Happy Labor Day, y’all! This is a day that celebrates the contributions of American workers. Normally, for the Hustle category of this blog, I write about how to save money. But today, I’m writing about how to make extra money. Cha-Ching!
Airbnb hosts make an average of $924/month, and if you live in a desirable area you could earn much, much more. After getting my Airbnb set up, I leave the day-to-day operations to a co-host, who collects the entire cleaning fee and 15% of the booking fees. That means, you don’t have to be involved with the daily work of cleaning and responding to inquiries if you want to have someone else handle that.
If you are willing to handle the communications with guests and turnovers yourself, your profits can be even higher. For myself, even with outsourcing the management of the unit, I’ve still been extremely profitable with my modest one-bedroom condo in a college area 20 minutes outside San Diego, attracting an average occupancy rate of 90% or more over the course of the year.
But Homo Money, I don’t want to have to share my home with strangers to make extra money!
I feel you! And I believe most travelers feel the same, preferring to have an entire space to themselves vs. sharing common space with a host. For my Airbnb listing, I have my condo used 100% as a rental property and have chosen to not occupy it myself.
If you are wanting to use your primary residence for hosting, there are ways to maximize privacy and comfort for both you and your guests. With that in mind, I’d recommend hosting on Airbnb if you can have a space that’s totally separate of your own living space with a private entrance. Some examples of this could be:
- a basement that you separate from your main level,
- a refinished garage,
- a guest house which could be a tiny house or Accessory Dwelling Unit (ADU) on your land, or
- a bedroom/bathroom that you wall off so guests have a private entrance with a minimal “kitchen” by adding a mini-fridge, microwave, and hot plate.
And so, in the spirit of Labor Day, here’s some best practices I’ve found by putting in a little “sweat equity” to maximize profits in my own Airbnb rental property. If you’re not already renting out a guest house or spare bedroom, it can be an excellent way to generate a little side income to give a nice boost to your savings rate.
Disclaimer: if you’re currently renting, be sure to check your lease before becoming an Airbnb host. Most leases ban renters from subleasing if you’re not the owner of the property. And if you own a condo, check your CC&Rs before getting started to be sure your HOA allows it. Some cities have put restrictions on Airbnb, so check to see if there might be a specific area with less restrictions on having a short-term rental with Airbnb.
1. Use photos wisely.
You’d be amazed how many people will post photos of unmade beds, darkly lit rooms, and cluttered spaces on Airbnb. Show off your property’s best assets in the best lighting for each room. Include a variety of wide shots, medium shots, and close-ups. Be sure to include photos of the outdoor amenities, too, and maybe even the local area if applicable.
2. Maximize “heads in beds.”
This is a major focus for reality shows that redesign spaces for the short-term rental market. Even though my Airbnb is only a 1-bedroom condo, we maximize the value to our tenants by offering up to three beds: a queen bed in the bedroom, a queen bed with the sofa sleeper, and a bonus bed from an inflatable air mattress we keep in the closet.
That allows the condo to accommodate up to 6 people! And before a new group arrives, my co-host always asks over the Airbnb chat how many beds they’d like him to make up before their arrival. To account for the extra cleaning time for larger groups, I add an extra $10-15 per person for parties of more than two people.
3. Leverage your “location, location, location.”
In San Diego, most areas near the city and the beach have 3-night minimums. By investing in College Area, which is near San Diego State University 15 minutes outside the city, I was able to get around this restriction and operate with a 1-night minimum.
Allowing for short stays has been key for helping fill any last-minute gaps that open up in my calendar. And they usually do get filled without fail!
As an additional note, urban areas have become over-saturated on Airbnb lately, so some advice I’ve heard from real estate podcasters is that tourist areas near national parks and tourist attractions could provide a much better return-on-investment in the coming years. In San Diego County, for example, you might have more success in the wine region of Temecula or the rustic charm of Julian.
4. Provide “the hotel experience.”
Let’s face it, even though a short-term rental is not a hotel, we’d all rather stay someplace that “feels” like a hotel and not the guest bedroom of our Aunt Sally, the hoarder.
To give that hotel experience, all glasses and dishes are a matching set. The premium towels and high-thread count cotton sheets are always bright white, so guests know everything is clean when they arrive. To provide hotel-style amenities, they doesn’t have to be expensive, either. Most of my purchases have come from IKEA and, for high-quality linens, Costco.
I also added a professionally designed guidebook and framed signs throughout the condo to explain things like the check-out process and how to get onto the WiFi network.
5. Add little touches to make a big difference.
Over the years, my co-host and I have added extra perks for our guests that we would appreciate if we were staying there ourselves: a free library in the dining room, every streaming app someone might want on the TV in the living room, epsom salts and dispensable soaps in the bathroom, beach towels and beach gear in the closet, spices and cooking essentials in the kitchen…
You’d be surprised how often people comment about these thoughtful little touches in their online comments afterward. We also make every effort to provide any additional perks we can in the form of wooden hangars, hair dryer, makeup remover wipes, etc.
6. Respond quickly.
You or your co-host should respond to questions as quickly as possible. Imagine you are the concierge at a five-star resort. Setting up push-notifications for the Airbnb app can help with this. To make it easier to answer questions, Airbnb has a handy feature called “Quick replies” so responses to frequently asked questions can be saved within the app itself.
Airbnb is always adding features to help make hosting more user-friendly. A few examples of this: posting photos for the self-check in process to do a virtual walkthrough, saving frequently sent “quick replies,” and scheduling out messages to guests in advance to arrive automatically.
Those are my top short-term rental hosting tips! After purchasing my first condo for Airbnb, I invested an extra $25,000 to get the unit from meh to NOICE!
Here was my general to-do list:
- Gray paint on walls
- Textured peel-and-stick wallpaper in the dining room
- Custom vertical blinds to open them toward the middle on both sides to maximize air flow when the windows are open
- Blue tile backsplash in kitchen
- Subway tile in bathroom shower
- Modern floor tiles in kitchen and bathroom
- Custom wall art I made in Photoshop and had printed on canvases
- Plumbing work to add new sink, tub, and kitchen fixtures
- Electrical work to add pendant lights in kitchen, canned lights on dimmers throughout the unit, ceiling fans in bedroom and dining room, and new lights with switches in the closets
- Furniture, dishes, silverware, linens, smart TV, etc.
And that extra investment in time and money paid off. By offering as much value as possible to my visitors, we achieved Superhost status within the first few months and my condo has been the most popular listing in its area.
Here’s a couple before and after photos…
The extra money and sweat equity I spent on the front end helped me ensure guests were happy, left positive reviews, and kept the occupancy rate at 90% or higher. By combining the extra cash flow with additional payments from my own savings, I was eventually able to pay off my mortgage in just four years.
In the spirit of Labor Day, I think it’s proof that a little sweat equity can pay off when you focus on offering the most value for your guests.
Your turn to share! Do you travel or host with Airbnb? If so, what do you or your guests love to see most during a stay?