Flipping Beds on Airbnb: Strategy to Maximize Profits

Discover innovative ways to maximize profitability and optimize your Airbnb rental properties!

Introducing “bed flipping”, which is an approach to increase revenue with Airbnb properties through renting by the bed instead of by the whole property. Or, a great way to get started in the real estate industry as a new investor.

Curious to learn more?   

If you are looking for higher profits, check out the potential benefits and risks associated with implementing this practice. 

TL;DR

• In a bed flipping approach, Airbnb hosts rent out individual rooms on Airbnb to multiple guests instead of the whole property to one set of guests.
• You can use the rent arbitrage strategy for this approach. But note that it comes with strict legal regulations, and finding a landlord who’s willing to do this model is quite difficult.

What is Flipping Beds on Airbnb?

Flipping beds on Airbnb combines two strategies to increase cash flow and profits.

The first strategy is leveraging rental arbitrage.  This is renting other people’s properties for an extended period and subleasing to guests on Airbnb.  The host makes extra money from the difference between the long-term rent cost and the short-term income.

This strategy is great for a beginning investor who may not have enough capital to purchase short-term rentals. 

The second strategy is offering the Airbnb property for short-term rent as individual beds instead of the whole house, apartment, condo, etc. 

Each bed is listed individually on Airbnb.

The Airbnb host becomes an intermediary between the property owner and the short-term tenants who are renting the beds.

The goal of bed flipping is to maximize occupancy rates and revenue by accommodating multiple guests within a single property.

Finding properties to flip beds on Airbnb

First, research the market using tools like Mashviser or AirDNA to get an idea of the overall opportunity.  Once you decide on a market or area that can be profitable, you need to do it yourself and find a willing property owner for rental arbitrage.

Convincing landlords to do rental arbitrage

I own rental properties and often get calls from investors who are looking to find deals to do rental arbitrage so I can give you three main options on what would work for me. 😁

Before that, we have to call or text the landlord with a compelling offer that is better than if the landlord were to rent the property to a regular tenant.

1. The first approach would be sweetening the pie– locking in a one-year lease at a higher monthly rent than market rents which provides an incentive for the landlord to try the strategy. 
2. Next, you can try offering to split the proceeds from the flipping bed business with the landlord so they can increase income as well.
3. Last, guaranteeing to pay any property damages so the landlord doesn’t have to worry about the impact on their property would be a great incentive as well.

Steps to set up a property

The steps to set up a property include:

1. Prepare the property: Review the property and make any repairs.  Add furniture and amenities to present an appealing and well-maintained property. 
2. Set pricing strategy: Look at Mashviser, AirDNA, and the competition to determine pricing. Consider seasonal factors, explore flexible pricing options, and look at dynamic pricing tools to optimize pricing

3. Promote and advertise: Use high-quality photos, write compelling descriptions, and list your property on multiple platforms to increase visibility and attract potential guests. 

4. Screen potential guests: Request detailed information, review guest feedback and ratings, and keep clear communication to assess the suitability of potential renters. 

5. Manage operations: Establish secure key hand-off methods, set up reliable payment systems, and provide clear house rules and instructions for smooth logistics and guest satisfaction. 

6. Property maintenance: Conduct regular inspections, address maintenance issues promptly, and encourage guest feedback.  These procedures help the property to remain in good condition.

The pros of bed flipping in real estate investing

Is it worth it to start a bed flipping business?  Like any business, there are pros and cons.  Here are some of the advantages of this business model:

Higher passive income

Rental arbitrage allows you to provide boarding for the rising demand for affordable accommodations.

By leasing out individual beds, you can attract budget-conscious travelers who prioritize savings and use flip beds over private rooms.

Doing this can significantly amplify the revenue potential of the property, resulting in more money for you as a host.

Flexibility and adaptability

Bed flipping allows you to adjust your pricing strategies based on demand.  You can use dynamic pricing tools to automatically do this for you so that you can focus on other areas of the business.

You can easily modify rates, respond immediately to the changes in the market, and maximize occupancy rates and profits.

Lower risk and initial investment

If you want to start an Airbnb business, bed flipping through rental arbitrage offers a more affordable alternative to acquiring and managing an entire property.

As an Airbnb host, you can start with a few beds, then expand as you gain experience and learn from market trends.

The rental arbitrage approach reduces the initial investment needed and allows for flexibility in scaling up.

Considerations and challenges

The disadvantages of the flipping beds business model include legal considerations and a high operational component with tenants moving in and out on a regular basis

Legal and lease agreements

As a host, you need to make sure that your bed-flipping practices comply with local laws and regulations. For example, understand what maximum occupancy rates are for property.  Learn about local regulations such as licensing and taxes.

