For those of you starting your own Airbnb, there are many things to consider — What are the cost to operate? What liabilities do I have for people who stay at my home? How much time do I need to dedicate and how often do I want to rent my place out? For many people, Airbnb is simply a side project to make additional income when they’re on vacation or out of town for a few days. For others, it’s a business venture, where they try to rent out as many days as possible to maximize their revenue stream.
Determine where you want to stand
Prior to setting up an Airbnb or VRBO account, make sure that you understand what your role is going to be from the very beginning. Are you going to be handling the finances and daily rate settings for your unit or are you going to be delegating that role to a specialist. If you are going to handle this aspect on your own, you’ll need a relatively good understanding of the going rates for comparable listings with similar amenities to your own. If you’re going to outsource to a local Airbnb host, you’ll need to make sure that you understand what their fee structure is going to be. Otherwise a chunk of your revenue is going to your host and not to you. Just for the record, if you hire an outside company to fully operate your Airbnb, you’ll be paying anywhere from 10-50% of revenue. Of course, it will depend on the level of your involvement. The more money you want to make, the more you’ll need to be involved.
Understanding the operations
Once you decide on your role in the finances of your short-term vacation rental, you’ll need to determine how you handle the daily operations. For example, who will oversee maintenance issues? Depending on how often you’re renting your home out, you’ll need to have a primary handy man around. If you can’t diagnose maintenance issues yourself and do basic fixes when your primary isn’t readily available, get a secondary for on-calls. Second, you need to prepare a fair set of rules for your visitors to follow. If you live in an extremely quiet neighborhood, you want to make sure guests are aware that they can’t be too noisy. Also, you want to ensure that your closest neighbors are aware that you’re using your home as an Airbnb (if you rent, make sure your landlord allows short term vacation rentals!). More or less, you want to include the most common things people might ask about IN your Rules Policy. Are pets allowed? How late can I use the pool? Can I have parties? It may sound silly, but if you don’t have any rules attached to your listing, anything goes… right? We both know that’s wrong, but you’re the one who will have to deal with your neighbor’s complaints! The vacationers will be long gone. Just to make sure people had an opportunity to read your Rules Policy before arriving, include a copy in a welcome book. Place it in an area where it’s hard to miss so there are NO excuses for breaking your rules!
Last but not least, you’ll need to determine how you’ll be cleaning up after your guests. Pricing out your cleaning fee will be very important here and you might also factor this into your deposit amount as well, just in case your place is left…well, you know! Just be mindful that you need to make your cleaning fee competitive to other units. The number one complaint I see throughout booking requests is that the cleaning fee is too high. I’ve seen cleaning service fees as high as $300 for a 4-bedroom house and less than $30 for a small studio. However, it’s an important part of the pricing structure and at the end of the day, people look at the total price of your listing AFTER the cleaning fee, TOT tax, Airbnb fee and any other taxes & fees that get added onto the booking. Remember, Airbnb requires some fairly good pricing experience. So, if you’re ready to take on the task yourself, start planning for your first vacationers and make connections.
About the Author: Sergio is a Airbnb Host located in California.