How to Start a Profitable Airbnb Side Hustle in 7 Steps

The rules you’ll need to follow as an Airbnb host depend on the laws and regulations for rental properties and businesses in your jurisdiction. This could be your city, state, county, or municipality, but it may also include your “zone” if your property is located in an area with zoning rules.

Some places have very strict rules. For example, in San Francisco, CA, you can only list your property on Airbnb if it’s your primary residence, meaning you’ve lived there at least 275 days out of the year. 1

Permits and licenses

Depending on where you live, you may need a business license, short-term rental permit, or other special licenses to run an Airbnb. The company has a short list of local regulations for certain locations, but you’ll also need to do your own research.

For example, to run an Airbnb in Seattle, WA, you may need a business license tax certificate, short-term rental operator’s license, Rental Regulation and Inspection Ordinance (RRIO), and bed and breakfast operator’s license. 2 In Albuquerque, NM, on the other hand, you just need a short-term rental permit. 3

The regulations vary widely enough that there’s no way to predict what you’ll need—the only way to be sure is to check.

Housing requirements

Some jurisdictions require short-term rental properties to meet certain construction, design, and maintenance standards to ensure they’re safe and suitable for someone to live in.

This is especially true if you plan on maintaining a rental property that’s unusual in some way. For example, if you plan on turning an object like a shipping container into an Airbnb, you’ll need to make sure that the container you get is cleared for residential use.

Taxes

As an Airbnb host, you may be required to collect taxes from each guest who stays overnight and then give that money to your city or local government. The Airbnb platform does this automatically for properties in certain locations, but you’ll need to manually collect taxes in other jurisdictions. 4

Landlord-tenant laws

Depending on where you live, you may be subject to landlord-tenant laws if you host guests for long stays. This would give them certain legal rights that could put you at financial risk, which is why it’s important to be clear about your legal obligations and liability when renting out your Airbnb for longer periods.

For example, a guest could refuse to leave your Airbnb at the end of their stay. If they’re covered under tenant law, you may have to go through the eviction process to get them out. 5

If you’re considering starting your own Airbnb business or side hustle, there’s a good chance you already have a house, apartment, spare room, or another space in mind to serve as your rental property. But if you don’t, you’ll have to get access to a suitable space. Most of the time, this means buying a property.

For this article, we contacted Sarah Blevins, an Airbnb host who owns four condos in the Florida panhandle and runs Our Little Lifestyle, a popular blog with advice for other hosts. We asked her how she selected her first property.

“We purchased one specifically as a short-term rental in an area that we love to visit—and then purchased our other three in the same area over the next few years,” she said.

Sometimes, it’s also possible to rent and then sublet an apartment as an Airbnb, but Blevins told us this usually isn’t practical. “Very few places let you rent a property and then use it as an Airbnb. That is a pretty primary insurance and liability issue.”

Not all homeowners’ associations allow short-term renting

If the property you want to buy is part of a homeowners’ association (HOA) or a condominium owner’s association (COA), check its bylaws before you commit to buying it. Some HOAs and COAs have strict stipulations for renting out your home, while others forbid it altogether.

Blevins singled out condo association rules as being particularly crucial for aspiring hosts to check out. “Many short-term rentals are condos, and most condominiums have very specific rules in the association’s by-laws around short-term rentals,” she said. “That should be the first thing someone checks.”

Creating a welcoming, functional, and comfortable space is one of the most crucial parts of starting up an Airbnb that’ll actually attract new and returning visitors.

Blevins gave us a quick rundown of preparations that you’ll want to make:

• Purchase key items: Of course, you’ll want to set up your space by buying everything your tenants will expect to see, including furniture, kitchenware, appliances, etc. Blevins recommended keeping at least three sets of linens on hand so that you have one in use, one being laundered, and one as backup at all times. (“I am also constantly replacing them,” she added.)
• Declutter: If this is a property that you’ve lived in yourself (instead of one that you bought specifically to rent out), walk through it and remove your personal items and knick-knacks. Focus on functional items throughout the space.
• Find a good cleaning company: Blevins told us that in general, “Most Airbnb hosts aren’t cleaning properties themselves. Hence, finding a reliable cleaning company is a very crucial part of the process at this stage.” Similarly, it’s also a good idea to find a local handyman who you can call when things break.

Blevins also recommended installing safety features. Most hosts use smart locks, changing the codes between guests,” she said.

Additionally, you’ll want to stock up on toiletries and check that the Wi-Fi is running smoothly.

To become an Airbnb host, head over to Airbnb’s sign-up page and fill in the required information to create an account. Once you have an account, navigate to your profile and create a new listing in the “Host” section.

Here are some details about the property that you’ll need to provide

• Room type (i.e., private room, shared room, or entire property)
• Type of rental property
• Number of bathrooms
• List of amenities
• Areas guests are allowed to use in the house
• Bed sizes (e.g., single, double, or queen)
• Maximum number of guests accepted
• Availability
• Location (as verified on a map)

You’ll have the chance to write a brief description of your Airbnb and upload photos to give guests a clear impression of where they’ll be staying. Be as accurate as you can in your description without exaggerating, and avoid adding blurry, low-quality photos.

