If you’ve recently taken the plunge into Airbnb hosting, you’ll quickly find yourself swimming in a proverbial sea of variables.
Everything from pricing strategy to marketing and finding a reliable cleaner.
It’s exhausting, honestly. Thank goodness for experienced and successful host Jasper Ribbers, who, along with co-author Huzefa Kapadia published the excellent guide book Get Paid for Your Pad. Their book will help you to optimize your Airbnb, as it did ours…
Within a month of our planned “go live” we got our first two bookings. In our case, waiting until after the holidays was all it took.
You want to get a healthy number of bookings under your belt to acquire good reviews. Those reviews will then drive new bookings, and then you’ll have the credibility to raise rates.
How to Get Paid for Your Pad
1.) Eliminate the security deposit. Deposits can be a turn-off for guests who might fear nitpicky things being charged back to them.
2.) Remove cancellation fees. I’m too new in this game to be restrictive with cancellations. My main focus needs to be getting guests in there and giving positive feedback. The more reviews I get, the more my listing will rise in the search. Just like a new product trying to elbow its way into a crowded market, you must come in low to get noticed!
3.) Enhance listing descriptions. It’s much better to evoke emotions when describing your space. Don’t simply say, “There are two bedrooms and two bathrooms, nice hardwood floors, and a balcony to watch sunsets on.”
An improvement might be, “Come back from a long day enjoying the white sandy beaches and relax on the sun-filled balcony with a glass of wine. Retire later to a master suite appointed with luxurious bedding and plenty of space to stretch out after a day of Northern Michigan adventure!”
4.) Use flexible lengths of stay. I had my listing limited to one-week minimum stays. But Airbnb is built on the idea of a quick stopover. Maybe one or two nights for most guests. To generate traffic, more reviews (key for a profitable vacation rental!), and ultimately more cash flow, I changed my minimum stay to one night.
The book advises a maximum stay of seven nights to promote turnover and more reviews when starting. After about ten bookings/reviews, we went back to 2-night minimum stays.
5.) Accommodate parents with infants. What great advice! I remember when our twins were at that stage. It sure was nice to arrive at a hotel and have pack-and-plays already set up in our room for them. Along those lines, I plan to buy a pack-and-play for the condo, so that little visitors can sleep safe and sound.
6.) Cut prices, at least initially. This is a key one. The book suggests undercutting the local competition to get those first few guests and some reviews coming in. Discounts of 20-30% are suggested. Whew! Now that that’s taken care of, I doubt you’ll find a better value until summertime rolls around.
7.) Lower the cleaning fee. I originally had a cleaning fee of $75, about enough to cover three hours of clean-up work. I’ve lowered it to $50 and will eat the $25 if there’s an extra hour needed to clean up.
I’ve also offered my cleaning lady a $25 bonus for each 5-star review we achieve. It can’t hurt to offer incentives to ensure a super clean pad. If nothing else, the “Get Paid” book is clear on the importance of a super clean, spick-and-span experience.
8.) Over-communicate, and respond quickly! I’m now poised to get back to all inquiries within minutes of receiving them. My phone goes nuts now with each one – notifications come through via the Airbnb app plus SMS text messaging and email. Bases are covered.
So when I get an inquiry, I’m quick to respond and respond with enthusiasm and detail. The more gracious you are throughout the process, the more likely you are to receive great reviews.
9.) Review your guests right away. This is a tactic that makes sense. Put the onus on your guest to give YOU a good review, by beating him to the punch.
Right after checking out, follow up with your cleaner to make sure the place was left in good shape. If so, give your guest a 5 star review.
Optimize Your Listing With a Solid Pricing Strategy
Airbnb puts forth a good effort to automate as much of your listing as possible. They have a pricing engine that sets base rates using data from local competition and seasonal factors. Sadly, as I found out through experience (backed up by Get Paid for Your Pad), Airbnb tends to lowball listings when using its Smart Pricing feature. I will give this feature a try again later on to see if the algorithm has improved.
Until that time, I’m happy to use BeyondPricing to set the price for the unit as demand and events change frequently. BP integrates seamlessly into Airbnb and VRBO, both of which I use. What’s also great about the two platforms, you can sync calendars between them with ease.
I pay Beyond 1% of all booking amounts for the service. I am 100% certain BP has yielded 20%+ in revenue I would otherwise have missed. The only trick is you have to tweak base rates as the high season transitions into the low season (and back again).
