The way people work is constantly changing. With each improvement in technology, education, and the general consensus on what it means to be happy, there’s a clear shift in how individuals make a living.
Today, we live in a “sharing economy” that allows any person who owns an asset (say a car or home for example) to make money by sharing it with people who need it. Websites and apps, like Airbnb and VRBO, are companies who connect the asset owners with the potential customers who need them.
If you’re interested in earning some income from renting on Airbnb or VRBO, we have five essential steps to make it happen:
1. Rent out your home
If you’re new to real estate but still want to cash in on renting out properties, start with your home. Back in 2015, when we began our journey with vacation rentals, that’s exactly what we did. Even though we weren't completely ready for guests, we decided to make a listing on Airbnb to see what would happen.
Within a few days, we got our first inquiry from a family traveling to Phoenix for work. We were stunned at how quickly it happened, but we were excited to host our first guests.
We immediately started planning a short trip out of town while they stayed in our home. Once we got the deposit in our checking for their stay, we were hooked. We continued to list our home on Airbnb, and we would stay with friends or at a hotel when we got a booking.
You can start the same way as us, whether you decide to rent out one room in your home or the entire house.
2. Rent out your properties
Maybe renting out your home isn’t an option, but you own other properties. Instead of renting them out to a long-term lessee, you should consider posting it on a vacation rental site.
You may be surprised to hear this: renting out your property for several, short stays can be more profitable than renting it out for a series of months. Here’s some math for example:
12 month lease @ $1,000 per month = $12,000/year
Four, 3-day stays per month @ $300 per stay = $14,400/year
Of course, this depends on how much you charge per night and how often you get bookings. Just like any other business, there are seasonal peaks and off-season lulls. But overall, we’ve made more money renting to vacation renters versus long-term tenants. Plus, our properties endure much less damage and wear-and-tear than compared to long-term rentals.
3. Acquire affordable, attractive properties
Once you’ve got your vacation rental business going, and you’ve nailed down your expense versus income ratio, it’s time to acquire more properties. The trick is to look for affordable places in high-traffic areas, so you can keep your expenses low without sacrificing on location.
To figure out if the property you’re interested in is worth purchasing, check out the listings in that area on Airbnb or VRBO. If you find several properties with a high number of reviews, there’s a good chance the area is popular and will be a good spot for a vacation rental.
4.Run it like a business
To make money on vacation rentals, you’ll need to treat it like any other entrepreneurial endeavor. That means tracking your income, expenses and listening to your customers’ input. It also means you’ll need to stay open to ever changing your properties.
Since I’m in charge of the financial side our business, I’ve become a pro at tracking our money. I have a Google spreadsheet where I input every payment and track every cost. I also categorize each expense, so we can see where most of our money goes.
At the end of the year, this spreadsheet enables us to easily file our taxes and claim business costs. This is incredibly important since you won’t pay in your taxes during the year. If you can’t claim your expenses at the end of the tax year, you’ll likely pay a large amount back to the IRS.
5. Choose a frugal lifestyle
While we’re living proof that you can make a living with Airbnb, we’re not exactly rolling in the dough (at least not yet). We make enough money to cover our expenses and live a comfortable life, and we accomplish this by living a frugal lifestyle
We don’t skimp on the good stuff (see: beer, food and fun), but we also don’t splurge on unnecessary items. Here are a few ways we avoid frivolous spending:
- We cook our own meals most of the time (and we buy fresh produce and meats instead of pricey, packaged food).
- When we do eat out, we share a meal and skip the alcohol (you can get six beers for the price of one at a restaurant).
- We love Groupons.
- We don’t go clothes shopping unless we absolutely have to or find a great deal.
- When we travel, we fly budget-friendly airlines (Spirit or Frontier).
- We rarely buy food or booze at the airport.
- We accept donations from friends and family (many of our vacation rentals were furnished and filled with giveaways from loved ones).
- We love thrift shops.
If you can scale back on unnecessary purchases, live within a tight budget and prioritize your splurges, you can make a living with vacation rentals. The reward is a low-stress lifestyle where you get to skip the forty-hour work week and find flexibility instead.
And we think skimping on frivolous purchases is totally worth the results.
Next steps
Now that you have our five steps for making a living with vacation rentals, it’s your turn to put it into play. Whether you rent out your home, list your investment properties, acquire more rentals, run it like a business or just start living frugally, you’ll be able to improve your overall income (and make a better living) with vacation rentals.
Interested in renting your home or property, but don’t want to deal with managing guests? Use our contact form on the home page to learn more about our management services.