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Nate and I dreamed of launching a furnished rental for years, but we didn’t know where to begin. There were a few mistakes early on that we wish we would’ve known sooner, but it was hard to find a clear-cut guide outlining how to start an Airbnb. Or monthly rental. Or mid-term rental. So, we’re sharing our journey—here and via Instagram and Tiktok @vacaymaker—in case it’s helpful for anyone else.
1. Know How Much You’ll Need to Save to Buy a Rental Property
Yes, rental arbitrage is a thing—where you rent out a place and then list it on Airbnb, VRBO and the like—but it can be a tough sell to convince landlords to agree to (many have clauses in their rental contracts against this). However, if you can convince someone, it’s a low-cost way to get started.
If you plan on buying a place to rent out, there are some (ahem, staggering) costs to consider:
- Down payment — Most lenders require at least 15 percent as a down payment when you’re buying an investment property, per Rocket Mortgage. If you rent it out at all, it’s typically considered an “investment property” rather than a second home. Cost: For a $250K house, that’s $37,500.
- Inspection — Worth it to know about any concerns surrounding the house; an inspector’s findings can also help you negotiate the cost of the home, should you uncover any issues. Cost: Roughly $500
- Closing costs — 2 to 5 percent of the cost of the home. Cost, using our $250K home as an example: $5,000 to $12,000
- Any immediate repairs — Cost varies, depending on what the home needs. But while there are certain quirks you can let slide in your own home, an Airbnb needs to be a bit more buttoned up (otherwise you’re telling every guest the back door jams easily, and you have to give the sink a “love tap” to get it to work sometimes…not the recipe for great reviews).
- Furnishing — Most Airbnb hosts, myself included, spent around $3,000 to $6,000 here, depending on the size of the home and the deals you can find.
- Maintenance fund — We try to keep the equivalent of roughly two months’ mortgage on hand to cover anything that springs up (and things will, sadly, spring up).
- Umbrella policy — Yes, Airbnb offers AirCover to help protect you, but what if a guest gets hurt on your property? Or they bring a dog that hurts someone? Umbrella insurance can help protect you from a range of liabilities outside of the standard insurance (and, on that note, homeowner’s insurance for a rental property can often be a bit higher than insurance on a primary home, because there’s more risk involved). Cost: About $300 to $450/year.
On the low end, that means coming up with $46,300! (This is why it took a decade to actually fund our dream.)
2. Find Your Ideal Location
What’s the draw to the area? Medium-sized cities tend to be more affordable and are very appealing, especially if you’re within 20 minutes of the beach, mountains, stadiums/arenas or downtown/cultural centers.
On top of that, you’ll need to make sure the city, state and HOA don’t have any restrictions against running a short- or medium-term rental in your area.
3. Know Your Rental’s Niche
Use sites like Vacasa, AirDNA and even Airbnb to estimate the home’s earning potential. That can help you decide whether it’s worth the spend. From there, you can start to determine your target market: Who are you looking to attract? Traveling nurses looking for 30-day-plus stays? Friends heading out for long weekend trips? Bachelor/bachelorette getaways? Snowbirds looking to escape? Know the people you want to market to, and choose your location and furnishings/aesthetic accordingly.
4. Buy the Property
Easier said than done, even if the housing market is starting to cool.
5. Complete any repairs & furnish it.
Get it ready to rent as quickly as possible, so you can start earning $.
6. Assemble Your Team
Determine whether you’ll need a property manager to oversee your rental and deal with any headaches that arise. Beyond that, you may need a…
- Cleaning service
- Lawn service
- Repair services (your go-to plumber, electrician, handyman)
- Accountant
7. Prioritize Photography and Optimize Your Listing
Aim for making your space as light and bright as possible, focusing on shots that will fit nicely within Airbnb’s square crops. Make your descriptions friendly, clear and concise, focusing on keywords your target market is searching for (like pet-friendly). More on that here.
