Gross Pay vs. Net Pay: Explanation and Examples

Airbnb allows property owners to rent out accommodation to the public for a fee. Anyone with extra space, such as a spare bedroom, annex, or even a whole property, can start earning extra money from the platform. As such, Airbnb offers a tremendous economic opportunity for those looking to supplement their pension or wages.  In this post, you’ll learn how to start an Airbnb business and what you need to do to make it lucrative. Read on to learn more. Why Should You Start an Airbnb Business? Before we dive into the “how” of starting an Airbnb business, it’s helpful to ask why you would want to start one in the first place. While everyone is different, most people share the following motivations for doing so:  It allows you to earn an extra income on the side for minimal effort on your part. You can list properties for free. You only pay Airbnb when you make a successful rental. You give guests a more personalized experience compared to hotels. Many travelers want a home-away-from-home-style stay when they visit another country. You get protection. Airbnb provides up to $1 million in property damage protection to its clients. Airbnb has a vast market. While it is popular among vacationers, many people on business trips also use it. There are many opportunities to build a thriving Airbnb business, even if you don’t live next to a tourist hotspot.  What Responsibilities Do You Have as an Airbnb Host?  With Airbnb, you can be as hands-on as you want. However, you should always prioritize guest satisfaction. If you get bad reviews, you may have to lower your prices or reconsider how much (or little) you get involved in running the place, making sure it’s clean, and so on.  Most hosts welcome guests and introduce them to their accommodation. They also answer quick questions and tell guests how they can get in touch with them if there is a problem. Other than that, the majority of hosts leave their guests alone for the duration of their stay. Once the rental ends, they clean the rooms to prepare them for the next guests.  If you don’t want to manage your Airbnb rental (or you’re going to be away), there are alternatives. For instance, you can leave keys in a coded key box that guests can access when they arrive. You can also hire a cleaning company to come in and prepare the rental for the next guest if you don’t want this responsibility.  How to Start an Airbnb In this section, we will present a step-by-step process for starting an Airbnb rental. Please note that some areas of the country do not permit short-term rentals. Airbnb should tell you immediately whether your address is eligible or not.  Step 1: Find Your Property If you already own the property you’d like to rent out, then you can skip this step. If you don’t, you’ll need to set your budget and choose a location.  Learning how to start an Airbnb business without owning a house is easier than you might think. Start by asking yourself the following questions:  What do I want my rental market to be?  What type of customers would enjoy staying in this accommodation? Is the accommodation close to any important landmarks, historical sites, tourist traps, or business hubs?  Once you know who you’d like to target, the next step is to set a budget. You’ll want to approach this just like any other real estate investor, thinking about the yield on any property you are considering.  In many cases, you will find that the yield for Airbnb properties is higher than you expect. For example, a property that requires a $20,000 deposit could possibly generate $100 per night (compared to just $1,000 a month if you rented it out as a regular apartment). However, you may need to check occupancy rate limits in your area. There may be rules on how long you can do short-term rentals in your area.  Step 2: Set Up Your LLC for Airbnb If you’re setting up an Airbnb business as an investor, it’s good practice to form an LLC. Having a brand name for your rental makes it more memorable and encourages people to recommend you via word-of-mouth. It also protects you from certain business-related losses. Don’t go for something generic like “Lakeside Cabins.” Instead, choose something original that will stick in people’s minds, such as “Cara’s Tree-Top Retreat.” The more authentic you are, the more bookings you’ll get.  Step 3: Talk To Your Accountant Airbnb properties let you generate a large second stream of income (alongside your primary day job or pension), generating taxes. Airbnb calculates these taxes for you, depending on your location.  However, you will need to keep track of expenses associated with running your business, such as cleaning and repairs. Accountants can help you determine your net taxable income more accurately. They can also help you manage the tax implications of renting out accommodation you own (including advising you on sales tax and the local occupancy tax). Step 4: Get Your Business License If you want to operate a rental business, you’ll need a business license. Depending on where you are in the US, this could be called either:  TOT certificate Lodgers Tax License Make sure that you register your rental business with the agency that collects the local occupancy tax. This way, they’ll have a record that you’ve paid, even if you do it through Airbnb. Step 5: Set Up Your Accommodation to Receive Guests Once you’ve chosen a property to rent out and set up an LLC, the next step is to prepare it for guests. Good furnishings allow you to charge a higher nightly rate. However, you will need to invest more money upfront.  