How-to Guide: Starting a Profitable Airbnb Business

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Airbnb has generated over $16 billion in revenue and has had over 772 million bookings since 2016. Even though the 2020 pandemic slowed down the traveling industry, Airbnb has managed to bounce back with a prediction of $5.4 billion in revenue for 2021. 

The average Airbnb host makes around $924 per month. While it can be challenging to start an Airbnb business, it comes with many benefits, including flexibility, tax advantages, and passive income. 

What Do You Need to Get Started?

  • Time commitment: As a host, you will have to respond to bookings and queries made by the guests while ensuring the property is maintained and cleaned.
  • Goals: Setting realistic goals for what you want to achieve through being a host can give you that long-term vision of success instead of an instant gratification mindset. 
  • Analyze the competition: Is the area you live in already saturated with multiple top-performing Airbnb’s? If so, you will need to develop a strategic plan that makes you stand out above the rest. 
  • Financing: Becoming an Airbnb host can cost you either very little or way too much, and if you don’t have the required capital, you might want to apply for a business loan for Airbnb


Steps to Starting a Successful Airbnb Business 

Step 1: Write a Business Plan

By writing a business plan, you set yourself up for success by not blindly starting a new business venture. 

When writing your business plan, ask the following questions: 

  • What are the required startup capital and ongoing costs? 
  • Who will be the target market? Elderly, singles, newlyweds, or people with children? 
  • How many monthly guests are required to make a profit?
  • How much will you charge each guest per night?

Step 2: Register Your Business

Register your business as an LLC from the start. An LLC is a limited liability company that separates your personal and business assets. If by any chance your business gets sued or any debt is acquired, they cannot come after your home and car if registered in a personal capacity. 

A registered business also comes forth as established and professional, which will help build trust with your clients while also making it easier to be approved for a loan. 

Step 3: Open a Business Bank Account and Credit Card

It would help if you separated your personal and business banking from the start, as you will be paying taxes on your income from the Airbnb business. Having a company credit card will allow for a credit line that can give you access to small amounts of money that you can use to fund your Airbnb. 

Step 4: Acquire Capital 

Whether you have a property or not, you will still need money to furnish a space in your house to accommodate guests. Once you have registered your business, you can apply for a business employer identification number (EIN). An EIN will allow you to start building a business credit score and history, which you can use to apply for an Airbnb loan ranging anywhere from $5,000 to $5 million. 

Take the following costs into consideration: 

  • 3% service fee 
  • Insurance coverage
  • Toiletries, beddings, and cleaning supplies
  • Emergency fund 
  • Mortgage costs 

Step 5: Find a Property 

You can rent out a room in your home or a garden cottage on your property. This is one of the quickest and easiest ways to get started. If you don’t have an extra room, you can purchase an additional investment property. However, you will need a 20% down payment and a high business credit score to acquire an Airbnb mortgage. 

Another method that has become seemingly popular is by renting a property with the sole purpose of using it as an Airbnb. Unfortunately, not all landlords will allow this. But, many are open to it as long as they receive their rent on time. Take your time to learn more about Airbnb property management if this caught your interest.

Step 6: Permits and Licenses 

Some cities restrict you from hosting paying guests for short periods, and not obeying the rules can lead to penalties.

However, all state rules are different, and to run an Airbnb business, you will have to check the requirements for your area and consider business licenses, building standards, zoning rules, permits, taxes, landlord-tenant rules, and the homeowners association.


Step 7: Insurance 

Airbnb offers host protection insurance up to $1 million if guests are accidentally injured or if their belongings get damaged during their stay. Unfortunately, Airbnb insurance does not cover the cost of damages done to your property or belongings. 

Here is a list of other insurance policies you can have a look at:

  • Accidental damage 
  • Loss of booking income 
  • Public liability insurance 
  • Home care emergency 
  • Building insurance 

Step 8: List Your Property on Airbnb

Listing your property on Airbnb is the exciting part. You will now have to take quality images of your guest room or home. You should include pictures from different angles, and the more photos you have on your Airbnb listing, the better. Also, editing and enhancing the colors of your Airbnb a little can make a big difference. 

You can include a description letting the guests know what they can enjoy about the house, what popular tourist destinations are nearby, and the rules that the guests need to obey. For instance, your neighborhood doesn’t allow for loud music after 9 p.m.

Step 9: Collect Reviews

Collecting reviews is a vital step if you are looking for long-term success as an Airbnb host. Hosts have scammed many people, and although Airbnb does not disclose the exact amount of scammers, they claim that it is scarce. However, due to the rise of cybercrimes worldwide, more people are hesitant when making a booking. Reviews are the best way to build that trust with your potential guests.

The easiest way to collect reviews is by offering a short free stay for your family and friends in exchange for reviews. 

Step 10: Welcome Your Guests 

Now that you have received your first booking, it is time to welcome your guests. Although the guests are not going to a hotel, it is nice to give them a luxury experience. Doing simple things like making sure the home is clean, laying out the towels on the bed with chocolate, and leaving a snack basket for the guests to enjoy, can make a big difference. 

Welcoming your guests with open arms will not only make them feel comfortable, but it leaves a good impression, and they will hopefully spread the news about their wonderful stay to their friends and family. 


Becoming an Airbnb host can be daunting as you have to invite strangers into your home. Still, it’s incredibly fulfilling when you can make people’s travel destinations a reality, and it doesn’t hurt that you get to add an extra income. 

Owning an Airbnb business comes with many challenges, but starting small by hosting a room in your home and then purchasing an additional income property can slowly build your way to a successful Airbnb business.