The five key secrets to maximizing your Airbnb profits

Converting some or all of your space into a short-term rental can pump up your cash flow.

One of my students has been at it for four months and has generated an additional $15,000 in income after costs.

If you want to B&B your home and make the most amount of money possible, focus on these factors:

Ensure the guest experience matches the (very good) marketing you’ve put out there

Five-star owners focus on ensuring that their renters get what they were promised. This doesn’t mean you must have the fanciest property. It means that the listing is truthful and accurate, and the pictures plus description represent exactly what the guests will get. Nothing ruins an experience faster than finding out that the third bedroom is actually just a single bed sitting in the hallway.

The accuracy of your listing is a major driver for your online rating. The better your rating, the more likely your rental will be booked again, and can fetch a higher price. If you’re a horrible writer and/or photographer, get help from a pro in crafting your listing.

Get proper lighting and keep the place clean

Spider webs, dark corners, cat hair, smelly refrigerators, broken door handles and leaky faucets — if any of this is going on in your short-term rental, you won’t be in business for long. Clean, well lit, well-maintained spaces can be rented for more money and will actually cost you less in long-term maintenance.

But, this means you’ll need to set aside money every month for proper maintenance and cleaning. If you’re handy or a pro at cleaning, you might be able to maintain the property yourself.

Price well for booking success

The good news is that you can creep on everyone else’s listings in your area to see what the market rate is for your short-term rental. Just ensure you’re comparing apples to apples; same number of bedrooms, bathrooms, solo versus shared space (with you) and so on. You can charge a bit more if you have a superior space (eg. designer everything) and if the location is primo (eg. right next to public transit or a major attraction). Price less than the market average if you have less to offer.

My pricing pro tip is to ensure you adjust your pricing based on the season and what’s happening in your neighbourhood. For example if you’re in a summertime hot spot like cottage country, charge more during peak summer months.

If there is a major conference being hosted in your city, charge more for the duration of the conference. In other words, pricing should reflect the demand for your rental. During low seasons, lower the price to spur bookings.

Income is what you have left over after your costs

Running a short-term rental has costs for cleaning, maintenance, the banking fees if you’re running money through an independent bank account, replacement of worn out towels and linens, furniture upgrades, lawn maintenance and potentially a property manager. You’ll pay for advertising and your listing, too.

Don’t overlook insurance costs, which are unique for anyone doing a short-term rental. And, if you’ve purchased a home exclusively for the purpose of rental income, then you’ll also need to consider the costs to service the mortgage, taxes, utilities, maintenance fees and more. Keep your costs in check (less than what you’re bringing in) in order to make your short-term rental profitable.

And, if you’re unsure about all the numbers, hire a financial pro that knows about real estate rentals. Setting up a short-term rental needs to be financially worth it. You can use this money toward your personal financial goals or even towards setting up your next short-term rental.

Maintain mutual security and privacy

I’ve been a landlord of both long- and short-term rentals since the age of 21 and I’ve experienced probably every weird tenant issue imaginable — fires, thefts, relationship disputes, threats and I’ve even had a tenant drive his motorcycle through my living room.

On the flip side, some of my tenants have been amazing. Be smart about protecting your privacy and security while still maintaining a good working relationship with your tenants. Your renters need to feel safe, too. If you’re sharing space directly with a tenant (my family did this when I was growing up), install appropriate locks on doors, lock up valuables, set passwords for electronics and be clear about privacy and security expectations. I think smart home and security technologies are a very good investment so long as everyone’s privacy is respected.

I’m a big fan of test driving a B&B or short-term rental in your own home first, before investing in another property purchase or permanently converting your basement into a rental unit. It takes time to adjust to being a landlord and you’ll need to tweak your listing a few times to ensure you’re making the money you want while attracting the right renters.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.