Goodbye 9-to-5: How to Become a Full-Time Airbnb Entrepreneur

How to start an Airbnb business

Launching and growing an Airbnb business takes time and careful research. Follow these 12 steps to get started.

1. Understand the legalities of Airbnb rentals in your area.

Researching and understanding local laws that apply to short-term rental properties in your area is critical. Your city or state may require registration, permits, licenses, insurance or other stipulations. Some areas forbid the practice altogether. 

For example, in New York, hosts must register with the city and cannot rent homes or apartments for periods of 30 days or less unless they’re physically present. This rule applies even if the host lives in or owns the building. Hosts in San Francisco must reside in the property for at least 275 days a year to be eligible to rent it out short-term.

Consider the following additional legalities: 

• If you rent a property and want to offer it as a vacation rental, you’ll need permission from your landlord to list it on Airbnb. 
• If you own the property and you’re still paying off your home loan, you may need the approval of your mortgage provider. Some mortgage providers will say no while others may require that you switch to a different type of mortgage that may cost more.

2. Determine your potential Airbnb earnings.

You must determine if running an Airbnb business makes financial sense. Consider the following financial factors:

• Nightly rates: You’ll need to charge enough to make a living on your Airbnb rates. Airbnb rates vary widely by location. For example, according to Statista, the average Airbnb rate in San Francisco is $392 per night, while Los Angeles was listed at an average of $292. Chicago averages $161 nightly, while New York City has a relatively low average of $156. Keep in mind that property size, bedroom numbers, amenities and specific locations will cause significant price fluctuations. 
• Occupancy rates: Your occupancy rate is a crucial factor in your Airbnb business’s financial viability. Occupancy rates also vary widely by location, peak season and property type. However, an ideal occupancy rate is considered to be between 65 and 75 percent. For reference, according to Airbtics, Seattle’s Airbnb occupancy rate was 76 percent in 2023, Baltimore’s was 58 percent, New York’s was 72 percent and Houston’s was 56 percent. 
• Additional expenses: When determining your potential Airbnb earnings, you must also consider your mortgage payments, cleaning costs, Airbnb fees and any other property-related expenses you maintain, such as gardening costs. 
• Cash flow and seasonality: Cash flow and seasonality are also essential financial considerations for Airbnb entrepreneurs. In seasonal markets, you’ll make the bulk of your income during specific times of the year. You must carefully manage cash flow to ensure all expenses are paid throughout the year. 

Airbnb’s earnings estimation tool is a helpful place to start when you’re considering becoming an Airbnb entrepreneur and trying to work out your profitability potential. 

3. Know your target Airbnb customers.

Before listing any properties, ensure you understand what your target audience wants and that you can deliver it. Your property type and location will determine your typical customer. For example, a city-center property will likely appeal to younger couples or business travelers, while a lakeside cabin in the woods would appeal to a different demographic.

To better understand your target demographic, find similar properties in your area that receive excellent customer reviews. Note what your target demographic wants and appreciates — and what displeases them. Consider everything from the type of furnishings you provide to the proximity of nearby attractions and amenities.

4. Plan how you’ll scale your Airbnb venture.

You’ll likely need multiple rental properties to succeed as a full-time Airbnb entrepreneur. Depending on how frequently and at what rates you can rent out locations, it may take anywhere from three to 10 properties to build a profitable, sustainable business and achieve financial security.

Growing your property portfolio may be challenging. You must make a significant financial commitment for every new addition. Consider that most lenders want a down payment of 20 percent on a new vacation rental — and they may ask for twice that amount, depending on your credit score. You’ll also need available cash to renovate and furnish additional rentals to the standards guests expect.

Fortunately, there are other ways to earn money from Airbnb, including:

• Airbnb Arbitrage: Boost your income by subletting other Airbnb hosts’ properties via the Arbitrage program.
• Vacation rental management: If you hold a property management license, you can charge other hosts to manage their guests and handle maintenance, repairs and cleaning.

However, Daniel Cabrera, owner of Sell My House Fast SA TX and advisor to many Airbnb entrepreneurs, advises caution when working with programs like Airbnb Arbitrage. “While Airbnb Arbitrage could be very profitable and doesn’t require any upfront ownership of a property, there are quite substantial risks associated with this approach, like landlord restrictions,” Cabrera warned. “Traditional hosting requires more investment but offers more control. Consider your financial status, risk appetite and long-term goals.”

5. Form a legal entity for your Airbnb business.

You should form a legal entity to conduct business as an Airbnb host, especially as your portfolio grows. You’ll save money on taxes by operating through a business structure like a limited liability company (LLC). It also provides a layer of privacy in cases where a problematic guest may attempt to confront you personally or take other threatening actions. Additionally, in the case of a business lawsuit, only the LLC’s assets are at risk, not yours.

6. Get your taxes in order and hire an accountant.

Tax laws and obligations vary by state and your tax responsibilities will differ depending on whether you rent out an entire property or just a single room. Many cities and states charge short-term occupancy taxes, which you are responsible for collecting and remitting.

