Research: The first step New Airbnb Hosts Need to do before getting started in 2025

Success in Airbnb hosting doesn’t happen by chance - it starts before your first guest checks in - with planning and research. Whether you’re evaluating a potential property or building your business infrastructure, every decision should be intentional. This email breaks down the steps to help you launch with confidence and avoid costly mistakes.

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Step 1: Research the Market

Before diving in, understand what works—and what doesn’t—in the area where you’ll host. Some markets are better suited for short-term rentals than others. Without solid research, you might pick a property that doesn’t attract enough guests—or one that comes with unexpected challenges.

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How to Analyze the Market:

Use Data tools: Tools like AirDNA or Key Data are super valuable for identifying trends like nightly rates, occupancy levels, and analyzing your competition.

Look for gaps in the market: If your area has a ton of three-bedroom homes but very few one-bedrooms, that could be your opportunity.

Understand guest needs: Are people traveling to your area for business, family vacations, or events? Tailor your property to meet those needs.

Consider Location: Properties near popular attractions, downtown areas, or public transportation tend to attract more bookings.

Consider Amenities: Does the property have features guests want, like parking, Wi-Fi, or a backyard?

Consider Maintenance Requirements: Smaller properties cost less to clean and repair. 

Learn From Competitors: Study highly rated listings in your area and see what they’re doing right. Notice their pricing, amenities, and even their weaknesses. If guests complain about poor communication or outdated decor, make sure you excel in those areas.

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Step 2: Understand Legal Requirements

Hosting isn’t as simple as listing your property online. Every city has rules for short-term rentals, and ignoring them can lead to fines or even losing the ability to host.

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What to Check:

• Local laws: Some cities require permits or limit how many nights you can rent out a property.
• HOA rules: If your property is in a homeowner’s association, make sure short-term rentals are allowed.
• Taxes: Research what taxes you’ll need to pay. Some areas require short-term rental hosts to collect and pay additional taxes.

Take the time to get everything in order before you start hosting. It’s better to spend a few hours on research now than deal with legal trouble later.

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Step 3: Financial Planning and Projections

Numbers don’t lie. Before committing to a property, crunch the data to ensure it’s a sound investment.

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Decide if you will Buy or Co-host:

• Owning the property allows for maximum control & building long-term equity.
• If buying a property isn't in the cards for you right now, try co-hosting instead. Managing someone else’s property lets you gain experience without a hefty financial commitment.
• Beware of Airbnb arbitrage. While it might sound tempting, renting properties to re-rent on Airbnb is risky and often runs into legal gray areas (no matter what the get-rich-quick gurus online say!) Focus on co-hosting instead—it’s simpler and more sustainable.

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Once you've decided how you’ll get the property, then:

• Use a spreadsheet to estimate some text
  • Income (e.g., Average Daily Rate (ADR) and occupancy rates), 
  • Costs (furnishings, renovations, insurance, utilities, cleaning, and maintenance),
  • Financing Terms (down payments, interest rates, and monthly payments).
  • Use our free spreadsheet: It will calculate Cash on Cash returns, Yearly Cash flows, and other important investment metrics. 
• Ensure the expected income outweighs operating costs and loan repayments.
• Prepare for market fluctuations and downturns. Try to forecast what will happen in the next downturn.

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Step 4: Set Up Your Business Properly

Even if you’re hosting as a side hustle, it’s smart to treat it like a real business. This helps you protect yourself legally and keep your finances organized.

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Business Setup Checklist:

1. Create an LLC. This protects your personal assets in case of a lawsuit.
2. Open a separate bank account. Keeping your business income and expenses separate makes taxes and budgeting easier.
3. Get the right insurance. Regular homeowners’ insurance doesn’t cover short-term rentals. Look for a policy designed for Airbnb hosts.
4. Track your finances. Use apps or software to monitor your income and expenses. Hiring a CPA familiar with short-term rentals can also save you money come tax season.

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Step 5: Network and Learn

The hosting world is full of people eager to share their insights. Join local meetups or online groups to learn from others’ experiences. And don’t forget to subscribe to The Host Report newsletter for curated tips and strategies that will save you time and boost your earnings.

Just don’t get stuck in analysis paralysis. Take action. The best way to learn is by doing.

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Summary Action Steps

1. Use a tool like AirDNA to research nightly rates and occupancy trends for your target area.
2. Identify one competitor listing and note what they’re doing well—and what they’re missing.
3. Create a simple financial spreadsheet to estimate your property’s potential income and expenses.
4. If you’re ready, set up an LLC and open a dedicated business bank account.