Creating a house manual

At this stage, you’ll also have the chance to write a house manual. As Blevins told us, “That is the main portion of the listing that guests access before and during their stay. It includes house rules, codes, where to find things, community information, etc.”

Spend a while thinking about everything you want your guests to know—including both rules and any tips that will make their stay more pleasant—and then write up a guide.

Setting your cancellation policy

You’ll also have to pick a cancellation policy. You have several options. Instead of offering a full refund on cancellations, you can opt for a nonrefundable policy or offer guests a discount on their next stay. However, Airbnb may charge you a higher-than-average service fee if your cancellation policy is especially strict.

Blevins told us that she uses and recommends Airbnb’s “Firm Cancellation” policy.

“This allows them to cancel 30 days before arrival and receive a full refund,” she said. “They receive a 50% refund up to 7 days before check-in and no refund after. This policy minimizes my risk and gives me ample time to rebook my space.”

She didn’t recommend the “Flexible” (1-day) or “Moderate” (5-day) cancellation policies, since it takes a lot of work to rebook with such short notice, and in many cases, it can’t be done at all.

She added that guests can “purchase travel insurance through Airbnb or third parties, taking the risk off the host’s plate.”

Setting your Airbnb prices too high can make it harder to secure new business and hurt your reputation if visitors leave negative reviews because they felt that their stay was overpriced.

On the other hand, setting your rates too low can cause prospective travelers to undervalue, distrust, or simply overlook your property—not to mention that you’ll earn less money for each Airbnb stay.

When setting your prices, take into consideration the following factors:

• Location: Just as a property’s location affects its sale price, it also affects its rental value. You can charge much more if your rental is located in a popular travel destination, a major city, or near famous attractions or shopping districts.
• Your competitors: Do market research on how much other hosts near you are charging and use their fee structure as a benchmark for your own.
• Rent control: Some jurisdictions have rent control programs limiting how much you can legally charge your Airbnb guests. To ensure your side hustle stays above board, abide by relevant rent control guidelines.
• Utilities: Recurring bills can significantly affect the cost of running an Airbnb. Make sure you’re charging enough to cover the total cost of utilities (e.g., water, electricity, Wi-Fi, cable, and even streaming services) while also generating a profit.
• Maintenance costs: It’s all too easy to overlook maintenance costs, but these also add up quickly. Factor in costs related to plumbing, electrical, and cleaning services, as well as replacements for broken appliances.
• Taxes: Your income from your Airbnb is taxable unless the property is classed as your primary residence (i.e., you rent it out less than 15 days per year or no more than 10% of the total number of days you’ve resided at the property). 6 Taxes will be a major expense for your business, so make sure to budget and save money for them.
• Airbnb’s service fees: Airbnb charges service fees in the form of a split fee (split between the host and the guest) or host-only fee (paid wholly by the host). Depending on your location, service fees may include value-added tax (VAT).
• Miscellaneous: If you plan to prepare snacks, beverages, or simple breakfasts for your guests, then you should factor the expenses for these services into your overall budget.

Blevins strongly recommended staying in your chosen neighborhood as a guest before setting your own prices. “I price my units based on what I would pay,” she told us. “We stayed in the area we bought numerous times before buying. We had a good feel for the seasonal prices since I am in a vacation destination.”

Be prepared to adjust your pricing

Blevins said she adjusts her rates on a nightly basis to maximize occupancy. To help her do this, she continually checks local event calendars to make sure she’s not underpricing her in-demand dates.

Airbnb pricing tools

If you’re feeling overwhelmed at the thought of managing your own prices, you can take advantage of Airbnb’s smart pricing feature. This is a tool that collects and analyzes data and automatically adjusts your prices according to market demand while also allowing you to specify minimum and maximum prices.

Blevins also noted that some hosts use third-party software, such as AirDNA and PriceLabs, to help them set and adjust their rates.

Setting up your calendar

Blevins also recommended setting up your Airbnb listing calendar at the same time that you set your prices. You can determine:

• How far in advance guests should be able to book (e.g., 3 months, 6 months, etc.), or whether you’ll open up dates manually
• The minimum stay length you’ll allow
• Whether same-day listings / instant bookings are allowed
• Any other rules you want to have for bookings (no checkouts on Saturdays, etc.)

The policies you should set depend on your situation, so there are no universally right answers here. That said, Blevins recommended opening up dates for booking manually, which gives you more control.

She also pointed out that if you’re hosting people in your own home, handling your own cleaning, or you plan on using the property as a personal vacation home, you need to make sure to account for your own schedule.

If you live far from your Airbnb or have a busy schedule, it’s a good idea to hire someone to manage your Airbnb while you’re unavailable. This could just be a family member or friend, or you could hire someone from a third-party agency.

Blevins told us that she’s never used a cohost. “I travel extensively and have been able to manage my booking from anywhere in the world,” she said. “The downside is that it often includes staying awake until midnight to send door codes for check-in, but it is doable.”

She added that if she were to hire a cohost, she’d probably have her family members do it, as they’re familiar with her property, which keeps costs down.

