Real estate is known to be a fantastic investment because of its flexibility. In fact, you can buy and sell it for more profits or use it to earn continuous income through property rentals. When it comes to utilizing real estate through rentals, there are two major types: long-term and short-term.

Why and How does Airbnb work?

Airbnb, or “Air Bed and Breakfast,”  (ABNB) is a popular platform where guests can rent other people’s properties over a short time for vacations and other purposes. But aside from using it to book your staycations, Airbnb can also be a good side hustle. 

Here are the top three reasons why an Airbnb business is a good business:

1. It’s a great passive income source
2. It’s popular, and people prefer them over hotels
3. It can be started even if you don’t own properties

Airbnb as a passive income source

Did you know that in 2021, the average American Airbnb host earned over $13,800 a month? These peaked during special holidays like Christmas and Thanksgiving and in vacation seasons like summer and spring. And although this number could not have been uniform for every host because of factors like location and amenities, it’s still an indication that Airbnb has good earning potential. 

We cannot call a business passive if it doesn’t earn independently, even without your daily efforts. And that is where Airbnb stands out. Because if automated properly, it will run and generate income for you even while you’re on vacation. You just have to delegate your tasks well.

Why do people prefer Airbnb over hotels?

The biggest business competitors of short-term rentals in any locality are hotels. In theory, people always go for high-rise buildings overlooking the city, and the local rentals don’t stand a chance. But this is not true for Airbnb hosts. In fact, people prefer Airbnbs for reasons like:

• Cheaper cost

Airbnb allows people to be flexible with their space by allowing them to choose to stay in smaller spaces if they’re traveling alone or in bigger houses with multiple bedrooms with family and friends. All within a fraction of the cost.

• More amenities

Some hotels have pools that guests can use but may not want to for health and safety reasons. Airbnb gives them a chance to choose properties with special amenities like these, and they’ll enjoy it for themselves. 

• Better privacy

Imagine a family traveling to places together, staying under one roof, grilling by the poolside, and just enjoying their stay without having to share it with anybody else. These kinds of personalized experiences are precisely why people prefer Airbnb over hotels.

Launching an Airbnb business without owning 

Let’s say you’re an employee who earns $6,000/month and want to replace it through your rental property business so you can quit for good and retire early. Suppose you own a single unit that gives you $1,000 per month; you’ll still need five more units to replace your income.

But there’s a strategy you can use to get faster return on investment (ROI) without needing to buy properties to get started. It’s called Rental Arbitrage. The Rental Arbitrage Model, also called Subleasing, is where you rent properties from other landlords, get their permission in writing, and then launch their property as your own short-term rental.

With this, you can rent a couple of units, give them a nightly rate, and launch them to start getting bookings and recover your ROI faster. Yes, it’s perfectly legal, and Airbnb lets you do this on their platform. 

Setting up a Sublease

The Subleasing strategy must have caught your eye if you’ve been reading this far and want to start an Airbnb business but don’t own properties. And that’s perfectly understandable because where else can you find a technique that allows you to launch a rental property business without owning properties?

However simple as it may sound, this strategy entails the right kind of knowledge to be set up successfully. Good thing we created a list of the four things you must have to make your Airbnb business work through Subleasing:

• The right property

First of all, you must find properties to launch. But not any random space will do. For Subleasing, you need to go for properties in cities that allow short-term rentals, have amenities like heating and cooling, have a parking lot suitable for two vehicles, are away from noisy places, and are far from main streets. Importantly, it must also be within your budget.

• Pitching skills

Talking to landlords, getting their permission, and striking a deal with them are the foundation of your business. However, if you’re not a born negotiator, you might need to brush up on your pitching skills to get your sublease strategy on the road.

• Legal binding contracts

To avoid legal complications, you need to have an agreement with your landlord that says you can rent their property for some time and use it as a short-term rental on Airbnb. Your contract needs to show that they know this and will allow you to change the property locks for the whole period.

• Management skills

Owning an Airbnb business is not synonymous with passive income, especially if you get stressed out about managing the cleaning and maintenance systems for each unit. But don’t fret about it too much because you can make it more automated by learning how to organize and delegate your tasks.

The Final Verdict

Why and How Does Airbnb Work?

If you’re looking for another source of income, Airbnb is a great platform to explore and invest your time in. It has an innovative business model that will allow you to create positive cash flow because it’s well-received by people worldwide. In fact, it even lets you get started even if you don’t own properties yet! This is truly a revolutionary business that’ll help you achieve the time, location, and financial freedom you have always dreamed of.

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