Airbnb has gained popularity as a side hustle and many are starting to wonder how to get in on the action…
In this blog post I’m going to walk you through some of the steps to help you start an Airbnb in Colorado… this post is for informational purposes only and not intended to be financial advice…
We manage over 200 vacation rentals so we know a thing or two about starting an Airbnb in Colorado…
Airbnb business plan
The first step to start an Airbnb is to begin with the end in mind…
Why are you looking to start an Airbnb?
Are you an investor looking to buy an Airbnb that maximizes profits and bookings?
Are you looking to buy a vacation home that you can enjoy but paid for by others?
Are you looking to do Airbnb without owning property?
The reason this matters is because the type of home and location you look at will be determined by your goal…
Buying a vacation home that you can use and also Airbnb when not in use may limit your opportunities because you’ll be narrowing your options based on where you want to own the property…
An investor has an advantage because they can simply focus on finding a high performing market and buy a property based solely on the cash on cash return it provides…
Finding a profitable Airbnb property in Colorado
Once you’ve gotten clear on your end goal, it’s time to start house hunting…
You’ll want to have access to a vacation rental analysis tool to help you determine if the market you are looking at is worth investing in…
One of the best tools on the market to analyze the profit potential of your Airbnb is AirDNA…
You can use the AirDNA rentalizer tool to get vacation rental comps that will help you estimate the profit potential of your home…
This tool is especially handy if you are looking to buy a home to use as a short term rental.
Some people may say things like “AirDNA isn’t very accurate”… and it’s not that AirDNA isn’t accurate, it’s that AirDNA will give you an estimate based on similar homes. Sometimes you’ll see a wide range between the lowest performing home and the highest performing home…
This is just like traditional real estate…
Location, location, location…
What amenities do these vacation rentals offer?
In other words, just because AirDNA shows you properties making a lot of money, it doesn’t mean that yours will perform the same unless you provide similar amenities and have similar upgrades to the homes you are comparing it with…
What separates the best vacation rentals from the ones that are struggling?
Finding Your Niche in the Vacation Rental market
As markets become saturated with many Airbnbs, some vacation rental owners are starting to see their calendars empty with no bookings. They’ll start wondering if the market is slow and if it will ever pick back up…
… but what’s actually happening is that successful Airbnbs that have found a profitable niche are starting to take on market share from those who try to cater to all guests…
Finding a niche is the best strategy you can have in your Airbnb business plan to maximize your profit potential and keep your vacation rental booked even during slow season…
You can learn more about finding your niche inside the STR Profit Academy…
What to know before buying a vacation rental home
When buying a short term rental, you’ll want to become intimately familiar with local regulations…
Some markets have a cap on the number of permits they allow for homes to operate an Airbnb.
Other markets may not have local regulations… yet…
One of the best resources is to join Facebook groups and meet other owners who are operating in the area to find out what regulations they’ve come across or if they know of upcoming changes in regulations…
A good example of this is Woodland Park, CO… for years, there was little talk about regulations in this area, but in Fall of 2022, they began to announce that regulations would be coming…
Here’s a video where we share other things to consider such as seasonality, etc.
How to set up your Airbnb
Once you’ve found a property, it’s time to set up your Airbnb…
You’ll want to make sure that you get insurance that will cover you for using the property as an Airbnb…
The biggest takeaway from this section is that an Airbnb property is not to be treated like a residential property, but rather commercial…
That means you need to ensure that the home meets safety requirements for guests staying at the property… this means you’ll need to have things in place like fire extinguishers, smoke and CO detectors, no tripping hazards, etc.
You’ll also want to furnish and provide amenities which is where finding your niche comes into play…
We put together an Airbnb host checklist to help you get started, but remember that you should modify it to better serve your niche…
How to launch your Airbnb
The hardest thing when launching your Airbnb is getting that first booking…
Many Airbnb users will shy away from properties that have zero reviews…
This is why you’ll want to develop a revenue management strategy… Your pricing starting out may need to be lower to incentivize guests to book your property… once you get your first 2-3 bookings, you can start to increase your nightly rates…
How you treat your first few customers can have a major impact on your listing’s search rankings… you’ll want to do everything you can to make sure that you get 5 star reviews from your guests which will boost your listing in the search results…
If your Airbnb continues to perform well and get 5 star reviews you will be on your way to becoming an Airbnb superhost which has some advantages… one of them being that you can charge more for your Airbnb…
How much can you charge for your Airbnb?
This is where your revenue management strategy kicks in.
You can use a tool like PriceLabs to maximize booking revenue… PriceLabs will adjust your nightly rate based on demand, events happening in your market and more…
How to manage your Airbnb remotely
Next up is to decide if you are going to manage the Airbnb or if you’ll be hiring someone to manage it for you…
Managing your own Airbnb can save you on management fees… the trade off is that it’ll require your time…
The good news is that with the right team and systems in place, you can free up your time and will be able to manage your Airbnb remotely…
We’ll be doing an entire post on this topic soon, but for now know that you need boots on the ground…
Typically a cleaner and a handyman are the absolute must have’s… Some people use their cleaners as their inspectors to make sure everything is good with the home… we recommend having a dedicated person that can look after a home if you plan on leaving the area…
If you have that in place, then everything else you need to effectively manage your airbnb remotely are all digital tools you can use anywhere with an internet connection…
You can get all the tools and systems you need to run your Airbnb inside the STR Profit Academy…
The other option is to find an airbnb property manager in the area so that you can free up your time.
Let me know in the comments below what your biggest challenge is to start your Airbnb…
