So You Want To Turn Your Rental Property Into An Airbnb (Part Two)
We’ll continue to look at some more considerations so you can decide if turning your rental property into an Airbnb is the right move for you. So far, what we discussed has been in relation to location, logistics, and photos. You can read more about that here.
Keep track of your expenses.
One of the most important actions you can take is keeping proper, meticulous track of your expenses. This serves a couple of purposes: you’ll want to make sure you are making enough money to be able to pay yourself at a rate that is worthwhile while being able to cover the cost of maintaining and owning the property. You also want to be sure you’re making a profit that either meets or exceeds the amount you would make if you were renting out this unit long term. If you’re not making at least minimum wage for every hour you put into maintaining the property, it might be time to take a harder look and decide if the profit you are turning is worth your time. Can you reduce the hours you are working? Can you cut down on costs somewhere?
The next significant reason you should be keeping track of your expenses is for tax purposes. Many things you buy can be written off as a business expense, but you’ll need to keep an itemized list including each thing you’ve purchased. What qualifies as a write-off varies between cities, states, and counties so be sure to consult your local tax professional.
Besides write offs, you should be keeping track of profits so you can pay the proper amount for your taxes. Since you’ll have many, many more transactions than a long term rental unit, having to backtrack through each and every one will be a hassle. Each short term stay is one transaction, meaning you can quickly rack up hundreds of different “tenants” in a calendar year. Compare this to a long term rental, where you only really have around twelve transactions in a calendar year.
Update your rental property.
This sounds obvious, but updating and sprucing up your rental property can help breathe new life into it. Potential customers are quickly scrolling through the different listings, meaning looks matter significantly. You can take all the eye-catching photos in the world but if the actual interior of the home is drab or outdated, buyers will move on to cuter, more aesthetic places.
Take some time to hang up some pictures, fix any leaky sinks, and descale bathroom appliances. These are easy actions that you can do without any help for a minimal cost. People who visit and leave reviews about your Airbnb will take careful note of the cleanliness and aesthetic of the place. (There is an entire category about cleanliness that Airbnb will note in your listing. Here’s a link to a place that is “sparkling clean” according to recent guests.)
Be Unique.
Being unique is one of the more difficult decisions you will have to make. According to a study conducted with over 900 respondents, when a customer stays at an Airbnb they are generally choosing based on price, its novelty, and the location. These three factors will be essential in determining your Airbnb’s success.
If you are able to offer a unique, novelty experience, this will set you apart from your competitors. For example, you can stay in a seashell-shaped house, a tiny house, or a literal castle. While your home doesn’t have to be as extreme, having a theme or a quaint, cozy house can drive flocks of people to your rental. Think about your location and make your own twist: there are thousands of beach houses listed on Airbnb near the coast, but how many of them are actually shaped like a seashell?
Final Thought
Converting a rental property into an Airbnb can be difficult, but if you happen to have a great location and an ability to turn a short stay into a unique and memorable experience, you might just find yourself earning more money. While long term rentals are a safe bet, you might be missing out on a lot of money by not considering short term rentals.