The quality of the décor and finishes you use will depend primarily on the type of tenants you want to attract. Budget accommodation is highly sought after in some locations, so you might want to look for deals on furniture from a thrift store or on Craigslist. In other places, people may want accommodation that helps them have fun or entertain guests. You may also want to set up the rental space to be family-friendly, particularly if you operate in an area popular with vacationers.  Step 6: Open a New Business Bank Account Whenever you start an Airbnb business, it’s always a good idea to open a business bank account. This way, you can save yourself the hassle in the future as your enterprise grows.  If you make more than 200 Airbnb transactions or $20,000 from rentals every year, then Airbnb will send you a 1099-K form. This form helps you comply with tax law by reporting all your transactions to the IRS. Keeping your business transactions in a separate account makes this process easier.  Step 7: Get Rental Insurance Insurance is a part of Airbnb startup costs. Here’s what you’ll need as a minimum:  Homeowners insurance: Homeowners insurance covers damage to the property on vacant days.  Airbnb damages insurance: Airbnb provides up to $1 million in coverage for damages caused by guests to your property while it is being rented.  Workers compensation insurance: You’ll need to take out this insurance if you hire workers to manage your Airbnb, such as cleaners. This insurance protects you against liability suits. Business insurance: Business insurance protects you against a range of legal risks associated with running your Airbnb operations. General liability and property and casualty insurance protect you if you’re found legally liable for injuries incurred in the accommodation you own. Don’t skip on insurance. If you do, you could be putting your livelihood at risk and may face hefty fines for non-compliance. Step 8: Put Together Your Airbnb Dream Team Running an Airbnb business often requires assembling a team. While most owners do at least some of the jobs themselves, they outsource others.  You’ll need to consider hiring the following people:  Photographers to take photos of your accommodation that appeal to users Cleaners to change bedding and prepare accommodation for the next guests Interior designer to create attractive spaces that encourage guests to stay and return Handyman for odd jobs around the property Accountants to help you keep track of your business revenues and expenses Emergency contacts – people who can step in and help if you’re not there Property management company to welcome guests on your behalf Many Airbnb owners do all of this work themselves. However, some prefer a hands-off approach.  Step 9: Check Your Business Plan Just like any other enterprise, Airbnb LLCs need well-considered business plans, particularly if you’re learning how to start an Airbnb with no money.  Set out your business plan by first defining the business structure:  Who is in charge? Who will you hire to help you manage or run the property?  Who will handle customer complaints?  Who will interact with customers via the Airbnb platform? Next, calculate your income predictions. Find out the going nightly rate for accommodation similar to yours and then subtract any expenses you expect to incur, including taxes, to determine your net profits. Consider all your recurring costs, such as equipment and furniture replacement, cleaning costs, and utility bills.  Step 10: List Your Airbnb Property Once you’ve completed all these preliminaries, getting started on Airbnb is incredibly easy. The platform provides you with most of the digital tools you need to make it happen.  As you build your profile on the platform, you’ll need to consider the following:  How much you’ll charge guests to stay per night. How many people you can comfortably fit in your accommodation. You’d like to attract (i.e., families, businesspeople, backpackers, etc.) Whether you’ll allow guests to book immediately. The details of your cancellation policy. The title of your property listing. The photos you’ll include, and in which order you will present them. Once you’ve completed your listing, get somebody you trust to look it over and tell you whether they would rent it out, depending on the information provided. Ask for honest feedback and what you can improve.  Step 11: Collect Feedback Airbnb rentals depend on guest ratings. The more positive feedback you can acquire, the more demand there will be for your accommodation.  Here are some tips for getting good Airbnb reviews: Specify your location clearly so that guests can easily find you. If you’re off the beaten track, experiment with different location instructions to see which your guests find easiest to understand. Provide guests with a check-in message, providing them with details about their stay. Send a check-up message after a few hours, asking if everything is to their liking. Send a check-out message, thanking the guests for using your accommodation for their trip. Leave a welcome note. Write a house manual that explains how to use everything. Make sure that you always follow your cleaning checklist. Allow guests to book instantly. Supply goodies for children and pets. Wrapping Up You can start an Airbnb out of your home or approach it very much as you would a conventional real estate business. The goal is to find projects that afford you the highest returns on the cash you put into the business.  If you already own a property, the cost to start an Airbnb is generally quite low. Expenses will rise if you decide to take out a mortgage, but the returns are still good. Once you learn how to start an Airbnb, it can be a real money-spinner.  Further Reading What Does LLC Mean? Everything You Need to Know About This Business Structure How to Pay Yourself from an LLC Best LLC Services: The Top Companies in 2022 