Tip: Tweak prices to the point you are getting bookings (on average) 3 to 4 weeks out. If guests are mostly booking further out than that, it means you’ve underpriced your Airbnb. If guests are booking last minute, you are overpriced and relying on last minute discounts to lure them in (thereby under-cutting your ideal rate!)
Should You Allow Long-term Guests?
Vacation rentals aren’t intended for stays longer than one month. I would consider longer-term rentals of one to three months during slower shoulder seasons when bookings are scarce. Having just a single tenant to look after for a long duration allows you to catch your breath, and capture some rent while you plot your high-season strategy.
Keep in mind that for longer-term rentals of up to a year, you’d have to take the conversation offline and work through a lease agreement. Airbnb and VRBO are good at restricting hosts’ ability to make “back door” arrangements. Email addresses and phone numbers will be blocked out in their message exchange system.
In our case, we were able to rent our unit for a month before the high season arrived. The booking was made through Airbnb, and we fetched a cool $1,200 for March. Not bad for a typically dreadful month demand-wise.
Managing Guests With Automation
Remember that there’s much more to this endeavor than the online experience. If you want to build and keep up a reputation for excellent customer service, you’ve got to communicate early and often with your guests. That means sending a note before they arrive:
“Hello, Jane! I’m looking forward to hosting you and your group this weekend. Please let me know if I can be of assistance with anything you need. I’m happy to offer suggestions on activities, dining, and sites to see. You’ll receive your entry code on the day of check-in via a special link from Airbnb. Best!”
It’s not much, but you need to remember to do this every time. And with Airbnb, you might have 3 or 4 different guests in a given week.
Thankfully, both Airbnb and VRBO have a templates feature that allows you to reuse common messages over and over again. I use this feature for new bookings, pre-check-in, post-check-in, pre-check-out, area activity ideas, and review reminders. Simply swap out the names and the rest of the content can be sent off as boilerplate.
There’s also a bit of back and forth that can happen during a guest’s stay. Some guests you’ll never hear a peep from. Others, you’ll get texts with selfies showing what a great time they’re having. I prefer somewhere in the middle as a host. Just be sure no matter what, to be RESPONSIVE.
One of our very first guests couldn’t stop gushing about how awesome the place was, which was music to my ears (eyes), but after a few more messages asking “where did you buy this piece or that piece?” it started to get old.
Still, you have to take the time to respond, and treat your guests with respect. That extra effort pays off, especially when you get those 5-star reviews rolling in.
You Must Use Top-Notch Photos for Your Listing
Staging any profitable vacation rental for appealing, pro-like photos is probably the single most important factor for generating bookings. You’ve got to make the place shine for the listing to get some traction.
1.) Rely on natural light. Early AM seems to work well. You want the sun to be present, but not glaring too much through the windows.
2.) Take your photos at waist level. This is what real estate pros do when staging a home for sale. From the waist or roughly three feet off the ground, you create a larger feeling space. I used this tip to excellent effect in the “after” images earlier on in this post.
3.) Put the clutter away. Simple things count, like getting rid of a second trash can in the kitchen used for recycling. And putting away extra charging cables.
4.) Apply a good filter to enhance the photos. I love the Camera Plus app on my iPhone 6. After I snapped all of our vacation rental shots, I applied the “Clarity” filter to bring out the contrast and brighten all of the shadows. It’s worth a couple of bucks for the pro version of this app.
5.) Don’t overdo it on photos. Just pick the best dozen and leave a little to your guest’s imagination.
The wonderful thing about the sharing economy is that it’s providing incredible opportunities to make money that wasn’t there before. Airbnb, VRBO, Lyft, Uber, DogVacay, GetAround, you name it. Photographers of weddings can now zip around and help us amateur vacation rental hosts!
Optimize Your Airbnb With Superhost Status
Before long, we had achieved ten 5-star reviews out of ten possible tries. Airbnb is excellent at promoting guest and host mutual feedback.
Now that we’ve achieved Super Host designation on Airbnb, we’ve seen a surge in views of our listing by 30%. This should easily lead to more bookings.
Consider that there are about 4 million Airbnb hosts on the platform today. About 7% (280,000) of these hosts are Super Hosts. It’s a special club that rewards its members but requires a high level of commitment to customer service and going above and beyond for guests.
Superhost is a meaningful achievement and one you should strive for. Not only will you get the added visibility, but you’ll also get perks including $100 towards your next Airbnb vacation.
