You’ve heard about all the hype surrounding Airbnb & VRBO and you’re ready to get in on the market. It might seem like an easy decision – throw some clean sheets on the bed, take a few pictures, write up a quick description, and post a listing, right? The reality of converting any property to an Airbnb is that it is a considerable investment, one that should be weighed heavily beforehand. Converting a home or apartment to a short-term rental is a major investment of both time and money. The more prepared you are, the happier your guests will be, which will bring in higher ratings and a higher rate of return on your investment.
1. Determine if Airbnb is even feasible.
Before you proceed with listing your property as a short-term rental, it’s important to weigh the decision of converting to Airbnb. Determining if your property is better suited for a furnished or an unfurnished rental will require some research and a feasibility study:
Are short-term rentals even allowed?
One of the first things you need to find out are rules and ordinances about short-term rentals. Most cities and towns have ordinances that define the minimum rental term allowable for different areas. In some places, Airbnb is prohibited, or highly regulated and require property owners to register their property, and often times there are fees associated with the registration.
In Portland, Maine, an ordinance was approved by City Council in April 2017 that required short-term rental registration with the City of Portland and capped the number of non-owner occupied short-term rental units on the mainland at 300. The requirement went into effect on January 1, 2018 and penalties may be assessed for operating an unregistered rental unit. And just across the bridge, South Portland, Maine residents continue to battle over new short-term rental regulations. In February 2018, South Portland’s City Council voted to ban unhosted short-term rentals in residential zones; however, a date has been set to reconsider the controversial rules as required by a referendum petition against the rental ordinances.
Secondly, if you are able to pass the ordinance hurdle, one of the other considerations is the type of rental property you own. If your unit is a condo or in an association, you should check the rules and regulations for rentals. Does the association allow short-term rentals and if so, what are the rules for renters and what are the minimum lease terms? Does your homeowners insurance allow rentals, if so, will the premium increase be worth it?
What is the ROI?
Since location is everything, you will need to determine if the demand is there for short-term, furnished rentals in your area. For instance, if your property is located in Scarborough’s Pine Point or Cape Elizabeth’s Rocky Point, there is no doubt that spring and summer will attract Maine vacationers and can support a high rental rate, and in turn a favorable return on your investment during peak season. But does the income gained during those months make up for winter vacancy or perhaps it’s worth it to keep it running at a lower rate in the off-season? There are many options to be considered when it comes to determining what’s best for your situation and budget.
Normally short-term rentals will bring in a higher rent amount, but the frequent turnovers are more labor intensive and the vacancy rates are higher, so these additional expenses would need to be factored into your operating budget. The upfront costs of preparing the unit will vary depending on where you are starting from, the size of the unit, and the quality of the renter you want to attract. If you are converting a unit you have been living in, you may consider using what is there already. This may or may not work and could easily backfire, costing you more money in the long run. You want your property to stand out from your competitors, and you want your renters to enjoy their stay. The last thing you want is a negative review left online. That’s tough to recover from.
2. Do an initial assessment of your property.
Any unit that has been lived in will have standard wear and tear, but you want to return your property to a like-new condition. Sometimes it takes an outsider’s point of view to really see what your property needs, which is where a property manager can come in to provide useful feedback so you can determine what repairs need to be made and what items need to be replaced:
- Inspect walls, floors, and baseboards for scuffmarks. Make note of areas where touch-up paint is needed.
- Assess your furniture, smoke & CO2 alarms, beds (both mattresses and frames), light bulbs, ceilings, blinds, and kitchen appliances to see what needs to be updated.
- Consider what home valuables you own, and how you will protect your property. We recommend removing all valuable personal items from the premises.
- Make a list of the unique and valuable aspects of your property that set it apart from the rest. Do you have garage parking? Lots of storage or shelving? A cozy breakfast nook? Later on when marketing your property, you can use these as selling points.
3. Start cleaning.
Or, if attention to detail isn’t your strong suit, hire someone to clean for you. After living in one place for a long time you might be able to overlook dusty baseboards, but you can be sure that someone walking into your unit for the first time is going to notice. Cleanliness in the Airbnb business is top priority, and will directly affect ratings.
4. Download an amenities checklist and start shopping.
Use our amenities checklist to ensure your unit is set up with all the amenities necessary to meet and exceed your guest’s expectations. Using this checklist, we recommend you create an inventory of what up-to-date amenities you already have in place. Not only will this list show you what you still need to buy, but it will also allow you to track what you already have so that you can protect yourself as an owner.
It is important to note that high speed internet is an absolute must. A business executive in town for a few days will need immediate access to important online documents, and you can be sure that your ratings will reflect any problems with the internet.
TIP: Save your shopping for holiday weekends, and purchase online when possible. That way, you can catch special online deals and have them delivered directly to your door. Not only will this save you time and money, but it will save you trips back and forth to the store.
5. Research insurance and Airbnb policies.
You will need to revisit your homeowner’s policy and purchase landlord or rental dwelling insurance as well as choose from Airbnb’s cancellation policies. Be sure to select a cancellation policy that works best for you and your situation.
6. Determine a nightly and weekly rate.
Consider your location. Proximity and convenience will influence price significantly, as will whether or not parking is included and how up-to-date your appliances and interior are. Research other Airbnb rentals in your neighborhood to see what they’re charging, assess what makes your property stand out from the rest, and figure out your individual price point from there.
7. List your property.
How you represent your property will have a huge impact on the kind of guests inquiring. We spend a lot of time screening to find the perfect tenant for our owners, and it all starts with how a property appears in the listing. That being said, don’t feel the need to exaggerate – represent your property as accurately as possible. Guests will appreciate your honesty.
The listing is where you get to show prospective guests what’s unique about your property. Create a distinct, concise title that will peak the interest of the kind of guest you want staying at your property.
High quality photographs are absolutely essential. We recommend having a professional photographer take photos so that they can ensure a beautiful online representation of your property.
Write up a description of the unit that provides readers with enough information to decide whether your property would be a good fit.
- Describe the general layout of the unit. Make note of attractive qualities like hardwood floors, granite countertops, or spacious bedrooms.
- Is the design modern or historic? Does it have any interesting quirks?
- Give your reader a description of the surrounding neighborhood. What restaurants and shopping are close by? Is your property within walking distance of the grocery store or a local music venue?
- If the unit doesn’t come with a washer/dryer set, provide information about the nearest laundromat.
If you’re not interested in writing your own listing, you can provide a property manager with a few details about your property and they will handle the rest. Some property managers offer an a-la-carte list of services so that you can decide how much or how little you want them to be involved. Many Airbnb hosts have been successful converting and managing their own properties, but hiring a property manager has its advantages too. Delegating responsibility to an experienced property manager can provide owners with peace of mind knowing that their properties are in good hands.