To ensure compliance, keep meticulous records of all income and expenses. It’s wise to hire an accountant experienced with rental businesses — ideally, one who has worked with landlords and understands the nuances of short-term rentals.

7. Open a business bank account for your Airbnb venture.

Your accountant will likely recommend opening a separate business checking account. Separating your Airbnb business finances from your personal finances simplifies bookkeeping. For example, tracking startup costs is much easier when all expenses are paid from a dedicated business account and many of these expenses may be offset against taxes on your profits. Keeping a separate account also helps you build discipline as an entrepreneur, ensuring that business funds aren’t casually used for personal expenses.

8. Insure your Airbnb business.

Business insurance is crucial for your Airbnb operation. Your LLC should secure buildings and contents insurance policies on the property, along with a commercial general liability insurance policy. Additionally, consider business income insurance to cover losses during periods when the property is uninhabitable, such as after fire damage or other major incidents.

9. Set up a system for managing Airbnb bookings.

Tracking bookings and inquiries may be easy enough initially. However, as your Airbnb business grows, consider obtaining property management software to make this process seamless and prevent double bookings. 

Double bookings must be avoided at all costs. If a client arrives at your property and discovers another occupant, they’ll complain to Airbnb and leave a terrible review for your business. You’ll also risk losing future revenue from repeat guests as many travelers return to their favorite destinations year after year. 

10. Comply with health and safety standards in your Airbnb properties.

When renting your property to guests, you must meet all applicable health and safety standards. This includes installing essential safety features like smoke detectors, carbon monoxide detectors, fire extinguishers, first aid kits and clearly marked emergency exits.

Keeping your property safe and compliant protects you from liability while ensuring the safety and well-being of your guests throughout their stay.

11. Plan for Airbnb maintenance and housekeeping.

A reliable cleaning and maintenance schedule ensures your property is always ready to welcome the next set of guests. 

Hiring a professional cleaning team after each stay helps maintain high standards, which can significantly impact your reviews. You might also consider offering guests a small discount to encourage them to tidy up before departure.

12. Treat your Airbnb venture as a business.

Jonah Hanig, founder and CEO of luxury rental property management firm Rovetravel, says becoming a full-time Airbnb entrepreneur requires an attitude adjustment. “The transition from part-time to full-time hosting is about mindset and operations,” Hanig explained. “First, treat it like a business, not just a side gig. This means systemizing everything — guest communication, cleaning schedules and pricing.”

Hanig offered additional advice for treating your Airbnb operation as a true business: 

• Use dynamic pricing software.
• Manage guest communications effectively.
• Build relationships with local service professionals, including cleaners and maintenance teams.
• Monitor local regulations — they can shift and impact your business.

The benefits of starting an Airbnb business

According to Airbnb data, in 2023, the typical Airbnb host in the United States earned around $14,000, with U.S. hosts collectively earning $24 billion. According to Hanig, the bigger your Airbnb network, the more you stand to earn. “In our experience, full-time Airbnb hosts can increase their revenue by 20 to 30 percent simply by being proactive about pricing, guest reviews and property upgrades,” Hanig explained. “It also opens doors to networking within the hospitality industry and scaling through multiple properties.”

Beyond providing a robust income source, starting an Airbnb business can bring the following benefits:

• Learn new skills: You’ll learn how to manage a property portfolio, design ads that win new bookings and create a great customer experience. These are valuable and transferable skills.
• Build recurring income: Each new property you add to your portfolio increases your monthly income.
• Save money on taxes: You can offset costs such as mortgage interest, insurance, professional fees and property taxes to reduce your tax bill.
• Spread investment risks: Diversifying your investments across different asset classes is wise because it reduces your exposure to volatility. Real estate investment is largely considered a wise bet.
• Reclaim your valuable time: Running a growing Airbnb business is challenging, but as you get better at it, you’ll see improved efficiency. You may even be able to hand over the day-to-day responsibilities to hired staff so you can have the freedom and financial independence to spend your time as you want.

Hanig says control over your financial growth is a significant benefit of Airbnb entrepreneurship. “You’re not just earning from the rental; you’re also building a brand as a host,” Hanig noted. “Full-time hosts can offer tailored experiences that drive higher nightly rates and occupancy rates.

Is Airbnb right for you?

Becoming an Airbnb entrepreneur may be the right course for you if you’re a people person who would enjoy providing holidaymakers with a memorable experience. Hanig emphasizes that full-time Airbnb hosts should focus on the guest experience to enjoy the most success possible. “We’ve found that properties with thoughtful, small touches — like curated local recommendations or a welcome kit — generate more repeat bookings and better reviews,” Hanig advised.

Cabrera agrees that creating a seamless guest experience is vital when transitioning from part-time to full-time Airbnb hosting. “[Offer] clean and well-maintained properties, fast responses and thoughtful touches like local guides or welcome packages,” Cabrera suggested. “It’s all about consistency that superhosts get there.”

Being an Airbnb host also requires honing organizational skills (or hiring someone with those skills) to avoid double bookings and ensure a proper maintenance and cleaning schedule. With the right planning and attitude, becoming a full-time Airbnb entrepreneur could be the perfect venture for you.