Flipping houses is by no means an easy business, but it can be a lucrative one if done correctly. Statistics show that an average house flip can make $67,000, with 80,000 US flips taking place in 2021. But working out how to flip houses with no money is challenging, as it means that the aspiring flipper will need to bring renovation skills, contacts, or previous real estate experience to the table.    This comprehensive beginner’s guide on how to buy and flip houses with no money will cover the best ways to get started in the buy-and-flip sector. What Is a Buy-and-Flip? Buying and flipping a house refers to the process of purchasing a house at a lower price and selling it at a profit. The original purchase price might be low because the house needs repair, or because the investor is taking a risk on a lower price for a house in an up-and-coming area. Typically, the house will need renovations, and the purchaser will try to minimize the costs of the restoration to make a profit from the final house sale. There can be one, two, or many investors involved in one property buy-and-flip. How to Flip Houses as a Beginner with No Money A big part of purchasing the original property is that you will need money upfront. This will cover the original down payment, as well as the renovation costs you need to cover the price of materials and labor. Fortunately, there are ways to purchase a property even without any start-up capital. Securing a Business Partner Working with a business partner has a number of benefits. House flipping is a risky business, so spreading risk between one or more parties can be beneficial. However, in exchange for minimizing risk, you will be expected to share the profits with one or more individuals, which will detract from your final profits. You’ll also need to pay back the original cash injection, which will likely come out of your final sum after the house sale.   When securing a private investor, you should write up a contract outlining the exact expectations from all parties. This should include details on who is managing the renovations, the project, and who is paying what upfront. The final division of profits must be outlined on the original documentation and signed by everyone involved. Bring Your Skills to the Table When you have no money to put into an investment, you will need to bring skills to the table. This might be your own direct renovation skills, project management expertise, or knowledge of local contractors that you can pay, and still turn over a profit. The business partner will be the person putting up the cash, so you will need to be able to bring your own expertise to the table to be worth investing in. Work with a Real Estate Investment Group A real estate investment group (REIC), is a group of individuals who focus their efforts on the acquisition of real estate. Finding a local investment group can help you secure private investors to get involved in your buy-and-flip project with you. They may also have real estate contacts or advice on hard money lenders who can help you with a loan. Explore Your Personal Network House flipping investors may be present in your own personal network. Do you know anyone who might be able to help with the start-up fees and renovation costs? You could also consider talking to anyone you know who works in real estate. They may not be interested themselves, but they might have connections to local investors you could approach. You can also use various real estate services to find appropriate houses to buy.  Use a Hard Money Lender Hard money loans are short-term loans with potential high interest used to fund a buy-and-flip project. The lender takes into account the potential value of the project and the current financial security of the flipper. When negotiating a hard money loan, if you don’t have an initial down payment, you might need to use other property as security and ask for the final costs to be rolled into the closing costs of the property sale. House flipping loans are a viable option, although you’ll have to make sure you can afford the repayments. Consider a Home Equity Loan A home equity loan is when you release cash from a home that you have equity in. You can then use the money for another purpose - like setting up a house flipping enterprise. You can borrow money against the equity and pay it back over time like a traditional loan. This will help you obtain some of the funds you need on your own, without necessarily needing a private investor. Flipping Houses 101: What If You Need More Help? If a business partner or a loan isn’t enough for you to start house flipping, then you can pool the resources of multiple individuals. Crowdfunding or syndicates allow you to invest in real estate with multiple investors so you can start your house flipping business with no money. Read on to find out how to leverage the power of multiple individuals when flipping real estate. Crowdfunding Real estate crowdfunding sites help multiple individuals with a small amount of money get invested in real estate. Each individual contributes a small amount, like $500, and the fund uses that as a pool to purchase property. Sites like DiversyFund are a good example of these platforms. As an investor, you co-own these properties along with the group of individuals who also contributed to the original investment.  