How to Triple Your Rental Profits with Airbnb

by | BiggerPockets.com

Like many real estate investors, I rent properties to long-term tenants and collect monthly payments. It’s an old property-rental model, but it works.

However, now that services like Airbnb have popularized independent short-term rentals, old-fashioned renting may not be the model that offers the greatest profit potential.

For a recent podcast, I sat down with real estate agent and investor Tyler Sheff, who is adamant that investors can make more money with short-term rentals than they can renting to long-term tenants.

After talking to him, even I’m thinking about making a change.

Tyler’s first rental property, a fourplex, was purchased in 2014. Now, less than three years later, it’s already a reliable source of rental income. Since Tyler turned two of the four units into vacation rentals, the entire property has consistently pulled in roughly $6,000 per month after expenses.

Tyler’s short-term rentals run for $100–$125 per night on Airbnb. These same units only generated $900-$1,000 per month when rented to long-term tenants.

Essentially, for each unit converted into a short-term rental, Tyler tripled his earnings.

According to Tyler, he didn’t have to do much to get his units ready for short-term guests. He believes other investors can implement the same strategy successfully without too much trouble. If you’re interested in giving it a shot, read on for a few key pieces of advice.

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Prep Your Property with Short-Term Guests in Mind

People tend to have higher expectations for short-term rentals than they do for long-term leases. To ensure guests will be satisfied with your space, you need to take a moment to consider what they want.

Location is obviously important to guests, but it’s not something you can change with a rental property you already own. What you can change, however, are the amenities your short-term rental offers.

Tyler furnished his short-term rentals with everything one would expect to find in a hotel room, including flat-screen televisions. He also equipped both units with high-speed Internet and cable.

While furnishing your rental property with modern items and services may seem expensive, it pays off in the form of positive reviews and increased interest from prospective guests. Besides, if you intend to use your property exclusively as a short-term rental, unbooked nights will cut deeper into your profits than monthly cable and Internet subscriptions ever will.

Related: Airbnb vs. Traditional Rental Income: A Creative Way for Investors to Cash Flow in Expensive Cities

Create a Competitive Listing for Your Short-Term Rental

The work you put into prepping your short-term rental will be in vain if you don’t advertise it effectively. There are three things in particular your listing should include to make it stand out to prospective guests.

1. A Detailed Description

A vague description is a red flag in the eyes of most prospective guests. Write a description that’s detailed and honest, but don’t be afraid to focus on your rental’s best features. After all, the description is your chance to sell people on your property.

2. A Complete List of Amenities

While you should mention at least a few of your rental’s most impressive amenities in the description, including a comprehensive list of everything it offers elsewhere in the listing is also important. Not only will this list help set appropriate expectations for guests, it can also generate additional bookings.

Since some prospective guests will skim through the description, your amenities list is a second chance at catching readers’ attention. List your rental’s amenities to avoid missed booking opportunities.

3. A Set of High-Quality Photos

Don’t skimp on your rental property’s photographs. Listings with low-quality photos tend to perform poorly on sites like Airbnb, and it’s pretty easy to understand why. Think about it: would you seriously consider staying in a short-term rental without being able to see what it really looks like?

If you need help shooting great photos of your rental, Airbnb offers a professional photography service.

Related: The Top 10 Dos and Don’ts for Airbnb Short-Stay Landlords

A Word of Caution on Short-Term Rentals

As with any investment strategy, hosting short-term rentals carries certain risks. Property damage is one of these risks, but it really shouldn’t be your primary concern. There is one thing in particular that has the potential to cut off your short-term rental’s cash flow completely: restrictive legislation.

Airbnb and other services that advertise homes and apartments as short-term rentals are relatively new; lawmakers still aren’t entirely sure how to handle them. In some cities, new laws are making it extremely difficult for property owners to profit with sites like Airbnb.

Last year, for instance, New York banned property owners from advertising short-term rentals on Airbnb.

Fortunately for the majority of short-term-rental hosts, most cities are still taking a supportive stance on services like Airbnb. Regardless, before seriously pursuing a strategy for short-term rentals, you need to be aware that this may change in the near future.

What do you think about short-term rentals? Are they a reliable source of long-term income? Let me know your thoughts in the comment section below!

About Author

Pat Hiban

Pat Hiban sold more than 7,000 homes over the course of his 25-year career in real estate. Now, he dedicates his time to helping others succeed as agents and investors. As host of the Real Estate Rockstars Podcast, Pat interviews real estate experts to explore what works in today’s markets. He also founded Rebus University, an online training platform for real estate agents and sales professionals.

16 Comments

  1. Tyler Huntington

    Great timing with the article, Pat.