“I would only recommend hiring an outside cohost if you want to be more hands-off. Using that as part of your business model will lessen your workload, but does come at a cost.”

The final step to starting an Airbnb business is getting your first visitor.

To market your property, consider creating social media accounts for it. Blevins noted that this is a great way to attract attention and it also lets you “consolidate up-to-date resources, including information about the area, photos, things to do, etc., in one place.”

Fortunately, Airbnb will also handle some of the marketing-related heavy lifting for you. “The major pro of using the Airbnb platform is that it connects you with guests looking for a place to stay in that area. You and the guests are paying for that by utilizing the platform, and a host should lean into that.”

Making your first stay a success

Once you’ve gotten a request from a potential guest, it’s time to accept their reservation and prepare to give them the most enjoyable stay possible.

Your number one priority as a host for a short-term rental property should be to make sure your guests feel welcome and comfortable. As you’re probably already aware, guests leave reviews, which have the power to either make or break your Airbnb business.

An attentive host does more than simply reply to guests’ inquiries in a friendly and timely manner (although this is important). Your job isn’t done once a guest has checked in—you need to be on call to solve any issues that arise during their stay.

Responding to inquiries quickly, avoiding unnecessary cancellations, and consistently receiving positive reviews will earn you a “Superhost” badge from Airbnb. The badge will be visible on your listing and profile, showing potential guests that you have a high customer satisfaction rate. Blevins told us that having this designation is a real help—”Guests can confidently book, knowing that I have a proven track record.”

The Superhost designation also comes with perks for hosts, including access to a special support line, which you can call if you have issues with difficult guests or rules violations (e.g., guests not respecting your pet or occupancy policies, etc.).

We asked Blevins if she had any more tips on how to make your Airbnb side hustle (or career) a success. She shared the following advice with us:

Empathize with your guests and address any concerns they have

Being an Airbnb host means dealing with customers. In an ideal world, none of them would ever be difficult, but that’s not realistic.

“For demanding or difficult guests, it is important that you acknowledge, empathize, and then act,” said Blevins.

She noted that some things are within your control, such as an appliance breaking, and you need to address those as quickly as you can for your guests. Other things aren’t under your control, such as the weather. “In that case, you need to acknowledge their disappointment, empathize with them, and offer some alternative rainy-day activities.”

How to handle guests who demand refunds

Eventually, you’ll almost certainly host a guest who claims to be dissatisfied with something and demands a partial or total refund. Sometimes, their complaints will have merit; other times, they won’t. Approach each situation on a case-by-case basis and decide what the appropriate course of action is.

Blevins told us a story about one guest who, after arriving at the property, immediately started wiping down the floor with wet paper towels to show her that the cleanliness “wasn’t up to her standards.”

“I immediately offered to send the cleaners back there to redo the floors or offered her a full refund if she wanted to find somewhere else to stay,” said Blevins. “She opted for the first but then asked for a partial refund.” Although Blevins didn’t believe the situation warranted that, at the end of the guest’s stay, she still refunded her the cleaning fee as a goodwill gesture.

“Every situation is different and has to be approached differently,” she said.

Be a good communicator (and find your communication style)

Blevins stressed that it’s important to manage expectations with your guests, which requires excellent communication skills. However, she noted that this doesn’t necessarily mean being hands-on.

“I make sure to make a personal connection with all of my guests. It helps ensure they leave good reviews and feel comfortable approaching me with concerns. On the other side, many successful hosts are more hands-off. Many even use scheduled messages and token responses.”

It’s okay to tailor your communication style as a host to your personality. Just make sure you’re getting everything across to your guests that you need to and that they’re comfortable telling you if there are any problems.

Do your homework when you’re starting out

As mentioned, before you get your own business up and running, it’s worth booking a few stays in local Airbnbs to see what works and what doesn’t work (as well as to gauge the rates you can realistically charge).

Blevins told us that “putting yourself in your customers’ shoes from the start” is crucial. “Make sure to read reviews for listings as well,” she said. “See if there are common aspects people like about the area or repeated concerns voiced there.”

She recommended listening to Airbnb hosting podcasts—”it’s a great way to get various perspectives and look for common strategies that work”—and singled out Thanks for Visiting as one that she’d enjoyed in the past.

She also suggested reading Every Airbnb Host’s Tax Guide, which will walk you through your tax liability as a host and point out various deductions you might qualify for.

Keep your eye on the bottom line

Blevins pointed out the necessity of treating your Airbnb hosting business as exactly that—a business. This can be surprisingly difficult, as it’s easy to get emotionally wrapped up in real estate that you own.

“It is vital that you see your space as a business and emotionally detach from it,” she said. “It is very difficult to watch people not care for your space like you do.”

For her, treating her investment properties as a business means forcing herself to:

• Avoid using them herself on peak travel dates to maximize her profits
• Replace items and move on quickly when they’re stolen
• Say no to family and friends who want discounts

“These days, my bottom line is at the top of my mind each and every day,” she said. Depending on your personality, following this advice might be easier said than done, but it’s very important if you’re going to make your Airbnb a success.