AIRBNB CASH FLOW -what you need to know!
The biggest problem that gig-economy entrepreneurs like Airbnb hosts face is the lack of a steady cash flow.
Generating a steady income on Airbnb can be hard because you are at the mercy of the market. If there is no demand for the space you are renting, you don’t make money. Unfortunately, expenses like; utilities, taxes, insurance, rent, mortgages and maintenance costs, don’t stop when the demand for your rental unit is low.
This situation can put a host in a terrible bind. The host has to dip into savings or retirement funds, sell investments, pay bills with credit cards, or take out a loan to cover expenses. Things can get truly desperate for those on a limited income, or people who have other expenses to cover.
Things can get even more frustrating if you have future Airbnb bookings, but no extra cash to cover day-to-day expenses.
A Source of Extra Cash Flow for Airbnb Hosts
To make matters worse, there are very few credit or funds available for people in the gig economy. Many traditional lenders, such as banks, will not advance money to Airbnb hosts.
This is where Payfully comes in. Payfully is a factoring service that buys your accounts receivable or Airbnb bookings at a discount.
It works like this: if you book a room to a guest for $100, Payfully will deposit a smaller amount to your bank account (around $97). Then when the guest checks-in and Airbnb pays you, Payfully will deduct $100 from your account.
The advantage to this system is that you can get the extra funds you need without taking on additional debt; tapping your savings or real estate equity. If you manage it correctly, Payfully can help your Airbnb business become self-supporting by maintaining steady cash flow.
How to Avoid Airbnb Cash Flow Problems
Following a few simple rules can help you avoid cash flow problems, these include:
- Pay yourself first. Before you pay bills or cover expenses, take 10% to 20% of your earnings and put it aside in a savings account.
- Create an emergency fund. Have a separate account with a specific amount of cash in it; say $1,000 or $5,000, you can access quickly in an emergency. Many banks will give you a savings; or even a money market account, with a debit card that is ideal for such a fund.
- Create a business plan and a budget from the beginning. Sit down and figure out what you will need. Decide what it will cost, and draw up a budget. Determine how much cash flow you will need to cover expenses each month, how much your emergency fund should be and who will manage your rental if you are not available. Write these things down! Simply thinking about such things will make it easier to deal with them.
- Learn as much as you can about Airbnb before you start. The more knowledge you have; the easier it will be to determine costs, and manage them. The best way to learn about Airbnb is to talk to some other hosts and pick their brains. Experienced hosts can provide valuable tips on things like dealing with guests, managing cash flow and cutting expenses.
- Try to contain costs as much as possible. There are many effective strategies for limiting Airbnb expenses; including automation, and handling chores like cleaning and maintenance yourself. A good rule of thumb is to handle those chores you enjoy and outsource what you don’t like. That way you can have fun and save money at the same time!
- Start small. Try renting out just one unit or room on a limited basis to see if you like Airbnb hosting and if you can handle it. Short-term rentals are not for everybody, so try it before investing a lot of money or time.
Maintaining a steady cash flow is the key to success in Airbnb. If you would like to get your Airbnb payments now instead of waiting weeks for your guest to check-in, sign up at Payfully.co and request your cash advance now.
To request your first cash advance for FREE, just tweet a selfie or a picture of your listing and tag @Payfully, we will send you a special code!