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Most profitable rental property | How to start Airbnb business

Profitable rental property

Peoples have two different mindset when they are planning to invest in Real estates.

1.      Purchase the property and sell when price increased

2.    Purchase/Rent a property then rent/re-rent out the property

Both the methods are profitable on their own ways. Here we are focusing on second part “Rental Property”, where you buy a property and then rent out or rent a property then re-rent out the property with some modifications.

Most common process in property rental business is to buy a property and then rent out. The other option is Rent a property and then do some modification than rent out with increased price. This is mostly used in Airbnb and Oyo business model.

So first we cover Buying a property and then rent out it. But you have to decide in which property you are going to invest.

In property investment there are two types of properties:

1.      Residential Property

2.    Commercial property


Residential rantal property

        Residential Property

commercial rental property

                         Commercial property

Rental business in Residential property:

Residential properties are homes or apartments. These might be single-family houses, townhouses, studios, etc. Most people who invest in residential property but don’t live in it themselves will rent it out to others, so they can generate income from the rental property. This introduces a very specific relationship between the owner, or landlord, and the tenants.

How to calculate Rental Profit in Residential property?

In residential property the gross rental yields are in the range of 3 to 5 percent per annum on the market value of your property. After insurance, property tax and maintenance the net yields came down to 2 to 4 percent per annum. Escalation in rent is around 5 to 7 percent, per annum. The overall return in residential property will be 8 to 10 percent per annum, calculated on 10 years span.

Ex– If you buy an apartment at the cost of INR 50 lakh.

      Net return over the 10 years period – 40 to 50 lakh (8-10% of property cost)

So here the business plan– If you lend money from bank it will be around 6.5 to 7 percent interest rate. So you are getting 2 to 3 percent profit by renting out your apartment. There will be a little down payment to lend money. But with some investment you can create a chain of rental apartments.


Rental business in Commercial property:

Commercial property, on the other hand, is any property not primarily used as a residence. office spaces, retail spaces, warehouses, and even hotels. Commercial property owners may run a business out of their space, but investors in such properties usually lease them out to other businesses. Lots of companies would rather rent a space than buy one, to save their capital for investing in their own business.


How to calculate Rental Profit in Commercial property?

Conventionally, commercial property is considered more difficult to get started in. This comes down to one key point, which is the initial cost of investing. In commercial property, the gross rental yields are in the range of 6 to 10 percent per annum on the market value of your property. After insurance, property tax and maintenance the net yields came down to 5 to 8 percent per annum. The overall return in commercial property will be 13 to 15 percent per annum, calculated on 10 years span.

Ex– If you buy an office area at the cost of INR 2 crore.

      Net return over the 10 years period – 2.6 to 3 crore (13-15% of property cost)

So here the business plan If you lend money from bank it will be around 7 to 9 percent interest rate. So you are getting 6 percent profit by renting out your property. But There will be initial investment in buying any commercial property. Because in residential loan you can get 70-90 percent loan amount while on commercial loan you only get 55-60 percent. So if you have bigger chunk of money to invest then go for commercial property because it has an edge of 3 to 4% over to residential properties.

Also consider aspects like the current leasing environment, the existing ecosystem in the region, distance from complementary and auxiliary industries, legal due diligence, clearances that are specific to the property’s usage, etc before buying commercial property.

Comparison between residential and commercial rental property:


    Residential property

   Commercial property

Lower initial investment (10 to 20 %)

Huge initial cost required (40 to 45 %)

Low rental income (8-10 %)

High rental income (13-15%)

NO minimum size requirements

Size constrained is there to qualify as commercial

Rental agreements are usually of 11 months

Lease can be as large as 10 years

Property could be vacant because of no tenant available

Leased are usually for bigger time period so vacant period is very less

Interior investment is higher because to make it living friendly

No interior investment required

Loan process is hassle free

Loan process takes more research


Both the options have their own pro’s and con’s. In simple word if you have low investment amount go for residential property investment. And if you have bigger amount of money to invest then go for commercial investment.

                          “More Investment More Profit”

How to partner with OYO Rooms:

Here is the another business opportunity for commercial property owner. In Oyo rooms you can register your Hotel to get better profit return.

In OYO business model you can simply register with them and get in touch with large group of peoples. The chances of room occupation is high. You don’t need to promote your hotel on your own. Peoples can search your hotel on OYO Rooms and book your hotel room on their website.

Oyo Rooms is the biggest marked system or Branded Network of inns and Hotels at present working in India and Malaysia.