    I have two SFRs going live on Airbnb within the next two weeks near Joshua Tree. I agree with your points. I think you can totally beat this topic to death and have ? bullet points. I’ve found my To-do list is never ending. Eventually had to come to grips with the fact this is a long term project and I can make tweaks as time goes by. Just get the darn thing listed and put the unit to work.

    • Jeremy W.

      New York City? It’s a shame that so many now have to run on “stealth mode.”

      For every other city, it pays get your hands dirty with the city ordinance. In Chicago, it put a “kibosh” on most of the “unprofessional” hosts and in places where guests had too many neighbors (major condo buildings). Outside that, the market has gotten more professional because it has to be to justify the taxes.

  2. karen rittenhouse

    My son lives in a very nice condo in the center of a very small town. He travels a lot out of the country but usually for only 3-6 months. Because of that, we didn’t try to rent it out for the first few years. With all the Air B&B talk, I decide to try advertising it weekly or even monthly.

    I was amazed. In 2+ years of marketing (only Craigslist), it has never been vacant. And I have gotten as much as one month’s rent for one week stay.

    Who knew there was such a demand for furnished spaces, not hotels, even in a small town near no vacation areas! People have rented to visit relatives, while remodeling, while in town training for a new job. It’s been great.

    Thanks for your post.

  3. Lazaro Vento

    Airbnb has changed my life I went from broke excar guy to having 20 units. Best part for me is that I don’t own any of the units. I won’t lie to anyone it’s a ton of work me and my wife do all the cleaning. There are always small issues everyday but I can tell you it’s a great way to get free. Also take control of your life you don’t need credit and once’s you get rolling loans for growing are easy to get.

    • Joseph Nichol

      Lazaro congrats on the 20 units and getting free! Are the issues everyday explaining certain amenities for each unit to each tenant? Also, on average how long does it take for you and your wife to get the place back into tip top shape after a tenant who is there all weekend?

      I am looking to start Airbandbing my property in Tucson AZ.

  4. Gary F.

    Airbnb in my area (South San Jose) is quite competitive and not very consistent. I have 4 bedrooms for Airbnb and I’ve been averaging 10 days/month over the past two months. Not enough to make up the difference for longterm rental. And my house is all brand new remodeled and the rooms are super nice, but still very low traffic.

    I like the idea of renting apartments and Airbnb those but I imagine not many landlords are ok with subletting, especially to Airbnb.

    I’m open to doing this model out of state. Any suggestions to where?

  5. Victoria Seale

    I have a STR property in Santa Fe NM. It has been a year since it went live, and a great couple manages it for me as I don’t live in town, and couldn’t be of immediate help if a tenant needed it. They do everything and are well worth the 25% they charge to take care of all the details, booking, cleaning, questions, check in, issues. That said, I pay all the utilities, taxes, insurance, and all the little stuff that makes this place get 5 star ratings like having some coffee on hand, fire wood, internet, paper towels, toilet paper, dish washing detergent, clothes detergent, makeup wipes (to keep makeup off towels), soap, shampoo, conditioner. I”m sure i’m not thinking of some other things that all add up. You have to supply what someone would get in a hotel and more. Hair dryers, irons, ironing board. There are lots of airbnb units in Santa Fe for the size of the town so lots of competition. It was also not easy or cheap getting insurance that covers STR. Maybe most people aren’t telling their insurance companies that they’re doing STR; i don’t know. Maybe some people have guest quarters that are next to or attached to their home, and they are just using their regular insurance to cover the STR unit. If you are renting a room in your house, then my response doesn’t apply to you. Also there is the upfront cost of furnishing a place if it isn’t already furnished. This is a big upfront cost if you want your place to look at all nice. I’ve stayed in airbnbs that look like everything was bought at a garage sale or thrift store. A card table with a table cloth on it. Mismatched sheets that were old. No sense of style or design. Yes it was cheaper than a hotel, and I had a kitchen, but it wasn’t as nice as the Hampton Inn I just stayed in in Salt Lake City. Though I had a discounted rate at the Hampton, so the Hampton was nicer and cheaper than some of the airbnbs i’ve stayed in. Also there is a big seasonal time in Santa Fe. Christmas and Spring Break are popular, but the really big time is the summer, and namely August for Indian Market. Rentals really fall off from November thru April. There are tons of the STR units that go on the market looking for 1-6 month rental periods to see them thru the slow time. I will be switching to LTR starting March 1 and see if that is better. I think it will be from the rents the property manager is shooting for for a furnished LTR. The city also has a yearly STR fee, and initially a lot of hoops to go thru. There can only be so many in proximity to each other. The city doesn’t want whole areas just airbnb units, which makes sense. The LTR tenants will be responsible for the utilities, internet, wood, etc., and that will be great!

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