Starting an Airbnb business is an exciting opportunity to earn extra income and dive into the world of short-term rentals. Whether you’re renting out a spare bedroom or an entire house, learning how to start an Airbnb business will help you create a unique guest experience and maximize your investment.
While there’s some upfront planning involved, getting the details right will set you up for success and profitability. Let’s walk through the key steps to make sure you’re ready to host like a pro.
Starting an Airbnb Checklist
Looking for a quick checklist to make sure you’re ticking all the boxes when starting an Airbnb business?
Here’s the TLDR:
- Research and choose the right property
- Ensure compliance with local regulations
- Purchase insurance
- Establish a legal entity
- Create a business plan
- Estimate your earning potential
- Get your Airbnb ready for guests
- Furnish your property
- List your property on Airbnb
Is Owning an Airbnb Profitable?
Yes, owning an Airbnb is usually profitable, so long as you are budgeting properly, charging an appropriate nightly rate, and putting the necessary effort into marketing your Airbnb.
How well your Airbnb performs will be a combination of your property’s location and your ability to properly manage it.
On average, however, the typical Airbnb property earns returns of:
- Urban properties: 15-25% annual ROI
- Suburban properties: 10-20% annual ROI
- Rural/vacation properties: 8-15% annual ROI
A lot of factors affect your property’s profitability, including seasonal demand, maintenance costs, rental rates, emergency repairs, and more.
How Much Does it Cost to Start an Airbnb Business?
Getting a short-term rental up and running doesn’t have to cost a fortune, but it does require a little startup capital. The amount you have to spend will depend on the type, size, and location of your property as well.
Outside of the cost of purchasing the property, on average it costs at least $5,000 up front, plus at least $2,000 a month to start and maintain an Airbnb business.
Here's a basic breakdown:
Essential furnishings
- Queen bed with frame: $600-800
- Sofa: $500-700
- TV and mount: $400-600
- Dining set: $300-500
- Kitchen essentials: $300-400
- Linens and towels: $250-350
- Bedroom furniture: $500-700
- Total: $2,850 - $4,050
Required amenities
- Wi-Fi router and service: $150 setup, $60/month
- Smart lock: $150-250
- Security cameras: $200-400
- Basic appliances: $500-1000
- Cleaning supplies: $200 initial, $100/month
- Guest amenities: $200/month
- Total: $1,200 - $2,000 up front; ~$360/month ongoing
Ongoing monthly expenses
- Professional cleaning: $100-200 per turnover
- Utilities: $150-300
- Supplies restocking: $100-200
- Maintenance fund: $200-300
- Insurance: $100-150
- Platform fees: 3% of bookings
- Total: $1,050 - $1,950/month, plus platform fees
You should also have safeguards in place for guests who might damage your property or disrupt the surrounding neighborhood.
To protect yourself and your investment, you may want to:
- Install security cameras outside the property
- Use smart locks that provide unique codes for each guest
- Create detailed house rules and communicate them clearly
- Document property condition between stays
- Get proper insurance coverage
- Keep valuable items in locked storage
- Build relationships with neighbors who can alert you to problems
How Do You Start an Airbnb Business? Step-by-Step Guide
Starting an Airbnb business can be an exciting and profitable venture if approached with careful planning and the right strategy. Whether you're looking to rent out a spare room, an entire apartment, or a vacation home, the goal is to create a welcoming space for guests while maintaining a sustainable and profitable operation.
Step 1: Research & choose the right property
An Airbnb business is an investment that, in order to be profitable, has to earn more in rental revenue than it costs in property upkeep. In other words, you need a constant stream of renters paying a sufficient nightly rate.
Location will always be your most valuable asset for attracting renters. If your property is located near a popular urban center or hot tourist destination, more people will stay there.
That’s why when investing in a short-term rental property, it’s important to check location details like:
- Distance to popular spots and business districts
- Public transit access
- Nearby amenities
- Local popular events
- Seasonal demand fluctuations
- Competition from hotels and other Airbnbs
Other ways to attract renters might include long-term rental discounts, unique accommodation themes, and renter policies catered to travelers with children or pets.