OYO business model
    • The business model of Oyo Rooms:

      1.      Oyo Rooms books a piece of the hotel  Inventory

      2.    These rooms are put to coordinate the institutionalized quality like free Wi-Fi, clean toilets.

      3.    These Rooms are offered to the clients at Oyo Rooms Website/Application

      4.    Clients purchase these from Oyo Rooms at a very affordable price.

      5.    Oyo rooms charges it cost while booking, and it included in the cost of room.

      In order to Get Oyo rooms hotel registration or Oyo Rooms Registration, you have to follow These steps :

      1.      In order to Partner with Oyo Rooms, you Have to visit this Link – and Fill Up a simple Oyo rooms registration Form By Stating your name, mobile number City and Property type i.e Home, Commercial and Hotel and click on Become an Oyo to Submit this form.

      2.    For Oyo rooms registration you can also Write an Email to and Give a call on this number +91 70530 70530.

      3.    After you submit a form Or Write an email or give a call to partner with Oyo rooms, An Executive from Oyo rooms Team will contact you, They Will give you information on Terms and conditions . They Will make you fill an Application form, collect Address and Id Proof from You and Will make you Sign an Oyo rooms partnership agreement.

      4.  Once The above Formalities are done Your Commercial Property, Hotel Or Home will get Oyo rooms registration and will be Listed on Oyo rooms app And website and you will be ready to accommodate Guest through Oyo rooms.


      Why you should register your Hotel to Oyo Rooms.

      In simple terms if you register to Oyo rooms you will get more guests because of its huge customer base. You don’t need to spend on marketing of your hotel.

      Oyo Rooms are very affordable. Price range start from as low as possible like 700-800 INR also available premium rooms. So your hotel is occupied most of the time. People also use Oyo rooms for like 2-3 hours because of its affordable price ranges.

      So more occupation of rooms leads you to good profit. You can earn very well with your small sized hotel with 10 rooms.

      Oyo rooms have only some basic conditions before registering the hotel, like setup the rooms according to their design and provide the basic amenities.

How to Start Airbnb business:

airbnb rental business

Airbnb is the most growing and trusted platform. In Airbnb model you just have to register your apartment and then list it available according to your convenience. You can set your own calendar, That on which dates you want to list your apartment. You don’t have to make it available all the time even you can rent it for just once and then never.

When you are are out of station you can just list it on Airbnb and make income while you are not using your apartment. People loves to stay in apartments when they are visiting to cities. A group of friends or families likes to stay in apartments rather than to stay in individual hotel rooms. Stay in an apartment gives them the feel of home stay.


So how it Turns into business for you:

You can purchase an apartment or rent an apartment than you can list it on Airbnb. It will give you more profit then renting it to a family for a whole year.

Renting your apartment to a family can give you 8-10 percent return on your investment. While listing that apartment on Airbnb could make 20-30 percent profit.

You can start with listing one apartment and then grow it in the chain of apartments. Peoples are making millions from this business model.

You will get benefits of residential property buying and make profit like commercial property. Like banks can give you loan on residential property terms. But you can earn from this a very decent amount every month.


How you can register on Airbnb:


1.      Make an Airbnb account

2.    Setup your listing

3.    List amenities and describe your space accurately.

4.    Post great photos of your apartment

5.    And it’s all done

Airbnb itself setup the price for your space according to your quality of space. What amenities you have provided there. What you have in your surroundings like gym, parks etc.

To better pricing you should list all the facilities you will provide, show some clean and nice pictures of your apartment. You can provide some additional perks to the guests.


What if someone steals from your apartment?

Airbnb’s Host Coverage insures for up to $1,000,000 in damage or loss (this is part of what the ~3% Airbnb booking fee for guests and hosts covers). Keep in mind that incidents of theft or damage are rare. It’s always advised to only accept booking from guests with previous positive reviews.


The Gist of Airbnb business model-

o    Hosting on Airbnb is simple, and begins with making a free account

o    Make a detailed listing with bright photos and well-thought descriptions

o    Offer simple perks such as a local recommendations and free tea & coffee

o    Be a reachable host – promptly reply to messages and inquiries to maintain a good profile.

Keep an up-to-date calendar to maintain a good response rate

FAQs - Rental Property

What are the different kinds of commercial rental properties in India?

Shopping malls, retail spaces, free-standing buildings converted into office spaces and professional offices, are some of the properties you can let out for commercial purposes.

What is B, B+ or A in commercial property?

It refers to the quality of construction. For example, a better quality construction will be picked up faster, rented or even sold in less time as compared to a B or B+ quality property. LEED gold or platinum ratings for buildings or even buildings with better lobbies, elevators, higher ceiling heights or good view, have better scope.

Can Residential Property Be Put To Commercial Use?

If the zoning rules and the housing society management rules allow it, you can use or rent your residential property for commercial activity. However, states have different sets of rules on conversion of residential property to commercial property. Some states allow up to 30 per cent area of a house to be put to commercial use by professionals such as doctors, lawyers and chartered accountants.

One thought on “Most profitable rental property | How to start Airbnb business

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