How to build an Airbnb empire (owning vs renting homes):
Pick a suitable property or space to offer Learn about local regulations Research your target customers List your property on Airbnb and market it Hire expert help as needed
Get good reviews Grow your business by adding more properties
Despite the competitive nature of the Airbnb business, there is plenty of room for newcomers in the short term rental market. Online data indicate that there are now over 4 million Airbnb hosts across the world with over 6 million active listings. Users of the platform have grown to over 150 million and have collectively booked over 1 billion stays.
With an Airbnb empire, you’re managing real estate properties as a living and you’re directly competing with other local Airbnb hosts. Alternatively, you’re serving small entrepreneurs by managing digital real estate with lead generation. Plus you’re only competing with 20 to 30 local businesses targeting the same keywords. As you drive organic traffic to your clients’ business websites, they get quality leads and increase their earnings. In turn, you get paid a handsome income by helping them establish and maintain a dominant search engine presence.
What are the pros and cons of owning vs renting homes on Airbnb?
Pros and cons of owning an Airbnb property
Pros
Higher income potential. Compared with offering your property for long-term rentals, listing with Airbnb allows you to earn bigger. You are charging guests per night and you can even offer the same place for a higher price during weekends and holidays. This can bring you greater income than fixed monthly rentals.
Availability dates can be flexible. You have full control over when you want to rent out your property to guests. Want to use the place for family members on a holiday? You can always take a break from receiving customers, depending on your preference.
No need to pay monthly rent. Since you are the property owner, you won’t have to worry about paying rent each month.
Cons
Income can be inconsistent. One downside of offering your property on Airbnb is that slow months can be challenging. This can disrupt your cash flow since you can’t rely on monthly rental from long-term renters.
Requires bigger investment. Obviously, owning a property requires a higher Airbnb startup cost. You’ll have to spend money on everything, from licensing your business and utility bills, to house maintenance, repairs, and insurance. Of course, you’ll also have to invest in furnishings and appliances before accepting guests.
Local laws can restrict your operations. As mentioned, you’ll have to play attention to local regulations - which vary from area to area. For example, a recent Fortune report tells us New York fined an illegal Airbnb rental property owner for $1 million.
Pros and cons of Airbnb rental arbitrage
Pros
You can choose any location. With rental arbitrage, you are free to pick where to invest. If the area suddenly implements strict restrictions or if it’s no longer as profitable, you can choose to move your operations elsewhere.
Lower upfront costs. Getting started on Airbnb is fairly less expensive with a rented home. In fact, you can start an Airbnb with $5K without buying a property.
Faster growth. Scaling your business can also be much easier since you won’t have to invest capital on buying properties each time you expand.
Cons
The monthly rent. While Airbnb arbitrage is profitable, you’ll also have to pay the monthly rent. This can represent a significant percentage of your total earnings.
You’re not in full control of the property. Landlords may implement strict rules on their properties. Damages caused by guests can get you into trouble, so you’ll have to take immediate action when repairs are necessary. Also, seeking permission from the owner is a must if you want to modify or upgrade the property.
Renting is not as secure as owning. If the landlord decides to sell the property or to stop renting out, you’ll have to be ready to move on.
How to Build an Airbnb Empire: 7 Essential Steps
1. Pick a suitable property or space to offer
First, you’ll have to select which property or space to offer on Airbnb. This can be a spare room, an apartment, or even an entire house you own or rent from a landlord. When offering a rented property, inform the owner in advance and have a clear agreement so you can avoid potential problems in the future.
How do you find a good Airbnb real estate property in a popular tourist area?
Finding a good Airbnb real estate property in a popular tourist area can be difficult. Most major cities have strict regulations on short term rentals. However, it is possible to still profit from the traffic of tourists by buying or renting properties near them.
Greg Pimentel of the Rental Arbitrage Academy encourages Airbnb hosts to consider unsaturated locations. Instead of buying or renting properties in popular cities, it’s best to check out those that have lenient regulations on short term rentals and yet have high occupancy rate potential all year round.
In a YouTube video, he shares 5 recommendations on ideal Airbnb locations namely:
Fort Lauderdale, according to him, is merely minutes away from Miami Beach but is not in the same county. Visitors wouldn’t hesitate about picking a nearby Airbnb rather than an expensive hotel. “I don't need to stress about doing heavy research of whether or not it will get booked because I know that millions of people go to Florida each year,” Greg also points out.
As always, check applicable local laws and regulations to find out if short term rental is allowed in your chosen area/s. Go to the official city website to learn about requirements and restrictions you may need to observe as an Airbnb host. If needed, work closely with a professional real estate agent to find profitable real estate investment options.
2. Comply with local regulations
As an Airbnb host and property investor, it’s important to learn about existing laws and regulations in your area. In some cities, offering short term rental is considered illegal. So it’s always best to check local regulations before starting your Airbnb business. That way, you know which licenses and paperwork have to be done.
