If you’ve been running a short-term rental property for some time now, this thought has likely crossed your mind: Man, this is doing pretty well. Could I turn this into a full-fledged business?
Many entrepreneurial-minded STR property owners wonder how they can turn a single Airbnb property into something more. But, before you dive headfirst into creating a rental empire, there are some things to consider.
Here you’ll find everything you need to know about transitioning your rental property from a side hustle to a full-time business.
Pros of Turning Your STR into a Business
Running a successful Airbnb can be incredibly rewarding. You get to meet interesting people from all over the world, be your own boss, and generate a nice side hustle income. Expanding your operation into a business could unlock a slew of new possibilities.
If you’re reading this, you likely already take your STR seriously, but what if you went all in and started marketing it instead of just waiting for bookings to come in? Or, what about coming up with some key performance indicators (KPIs) to help you keep track of your progress? When you start treating your property like a business in this way, you could significantly increase that side hustle income. And that’s what a lot of hosts want, right?
There’s also the option of purchasing or renting several properties — imagine the potential to significantly increase your income by managing multiple rentals. You can turn your operation into a brand and establish yourself as an expert in hospitality — you also have the opportunity to learn a lot. As your business grows, you’ll gain valuable skills in areas like property management, marketing, and customer service.
Cons of Turning Your STR into a Business
As with everything, there’s, of course, another side to the coin.
Scaling your short-term rental operation requires a lot of work. Managing multiple bookings, guest communication, cleaning, maintenance, and navigating potential legal or regulatory hurdles demands significant time and dedication. Gone are the days of casually managing your listing on the side. Owning a business means putting in the hours to make sure everything runs smoothly.
You also need to be aware of startup costs. Depending on how you decide to do things, you might need to invest in more furniture and decor, marketing tactics, or even property upgrades. It’s also important to consider your unique market — you must do your research to understand your local rental landscape.
One Property or Multiple?
You can either go all in on a single property, or you can build a rental portfolio.
If you decide to go with the single property route, consider upselling amenities like airport pickups or elaborate welcome baskets. You could also offer add-on services with professionals like in-property massages or private chef experiences. Dynamic pricing strategies based on seasonality and demand can also go a long way toward boosting your earnings. The key here is to build a strong reputation by providing exceptional guest experiences and leveraging positive reviews to attract repeat bookings and referrals.
Before diving into managing multiple properties, it’s best to take a good hard look at your current workload, time commitment, and perhaps most importantly, profitability. If your single property isn’t making you any money, your first step would be to work on getting consistent bookings. Only then should you move onto another property.
And if you’re already there, you may be ready to acquire additional properties. Here, location is crucial. Again, do your research! Look for properties that cater to your target audience, consider the type of property (vacation home, condo, apartment, etc.), and always factor in a potential return on investment.
As your business grows, you might even want to build a management team. Hiring property managers, professional cleaners (like us!), or virtual assistants can free up your time so that you can focus on strategic growth. Remember, the financial side of things is super important here. Create a solid business plan, secure funding if you need it, and always be realistic about the ongoing costs of maintaining multiple properties.
Essential Steps Before Going Full-Time
Before you officially take the plunge into full-time short-term rental business owners, there are a few key steps to keep in mind.
- Know the laws: Don’t get caught off guard. Research any local regulations and permitting requirements for STRs in your area.
- Plan ahead: A well-defined business plan can be super helpful. It doesn’t necessarily need to be anything fancy — outline your goals, identify your target market, budget, and how you plan to operate. Your plan will help keep you focused and navigate any challenges that may come up.
- Talk to an expert: Meet with an accountant to make sure you’re compliant with legal and tax regulations. This will save you from potential headaches once April 15the rolls around!
Ultimately you’re the only one who can decide whether or not you’re ready to turn your STR into a full-time business. Weigh the pros and cons carefully, do your research, and create a solid plan. And there is absolutely no shame in starting small and scaling up gradually. Slow and steady wins the race, as they say!