Complying with local regulations
A lot of laws governing short-term rentals have sprouted up over the past few years, and some of them can affect your rental’s profitability. You need to play by the rules — skirting a city ordinance may save you money today, but the penalties for violating one can be severe.
Make sure to take note of any local rules involving:
- Zoning restrictions that prohibit short-term rentals
- Requirements for business licenses and permits
- Health and safety inspections
- Parking regulations
- Noise ordinances
- Occupancy limits
- HOA or condo association restrictions
It’s never a bad idea to run your Airbnb business by an attorney familiar with short-term rental laws, but free resources are also available to help you find answers on your own.
You can start with:
- City planning department websites
- Local business licensing offices
- Health department regulations
- HOA/condo association bylaws
- Short-term rental ordinances
- Tax requirements
- Insurance regulations
What is the 90-day rule on airbnb?
Some cities and countries put restrictions on short-term rentals. For example, the 90-day rule — found in New York City, San Francisco, Los Angeles, Chicago, and other cities — limits entire-home rentals to just 90 days per calendar year. The aim of these laws is to protect long-term housing prices from inflation caused by short-term rental investors.
Even if you own property somewhere that doesn’t have a 90-day rule, many cities still have prohibitive rules for Airbnb businesses, such as:
- Minimum stay requirements
- Maximum number of guests
- Required host presence
- Neighborhood restrictions
- Special permit requirements
Step 2: Set Up a Legal Business Entity
Short-term rental hosts who fail to set up their businesses properly from the beginning can face a slew of potential tax liabilities that hurt profitability. Many short-term rental owners create a business entity as a way to minimize that liability.
The most common options for starting a legal Airbnb business include:
- Sole proprietorship: Simplest but highest personal liability
- LLC: Better liability protection, moderate complexity
- Corporation: Most protection but highest complexity
You might want to speak to a short-term rental attorney about which business model is right for you, but it may not be necessary if you only plan to own a single Airbnb property.
You can establish your Airbnb business yourself by following these steps:
- Choose your business structure
- Register with state authorities
- Obtain necessary permits
- Get an EIN from the IRS
- Open business bank accounts
- Set up accounting systems
- Secure proper insurance coverage
It’s important to keep detailed income records of all your business dealings. Track expenses, report all income, and consider setting aside money for possible taxes or fees owed down the road.
Business Planning & Estimating Earning Potential
You’ve got a property and you’ve established your legal entity. Now it’s time to do some more business planning — specifically, forecasting revenue so you can create a realistic budget.
You’ll need to consider your expenses when setting a nightly rate and establishing a pricing strategy.
Here are some tips for setting your pricing:
- Assess the competition. Know what similar rentals in your area are charging.
- Adjust your nightly rate for demand. You don’t have to keep the same rate every day of the year. It’s wise to change your rate based on seasonality, weekends vs. weekdays, and during major local events.
- Don’t overlook fees. Remember that your guests will pay a required Airbnb service fee, plus any additional fees you charge (such as a cleaning fee, pet fee, etc.). So, don’t price potential guests out by setting your nightly rate too high without considering those fees.
Step 3: Get Your Airbnb Ready for Guests
The next step to starting an Airbnb business is furnishing your space so that it’s attractive to renters.
Reviews are the bread and butter of any short-term rental — a property that doesn’t perform well has a hard time commanding high rental rates — so it’s essential to invest in high-quality Airbnb furniture that is within your budget but will deliver a great guest experience.
Here’s a breakdown of the basic Airbnb essentials to include for each room in your rental:
Bedroom
- Quality mattress
- Pillows
- Fresh, clean linens (at least 2 sets per bedroom)
- Blackout curtains
- Bedside tables with lamps
- Empty closet space
- Full-length mirror
- Extra blankets
- Charging stations
View a complete list of Airbnb bedroom essentials >>
Bathroom
- Clean towels (3 sets per guest)
- Basic toiletries
- Hair dryer
- Plunger and cleaning supplies
- Air freshener
- Extra paper products
- First aid kit
- Good lighting
Kitchen
- Coffee maker and kettle
- Basic cookware
- Utensils and dishes
- Microwave
- Refrigerator or mini fridge
- Paper towels
- Cleaning supplies
- Basic spices
Living area
- Couch
- Arm or accent chairs
- Smart TV
- Good lighting
- Window coverings
- Work space
- Local guides
- House manual
- Entertainment options
Where to Buy Airbnb Furniture
- Minoan: Minoan is a centralized purchasing platform designed specifically for Airbnb hosts. It’s your one-stop shop to furnish and restock your short-term rental with savings of up to 60%. You can add items from any partner brand to your cart, then check-out effortlessly through Minoan.
