such as the 3% Airbnb service fee, cleaning services, utility bills, taxes, decorations, lockboxes, etc. If you’re feeling overwhelmed, consider taking an Airbnb hosting course on a platform such as Udemy.

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Prepare Your Space

While Airbnb rentals aren’t required to provide essential amenities — toilet paper, soap, linens, etc. — it’s strongly encouraged. If your listing includes a kitchen, think about stocking it with cleaning supplies, cooking utensils, coffee, tea, salt, pepper, oil, and other basics. Nice-to-have items include USB chargers, power strips, an electric kettle, and a hair dryer, according to Airbnb superfans. “Try staying in the space yourself, so you'll know if you're missing a bottle opener or don't have enough crockery,” a host suggests.

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Set Up Your Airbnb Listing

Airbnb makes the onboarding process fairly straightforward, pairing new hosts with a mentor and a first-time guest who has a good track record. You can tweak Airbnb’s settings to change your check-in process, availability, maximum stay duration, automated messages, and more.

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Market Your Listing

Invest significant time (and perhaps a bit of money) into marketing your listing with well-lit photos, a detailed and accurate description, and a clear explanation of your rules and expectations. Some hosts recommend even hiring a real estate photographer for listing photos. “I am a vacation rental marketing consultant, and trust me when I tell you it is 100% worth it to have a real estate photographer take photos for you,” a host on Reddit wrote.

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Ask Airbnb Veterans

Hosting an Airbnb can feel like a full-time job. If you’re ever confused, overwhelmed, or just want to optimize your listing, reach out to more experienced hosts. You can read through previous posts or start your own conversation on Airbnb’s community center or Reddit.

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The Bottom Line

While it's easy to fantasize about effortless passive income, starting your first Airbnb business will take time, money, and patience. That said, millions of hosts have done this before, so you don't have to reinvent the wheel. Take advantage of their experiences and do plenty of research. Many of the same tips included here apply to other home sharing and rental platforms, though we also have a Vrbo-specific guide. The Airbnb competitor even has a dedicated "fast start" onboarding team for hosts who already have listings with other companies. If you're unsure of which website to use, Host Tools has a comprehensive guide comparing the two rental platforms.