Landlord and author Michael Boyer shares that if you’re not compliant, regulations “may undercut your dreams of empire.” In a Quora post, he writes that rules and restrictions apply, especially if you’re aiming to build an Airbnb empire with multiple locations.
“Some of the regulatory framework in this area is still evolving,” Boyer likewise points out. “So seek professional advice before investing (not after).”
3. Research your target customers
The type of property you have and its location will likely determine the type of customers you will have. Learn what type of travelers frequent your area. Are they usually visiting for business purposes or to visit popular tourist attractions? If you can dig deeper and learn if they’re traveling as individuals, couples, or groups, that would be to your advantage. Also, keep in mind that the short term rental business model usually depends on seasonality. So find out which months are most profitable.
You can use the information to decide your pricing and the type of amenities to offer. In addition, establish your own house rules to protect your property and provide your potential guests with the best experience.
4. List your property on Airbnb and market it
With that out of the way, you can start listing your property on Airbnb. Be honest and detailed in your descriptions. Use quality photos to show what you have to offer. Highlight your best features to show guests what separates you from other Airbnb properties in the area.
Use social media to promote your listing. Advertise on your pages and join groups where you can share about your Airbnb property.
What are the best ways to attract more guests on Airbnb?
Some of the best ways to attract more guests on Airbnb are:
Optimizing your listings
To make the most of your Airbnb listings, write a catchy title and tell your space’s story. Airbnb emphasizes the importance of using “compelling language” in the descriptions. According to their website, the description is “where you market your space, and storytelling is a key part of effective marketing.”
Airbnb empire owner Adam Falla also tells Entrepreneur magazine that photos, pricing, and reviews help in attracting customers. “When you are new, make sure you get professional photographs uploaded as soon as possible,” he said. “Initially, drop your prices until you have at least 10 reviews because until guests trust your property you will not be able to charge higher rates.”
Providing quality amenities
You want your guests to feel comfortable during their stay. Providing them amenities that meet their needs can help you achieve that. If you’re accommodating a family as your guest, having baby baths, high chair, and an extra mattress will mean much.
Also invest in quality furniture. As Chi Ta told Forbes, he initially spent around $20,000 to $25,000 on a single property for rent, security deposit, and furniture. “Don't go with all that Craigslist stuff like everybody is doing and have your listing looking like a garage sale,” he shares. “Go for tasteful furniture, pay attention to detail, and you’d have yourself an actual winning property.”
Listening to your guests
In the same Entrepreneur feature, Airbnb host Alexander Van Dijl mentions, “Listen to the guests would be the best tip. Even something that is not brought as a complaint can help a whole lot. Once a guest mentioned that the apartment was a little cold when they came in. So I added an electric heater, and now turn on the heat before the guests arrive.”
5. Hire expert help as needed
Since you’re aiming to build an Airbnb empire, consider hiring professionals who can perform some tasks on your behalf. The right experts can help you save time, allowing you to focus on important aspects of running your Airbnb business.
For example, you can hire freelance social media administrators and marketing specialists. You can also get an Airbnb co host who can run the business on the ground. Other than that, you will need the services of professional cleaners to keep your place tidy in between bookings.
6. Get good reviews
Having good reviews means you’ll be able to attract more future customers. So provide a positive experience for your guests and be attentive to their needs. Welcome them upon booking and be in constant communication with them during their stay. Respond to their questions and concerns, if they have any. Inform them if the cleaners are coming over. Before they check out, thank them for booking and ask them to leave a review soon. Also, make sure to leave reviews for your guests, too. This will encourage and remind them to write one for you as well.
7. Grow your Airbnb business by adding more properties
Over time, you will learn to manage your initial listings efficiently. Your next goal should be to offer more properties so you can grow your business and multiply your revenue. As you implement proven strategies, you’ll be able to expand your Airbnb empire.
Can Airbnb make you a millionaire?
Airbnb can make you a millionaire, provided that you work hard, do extensive research, and implement effective strategies. In a Forbes feature, Chi Ta of BNB University shares how his Airbnb side hustle became a million dollar business. Today, Ta owns 30 international properties and makes around $2.4 million per year.
Meanwhile, Sean Rakidzich of Million Dollar Renter currently manages 155 Airbnb properties across 8 cities. He credits much of his success to automation, saying technology allows him to take a year off while still growing his business. He currently earns over $200,000 per month on Airbnb without owning properties and has generated over $10 million in revenue on the platform.
While there are many success stories out there, the Airbnb business model is not a get-rich-quick scheme. Return on investment is dependent on various factors, so it’s always best to stay updated with market trends and seek professional guidance as needed.
Related Articles on Airbnb and Short Term Rental Industry
Conclusion: Is Airbnb still profitable?
Yes, Airbnb is still profitable today. Airbnb hosts in the United States earn an average of $59,000 annually, according to ZipRecruiter data. Earnings differ from one host to another and some report making millions, as mentioned earlier.
For those interested, local lead generation is also a profitable business model. By targeting specific keywords and using effective SEO techniques, you boost business websites to the top of search engine results. This helps them attract organic traffic and can lead to them having more customers.