Work with the landlord on the lease agreements to confirm that renting out beds is allowed per the lease agreement.

Increased operational complexity

Managing multiple guests within one property can be more challenging than hosting individuals or groups in separate units. Coordinating check-ins, ensuring privacy, and dedicating effort to maintaining a harmonious environment are required for creating a smooth and enjoyable customer experience.

Consider using Airbnb software tools to help you manage the operational process of guest communication, check-in and out, and cleaning

Legal aspects of shared spaces and guest interactions

Bed flipping involves shared spaces, like common areas, kitchens, and bathrooms.  Consult with legal advisers to establish rules and methods to protect both guests and yourself.   Here are some areas to explore:

• Insurance: Obtain appropriate liability insurance coverage that includes short-term rentals. Consult with an insurance professional to ensure you have adequate coverage for potential incidents.

• Clear House Rules: Establish and communicate clear house rules to all guests. Include guidelines on behavior, noise complaints, and any specific safety regulations. Make sure guests acknowledge and agree to these rules before confirming their booking.

• Security Measures: Implement security measures such as installing sturdy locks on bedroom doors, providing secure storage for personal belongings, and ensuring the property has adequate lighting and surveillance if necessary.

• Background Checks: Consider conducting background checks on potential guests before accepting their booking. Services like Airbnb’s “Guest Requirements” feature can assist in verifying guest identities and reviews.  Consider using a service like Safely for guest screening.

• Communication and Documentation: Maintain clear and timely communication with guests. Document any incidents or concerns that arise during their stay, including any complaints made by other guests, and keep a record of relevant communication.

• Guest Agreement: Create a guest agreement that outlines the terms and conditions of the stay, including a liability waiver clause. Guests should review and sign this agreement before checking in to acknowledge their understanding and acceptance of the terms.

Remember to consult with legal professionals to ensure compliance with local laws and regulations specific to your location.

Best practices for successful bed flipping

Market Research

Before diving into a bed flipping business, ensure you grasp the local market dynamics, including demand, competitors, pricing trends, and money-making opportunities.

What are the target audience’s preferences?  How can you customize your offerings? 

Look at your competitors and see what they provide, what their reviews are, and where you can do more to stand out.

Invest in quality furnishings

Hosts should invest in comfortable bedding, and amenities to attract customers and ensure positive reviews.

Creating a pleasant and cozy environment can improve the guest experience and lead to higher occupancy rates.

Well-furnished accommodations enhance guest satisfaction and increase their chances of receiving a positive review on the business. After that’s done with, you can check out the Airbnb furniture checklist at Floorspace for ideas to complete your rental.

Effective communication and guest management

Communicate effectively with guests. Establish guest rules, give clear instructions, and promptly address concerns so that guests have a positive experience.  Here are examples from Complete Hospitality Management.

Optimize listing and pricing strategies

Hosts should emphasize the unique qualities of each bed, showcase shared areas, and discount prices, and provide accurate descriptions to make your listing stand out.

Hosts can maximize their earnings on the business by regularly reviewing and adjusting pricing strategies based on demand and season.  Dynamic pricing tools such as Beyond can help manage rates for you on a real-time basis.

Conclusion

Flipping beds is a smart option for hosts seeking alternative methods to maximize returns on their Airbnb investments or for new investors aiming to leverage the rental arbitrage strategy. 

By managing the beds in your property, you can attract more people, boost occupancy rates, and ultimately increase your earnings.

Research local regulations, understand associated challenges, and implement effective management practices to grow a successful bed-flipping business.

FAQs 

What is 10XBNB?

10XBNB is a coaching program that teaches budding Airbnb hosts the very basics you need to know to build a successful business on Airbnb. 

Their basic package teaches you everything from flipping beds to teaching creative financing to get past lenders who aren’t so willing to finance your property.

How do you change the number of beds on Airbnb?

1. The first step is to open the Airbnb app on your device or visit the Airbnb website.
2. Go to your listing management dashboard or navigate to your listing.
3. Look for the “Edit” button or a similar option to change your listing details.
4. Once in the editing mode, find the section related to the property details or amenities.
5. Look for the field that specifies the number of beds and update it accordingly.
6. Save your changes.

Is it better to have more beds in an Airbnb?

Whether it’s better to have more beds in an Airbnb depends on different factors.

While having more beds can attract larger group bookings and make more passive income, it’s necessary to consider the available space and comfort for customers. 

Striking a balance between bed quantity and space is necessary to make guests happy. It’s important to understand your target market’s preferences and make sure the sleeping arrangements meet their needs and expectations.