- Major retailers: You can purchase furniture and supplies a la carte from brands like Wayfair, Crate & Barrel, Ikea, Article, Public Goods, Parachute, Quince, Caraway, and All Modern.
- Furniture packages: If you’re looking for an easier way to buy essential pieces for your Airbnb, consider purchasing a furniture package. Many brands offer curated furniture packages that include coordinated pieces.
- Thrift shops and Facebook Marketplace: Thrifting and buying gently used pieces is a great way to save when furnishing your Airbnb. Just be mindful of which pieces you buy used — for example, buy a new mattress but consider snagging a used TV or a used dining table.
Step 4: List Your Property on Airbnb
Once you’ve done the groundwork — researching your market, setting up your legal structure, and furnishing the space — it's time to list your property on Airbnb.
This step is essential to turning your property into a business that can generate income, and getting it right is crucial for attracting your first guests.
Crafting Your Listing
When it comes to listing your property on Airbnb, first impressions count. Your listing’s description and photos will either attract potential guests or turn them away, so it’s important to make it stand out.
Here’s how to create a listing that captures attention:
- Write a catchy title: Your title should be clear, concise, and highlight the most attractive feature of your property. For example, "Cozy Downtown Studio with Stunning Views" or "Spacious Family Home Near Central Park."
- Write a detailed description: Provide an accurate and inviting description of your space. Highlight what makes it unique — whether it’s the location, amenities, or the atmosphere you’ve created. Make sure to include details about the number of bedrooms, bathrooms, amenities, and any special features like a hot tub, balcony, or modern kitchen.
- Showcase high-quality photos: Great photos are one of the most important aspects of your listing. Invest in professional photography if possible, or ensure that your photos are well-lit, clear, and capture the most important areas of the space.
- Highlight amenities: Ensure that your listing includes information about the amenities you offer, such as Wi-Fi, a coffee maker, or toiletries. Guests appreciate knowing what will be available during their stay, and it can set you apart from other listings in your area.
- Be transparent about rules and expectations: Clearly outline your house rules and expectations for guests. For example, do you allow pets? Is smoking permitted? Do guests need to bring their own linens or towels? Setting clear boundaries upfront helps prevent misunderstandings later on.
Optimizing Your Listing for Search
To ensure your listing appears in search results and attracts as many views as possible, you’ll need to optimize your listing for Airbnb’s search algorithm. Here’s how:
- Use relevant keywords: Think about what potential guests might search for. Make sure to include location-based keywords (e.g., “Downtown Los Angeles apartment”), and relevant features like “pet-friendly” or “close to public transport.”
- Regularly update your calendar: Airbnb prioritizes listings that keep their calendars up-to-date. Make sure to regularly update your availability to increase your chances of showing up in search results.
- Encourage reviews: Once your first guests have stayed, encourage them to leave reviews. Positive reviews not only build trust but can also improve your listing’s ranking on Airbnb. Great reviews help guests feel more confident booking your property.
Keys to a Successful Airbnb Business
Your Airbnb business will be plenty profitable as long as you can do the work required to get it there. Thorough planning is a must. Once you’re in business, turn your focus to providing an excellent guest experience that earns great reviews.
This includes:
- High cleaning and maintenance standards
- Clear and prompt communication
- Competitive pricing
As your property’s reputation grows, you’ll want to revisit market trends to see how your rates compare to others in the area. Keep your property rentable by keeping up on maintenance while following all rules and municipal codes.
With proper planning and execution, your Airbnb venture can become a rewarding business opportunity that provides steady income. Good luck!
