This article originally appeared on Business Insider.
Ever since I was young, I had an entrepreneurial spirit. I sold lemonade at my dad’s barber shop every summer growing up, and in high school, I offered beauty treatments like eyelash extensions and eyebrow waxing out of my house. I’ve always done odd jobs too.
My brother died when I was 16, and that was a huge wakeup call—it reinforced to me that life is short, and I didn’t want to spend my days working a 9-to-5 job. I would rather work for myself so I can spend more time with the people I love.
I graduated high school and decided against college: I wanted to try other ventures instead, like trading stock options and drop-shipping. But once my partner and I decided to give Airbnb a shot in May 2021, there was no turning back. We’ve grossed over $375,000 this year, and our best month ever was this past May, when we grossed $58,120.
You don’t need to own a home to start an Airbnb
“The Sunrise Penthouse Master Bedroom” in Downtown St. Louis Inayah McMillan, one of McMillan’s listings.
I think there’s a big misconception that you need to be able to buy a property to be an Airbnb host: while you definitely have to have solid savings (I recommend at least $8,000 to $15,000) or a good credit score you don’t. own any properties.
using Rent arbitrage, we rent out all of our listings and then list them on Airbnb. As a disclaimer, you need to check your state’s government website to make sure rent arbitration is legal in your area, and you’ll need to get your landlord’s approval first.
Startup costs vary depending on where you are and the size of the home, but I typically set aside $8,000 to $15,000 to set up each new listing, which covers the first and last month’s rent, security deposit, furnishings and supplies. Going into this, we had most of that money saved up, but I also used some personal credit. Now that we have switched our business to an LLC, we use business credit when needed.
Our regular monthly expenses include rent, utilities, cleaning services and automation tools. Our less expensive listings, such as our one-bed, one-bath properties, typically cost around $1,500 in monthly expenses and bring in anywhere from $2,500 to $3,000 per month – that’s up to $1,500 per month.
Our largest listing, which has four beds and two baths, costs $3,500 per month to run and brings in about $7,500 to $10,000, which means we can make up to $6,500 in monthly profit.
To determine what to charge at night, I recommend using dynamic pricing automation (we use PriceLabs), which sets prices based on the price of similar listings, time of year, overall demand, etc.
I highly recommend getting an LLC
When we rented our first unit in May 2021, we signed the lease in our own names and a few months later we formed an LLC — this was the key to scaling my Airbnb business.
A “Beaming Carriage Home” in the Central West End, St. Louis, one of Macmillan’s listings. Inayah McMillan
After that, we signed a lease on another property in November. And in 2022, our portfolio really expanded; We signed two in January, another two in March, another two in May, and our two most recent properties were signed this past June. That makes a total of 11 listings — 5 houses and 6 apartments combined — with a few signed but not yet running as Airbnbs.
Once you have an LLC, you can use a corporate lease. They are essentially the same as individual leases, but renting under our company name allowed us to sign on 4 properties at once — something that landlords typically don’t allow you to do otherwise. If I could go back, I would have registered my Airbnb business as an LLC from the beginning.
Having an LLC also offers tax benefits (we can deduct business expenses like rent, utilities, transportation, supplies, etc.), and makes a big difference when it comes to rent arbitrage—it allows you to identify yourself as one to landlords. is A company rather than an individual, which sounds more professional.
The process was not difficult or very expensive. I used InkFile, an LLC-building website that charges nothing but your state fee, which varies. Even though my listings are in Missouri, I live in Nevada, so it came to about $500.
Automation is key to software scaling
“Beaming Carriage Home” in Central West End, St. Louis.
Another thing that sets me apart is a private booking website. When I contact landlords, I usually send them an email asking if they are accepting corporate leases and direct them to my site. It gives them a professional online pitch that shows what my business has to offer, who we are as a company and how we can help them as a short term rental company. Most of the time, I get more yeses than yeses, but it’s a numbers game, so I reach out to as many people as possible.
When we first started, we managed most of the operations ourselves. But to scale, automation tools are crucial. These apps have allowed me to devote much less time to my business each week:
- PriceLabs: Sets prices based on the price of similar listings, time of year, overall demand and other factors
- Yale August Smart Locks: Automates our check-in process to allow guests and cleaners to have their own unique codes
- NoiseAware: Monitors noise levels to ensure guests don’t speak too loudly and disturb neighbors
- Hospitality: Automates all messages to guests and cleaning staff
- Nest Doorbells: Ensures our guests have checked in safely
Now, my business is almost entirely passive, so I only work an hour or two a week and dedicate that time to responding to guests who have a specific request that can’t be handled by an automated message or a specific property. Cannot be checked. .
When I’m looking to rent a new property, I first do extensive research using AirDNA and Airbnb. AirDNA shows you average rates, occupancy levels and annual revenue for a given location, as well as estimates for top-performing zip codes or cities. We also look at other Airbnbs in the area of comparable size and see what their nightly rates are.
After I run the numbers and predict my expected costs and profits, I consider the ratios and decide if it’s worth going ahead with. When it comes to scaling, running a real Airbnb is easy – it really just depends on how much time and capital we have to set it up.
The market has not slowed down my business
While there are many Uncertainty In the market right now, I have not experienced any general decline in business. November through February is usually our slow season, so our revenue has dipped a bit, but for the most part we’ve been pretty consistently booked.
Choosing properties keeping in mind your customer base is extremely important. Our corporate business is travelers — we have a healthy mix of one-bedroom apartments and larger accommodations, and we’ve chosen locations that are close to universities and hospitals. Typically, that target group will travel year-round, even during recessions.
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