Syndication The syndication process is similar to crowdfunding, and is often managed by a real estate syndication company. They will curate a portfolio and show this to the investor that is looking to invest in real estate. The syndication will be made up of multifamily investments, which means like crowdfunding, the initial investment comes from different individuals, and the final costs are pooled into the purchase of property. Unlike crowdfunding, however, the company will approach the investor with a particular portfolio. Crowdfunding platforms traditionally have one set portfolio that investors can buy into. Wholesale Wholesale flipping is when you secure a contract with the seller of a house and then have a contact with an end buyer to purchase the property. You are essentially facilitating the end buyer’s flip-and-buy transaction and helping the seller find a buyer. It helps if you have some real estate investors in your network, as you’ll need to find a buyer interested in flipping homes. You obtain a transaction fee for the process and do not purchase the property directly. How to Flip Houses with No Money and Bad Credit If you have bad credit, then the focus should be on either working with a business partner or private investor. Hard money lenders are also less strict with credit scores than traditional lenders, but will very rarely loan 100% of the house value, so you may have some extra upfront costs to get the loan. You could also consider the wholesale option above, where you act as an intermediary, or consider a home equity loan to release some initial funds upfront. How Do I Actually Make Money: Quick Flip Real Estate If you’re working with other people who are invested in the project, there is even more emphasis on making a quick profit. Before purchasing a property, have a building survey or assess the building yourself to see how much needs to be done. Does the property need a few upgrades to take it to the present day, or will the upgrades be more extensive? If you’re splitting profits with more than one individual, a house with minimum renovations required is less risky. Get quotes for the restoration work upfront, before you decide to purchase a property that needs lots of work. The 70% rule can help you make a decision on whether or not to invest in a property. The rule is that the flipper should invest no more than seven-tenths of the final value of a property, minus the overall cost of repairs.  Is House Flipping a Bad Idea? Flipping houses for a living can be a lucrative business, but it comes with its risks. When house flipping with no money, you’re also taking on additional pressure. as you’ll need to consider that your private investor is also looking to make a profit. When flipping a house, consider some of these additional points to weigh up the risks of investing in a buy-and-flip property. Where Is it? It’s not just the property’s resale value you need to consider. Is the location desirable, or at least up-and-coming? Are there lots of properties that need renovation, and is there a demand for renovated properties in the area? You need a pool of suitable houses and willing buyers who are prepared to pay a premium to live in them. Be Realistic with Your Profits Look at similarity renovated homes in the area and work out how much the home could realistically sell for. Then review the renovation costs and see what the potential profit is. Is the original purchase price going to give you enough room to make a profit? The bigger the potential profit window, the smaller the risk in investment. How Much Work Needs to Be Done? The amount of work that needs to be done isn’t just a cost factor, but a time factor. How long is it going to take you to complete the works on the property? Your private investors or business partner will need to know how long it’s going to take them to get their original investment back and make a final profit on the property. You want to make sure everything is nice and neat when you show the house to potential buyers.  Further Reading  Top 7 Real Estate CRMs in 2022 Real Estate Agent vs. Broker - What’s the Difference? 30+ Essential Real Estate Statistics Conclusion: What’s the Best Way to Flip Houses with No Money The ultimate conclusion is that if you have no money or bad credit, you’re going to need to bring renovation skills or a significant network of real estate investors to the table. If you don’t have the start-up capital, you can consider exploring your personal network for a potential private investor or business partner. Don’t know one? Network through local real estate investment groups to find potential partners in your local area. If you want to flip houses on your own, then a hard money lender or a home equity loan might help you with financing. If this is too risky or you need even more support, then syndication companies or crowdfunding sites might be a viable option. If you do have an active network of real estate investors, then wholesale might help you start a viable flipping business with you as the intermediary. Ultimately, the best way to flip houses depends on the area you’re looking at, the purchase price of the property, and the expenses and time it will take before flipping. The less work and the quicker the turnaround time, the faster you’ll start making money from your buy-and-flip projects. We hope this guide has given you a comprehensive overview on how to flip houses with no money or credit.