5 Tips for Achieving Superhost Status
1.) Find a great cleaner. And when you do, take good care of him or her. Give the occasional bonus for continued 5-star marks for Cleanliness (and accompanying review comments noting how clean the unit is). Pay a decent wage, but expect excellent reviews. I currently pay our cleaning crew $125 for each turnover for a 1,000-square-foot living space.
That’s almost $50/hour for a 2-3 hour job. The good news? The guests pay cleaning costs – it’s a pass-through fee with each booking.
2.) Stay at other Airbnbs or hotels and bring back good ideas. Whenever you travel, take note of the features you like and dislike. I’ve brought back a few ideas to enhance our pad including adding an Amazon Echo (great for juke-box music and weather updates), two different coffee makers* (traditional drip and an Aeropress), and cozy blankets for the sofa, a brochure basket, etc.
With a keen sense of what works and what doesn’t, you can borrow and steal the best ideas from other Airbnbs. Make your space a cozy and relaxing retreat that welcomes your guests home after a day on the beach, exploring, and having fun. They WILL appreciate it!
3.) Stick by your minimalist tendencies. I.e, Don’t over-furnish or overfill the space. The more open and airy your living space is, the cleaner and more inviting it will feel, and guests will have less stuff to break (or complain about). When you overstuff a living area, guests feel that they’re imposing on someone else’s home.
Maybe we can call this the Goldilocks Effect? Time and time again, guest comments have praised us for a clean and attractive space. Some basic tips for the newbie decorator: Stick to light / neutral wall colors. One big mirror per room to make it feel bigger and bring in more light.
One big showcase / bold work of art on a wall opposing the mirror. Avoid extra furniture, like a desk or bookcase. Stick to a sofa, maybe two chairs, end tables, a coffee table, and a small TV stand. In the bedrooms, all you need is a bed, two nightstands, and a single dresser.
4.) On that note, stay a few nights or a week at your Airbnb to get a sense of what works and what doesn’t. Our family spends a full week at our condo in the summer, visiting family and doing our best to RELAX. While there, it’s an opportune time to make notes of possible improvements, perform a little light maintenance, and take inventory of supplies.
It’s the little things that count. Are the pillows still comfy? Is there a pile of dust on top of the fridge? Is the dryer’s lint filter clogged? These visits are important. I’d prefer twice a minimum per year to stay in our pad if we could.
5.) Little touches go a long way. We leave a bottle of decent $10 white wine in the fridge for all our guests. There’s a guest book as well. Whenever we’ve stayed at beds and breakfast or boutique hotels, it’s fun to thumb through the guest book and see how others enjoyed their stay.
It does influence your perception of the experience. We put flowers in a planter at the front stoop and put out a welcome card on the kitchen counter. Many hosts go much further, leaving treats, stocking the fridge, or having music playing when guests arrive.
Build Goodwill With Neighbors
One regret I have is that I didn’t make more of an effort to reach out to ALL of my neighbors before I started up bookings earlier this year. I would strongly suggest you get to know as many of your neighbors as possible and float your intent. Better to know in advance what the perceptions will be, and simply making yourself known builds some trust.
Earlier this spring one of our neighbors complained about noise from slamming cupboard doors. This neighbor is a really good chap. He offered to install slow-closing hinges on the cupboards and drawers. I paid for the hardware, he installed.
Problem solved. This was a neighbor I had met before firing up the rental, and I’m glad I did.
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freddy smidlap says
holy crap, cubert! that was freakin’ comprehensive. it should be required reading for anybody thinking of jumping into the pool on these platforms. i’ve been kicking around the idea of renting a couple of bedrooms in our big-ass house or even renting the whole thing when we’ll be away. we just have so much of our own stuff (some of it nice) that the idea is daunting. plus we have an over-friendly face-licking dog and not everybody loves a good face lick. these things keep me hesitant…..for now. great article you’ve written here.
You read the whole piece right? Word for word? 😉
Thank you for the kind comments!
I agree with your on renting your own home. We didn’t get any bites, so it was easy to call the experiment a fail. I’d rather get good money than to go way low and risk any problems. And we don’t even have a dog to offer free kisses!
Yeap, holy moly. What an awesome comprehensive post! Great job.
I’ve been thinking about converting the basement in our duplex into a short term rental. This will help a lot. It sounds like a ton of work, though. I bookmarked this for future reference. I only got through half of it so far. 🙂
Hey Joe! It was an awful lot of work, but most of the content was already published in like a dozen earlier posts. Still, aggregating and organizing all of it was an editorial nightmare. I rewrote major sections and took out a lot of the fluff. It’ll be a while before I try something like THIS again. Thank you for bookmarking!
