Success at Airbnb hosting requires a lot more than hospitality – it also involves expertise in marketing and cash management. Cash management is a vital skill for Airbnb hosts, because the revenue stream is often uneven and uncertain.
A lot of people fail at Airbnb because they find they are unable to cover day to day expenses even though they get plenty of bookings. This occurs because of the way Airbnb pays, it take several weeks to receive payment for a booking.
Hosts in this situation often find themselves with lots of bookings and guests and empty bank account. Many of them end up unable to cover expenses, or using credit cards to pay for things like groceries and utilities.
Fortunately this predicament can be avoided with careful cash management. Every host needs to understand cash management in order to keep from running out of money.
Best Cash Management Tips for Airbnb
Here are some of the top cash management tips for Airbnb Hosts:
- Create a basic budget and follow it. If you have a hard time budgeting there is plenty of software out there that can help.
- Go over your spending and expenses on a regular basis usually once a month. A great way to do this is put all of your purchases on a credit or debit card and look over the statement every week or month.
- Have an extra source of capital such as a home equity loan available. An excellent source of capital for Airbnb hosts is Payfully a factoring service that can convert bookings into cash. A big advantage to Payfully is that it pays quickly, usually within 48 hours.
- Watch your credit card borrowing and closely. Credit card fees and interest can add up quickly.
- Buy cleaning and other supplies in bulk from discounters like Sam’s Club, Costco, Walmart or online discounters such as Jet.com. Such discounters are often far cheaper than small stores. Buying large quantities in bulk can save you money and avoid the added expense of shopping trips.
- Keep a careful record of your spending, so you’ll be able to write the expenses off on your taxes. Bookkeeping software such as Quickbooks will enable you to keep track of your expenses without doing a lot of extra work.
- Try to keep at least $1,000 in your savings at all times in order to cover emergency expenses.
- Pay your highest interest debts; such as credit card bills, off first.
- Keep track of your mileage for tax purposes. Even trips to Walmart for supplies can be written off.
- If you don’t understand business consider taking some business classes online or at a community college.
- Have other sources of income you can tap such as Uber or Lyft driving, a part time job or freelance work.
Effective cash management is the key to success at Airbnb. If you can master cash management you will succeed as an Airbnb host.