Most businesses choose between two types of domain extensions when looking to establish a reputable online presence. The .com and .net domains are prime online real estate when you want to appear professional and credible. But which one of these should you choose? Our guide on the .net vs .com comparison will help you select the right one for your business. Why the Domain Extension Matters Given that 20% of new businesses fail within the first year,  having an online presence and a professional-looking website is more important than ever. Aside from having experts design and host the site for you, one thing you’ll need is a domain name extension that reflects your brand. If you haven’t thought about domain extensions until today, you’re underestimating the significance of your digital address. These extensions are designed to categorize your website by business model and type, and there is a real difference between .com and .net domain extensions. Here’s why: Helps Identify Your Website’s Purpose What kind of business are you starting? An eCommerce website? Consulting services? Something unique and unusual? Choosing the right domain extension means you can help people who aren’t necessarily familiar with your brand and website quickly figure out what you’re all about. For example, .com domains, which are the most popular option, were originally conceived to host commercial sites, including online stores. Meanwhile, .net is derived from the word network, and the extension is a recommended alternative to .com. It’s meant to be used by businesses and companies that provide services such as website hosting. Improves Your Brand Perception Another reason to think carefully about the domain extension you choose for your business website relates to brand perception and how to improve your reputation. Here, it’s worth noting that the .com domain extension isn’t just easier to remember, but it’s used by nearly half of all the websites on the internet. As such, your target audience will likely perceive your brand as being more professional thanks to this domain extension. Builds Audience Credibility Another key component of your business that’s affected by the domain extension you choose is your ability to establish credibility with your audience. If you aren’t familiar with different domain types and select one that doesn’t align with your brand, it will undermine your credibility. When Should You Use a .com Domain Extension? By now, you have a pretty good idea about why a domain extension is critical to business success. But it’s important to circle back to the .com vs .net comparison and delve a little deeper into why you should get a .com domain extension? You Want People to Know You Have a Business Website Firstly, selecting a .com domain extension is a wise move when you want everyone to know you’re running a business website. One of the great things about having a .com domain extension is that nowadays, it’s applicable to pretty much any business type. It doesn’t matter whether you’re a construction company or you print magazines - a .com domain extension will work for your website. In the .com vs other domains showdown, the former should always be at the top of your list because it’s reassuring and familiar to users. However, the popularity of .com extensions also translates into limited availability.  You Don’t Want a Country-Specific Domain Extension It’s no secret that you can buy domain extensions for virtually all countries on the planet. For instance, if you have a UK-based operation, you could purchase a .co.uk or .uk domain for your business. However, if you want to promote your business on a global scale, a .com domain extension makes the most sense. This is also true when it comes to the .com vs .net domain extension comparison. The former is simply more internationally recognized. Believe it or not, some people aren’t aware of .net domains.  When Should You Use a .net Domain Extension? While there are many reasons it makes sense to invest in a .com domain extension, there are times when a .net is a better fit for your needs. Below are a few instances when a .net domain extension is more appropriate for a website: 1. When You Run a Tech Business A .net domain extension is perfect if you run a tech firm. For example, if you run a business that offers computer networking products and services or installs network infrastructure for other companies, a .net domain extension could be the way to go. 2. Your Website Is an Internet Service So is .net a good domain if your business is launching a new Internet service or platform? Absolutely. A .net domain extension is typically associated with sites that specialize in network-based technology such as email services or ISPs.  It’s also important to note that .net is sometimes used by businesses that can’t find a suitable domain available with the .com extension.   Which Domain Extension Is Better for SEO? The domain name you choose for your website can also impact your SEO capabilities. For example, having your brand or company name in your domain name can make it easier for people to find you. It’s worth noting that domain extensions, irrespective of what they are, don’t particularly impact your website’s SEO. However, the .net vs .com  showdown can be relevant when two sites have the same name and implement the same SEO practices but have different domain extensions. In those instances, the site with the .com domain extension will likely rank higher.  Further Reading Small Business Banking: Top Banks How Does eCommerce Work? How to Start a Property Management Company?