Tread Lightly, Retire Early says
I realize it’s a TON of work, but I can’t help but consider going the Airbnb route someday (would have to decide to buy a property first though). And as a user, we very rarely book throughout VRBO these days because the fees are so dang high! Though we are actually going that route in Hawaii this winter because they had the better options/rates for that week for whatever reason.
You really should give it a go, seeing as how you have a really good financial head on your shoulders, you know about what makes a good Airbnb based on your travels, and I think you’d be easy for guests to relate to. Super Host in your future? Methinks yes!
VRBO fees are absurd. No argument there. I even have to charge more because they ding me on guest credit card fees and their own cut of the money. Grrr…
[email protected] says
Thank you for this comprehensive post! Definitely one that needs to be saved. I purchased a property specifically to put on AirBnb but I relied mostly on someone to manage and set it up so I didn’t do that much. That’s a good thing but a bad thing… I definitely see the demand but it’s also not as passive as long term rentals even with a property manager. Plus the property manager takes a big piece. I’ve had some hiccups with the property but hopefully things will improve. It would be great if I could invest closer to home but I can’t afford real estate in NYC!
You’re welcome, Andrew!
Curious, how much did you pay for someone else to manage and set it up? Are you getting the returns you had expected at the outset?
NYC is a goldmine for Airbnb but the bar is awfully high for entry.
Thanks for stopping by!
[email protected] says
25% for full service, but the PM does 15% if just handling bookings and coordinating cleanings. With the full service, the PM said the set up was included but it’s possible he took a cut when I paid for the furnishings as well as for some minor updates to make it look nice. I had my first guests last week and the reviews were less than stellar so I’m working with the PM about those issues. I definitely see a decent amount of demand though. As for NYC, I wouldn’t be able to buy property here because of the costs plus they strictly regulate it here…the hotel lobby isn’t too fond of AirBnb =)
That’s a healthy chunk, but if you’re making a killing, you should be able to absorb it okay.
Right on about NYC. A goldmine where the gold can’t quite be extracted due to many factors. Hotel interests chief among them!
I stumbled upon your Cash Flow Index post and since then I’ve been snooping around and I’m finding a lot of great reads. Short-term rentals are something I’ve been wanting to get into for a long while. Short of reading a book about this is subject, this is by far the most comprehensive short-term rental post I’ve seen.
Keep up the great work. I’ll be following you to retirement.
I’m glad you found me, Jairo! Appreciate the compliments. Having a good following helps me stay motivated!
I don’t think that the statements that you made about Airbnb submitting occupancy tax is entirely correct. It said in their description that it varies on location. I believe in Colorado where mine are located that they collect the amount of tax and then it is my responsibility to submit to the government entities.
Great call-out, GDS! Thanks for contributing that tidbit. It’s definitely something each individual host needs to investigate to be sure they’re meeting each state’s unique requirements.
Great Document, I will link to this in my own stuff. I have been on VRBO as an owner for about 4 years. I used this as a checklist to make sure I was doing everything right.
Othala! Hey Brother! Glad you found this useful. Curious – Do you use the $499 flat fee, or 8% per booking option with them?
Mindy Jollie says
I’m glad that you talked about the importance of 5-Star reviews on Airbnb and similar sites. My husband and I have been thinking about investing in a vacation home. We’ll have to make sure we do our homework about the options and talk to a real estate professional.
Super important! Also on VRBO. We just got a 3 star review there from a VERY picky guest. Can’t win them all, but we try!!
Annie Lantsberg says
In my point of view, investing in a vacation rental is more profitable as compared to residential rental. However, risk factors associated with the investment in the vacation rental is also higher. Besides, the management of such property is also stressful. So, an investor should be very cautious while purchasing vacation rental property. Assistance from experienced professionals could be very useful while making such a deal. Besides, such property needs proper management and reputed property management firm should be selected for the management of the concerned property.
It certainly can be! A couple hitches are the more intense management required with vacation/short-term rentals. Also, the tax treatment is a little less favorable, since you’re running a hospitality business, not a real estate one. Oh and then there’s the trouble with regulations trying to clamp down on AirBNBs everywhere. Whew! Lots to consider when jumping into this! Definitely talk to your accountant and read up first.
Randy Chorvack says
I can’t believe that Airbnb has $1M in protection policies, as you said! It makes sense though because any kind of person can rent an Airbnb place. It’s good that they’re protected.