Post The Airbnb Bust: How Much Money Can You Make On Airbnb?

Have you wondered how much money can you make on Airbnb? I definitely did before I started my hosting journey! There’s so many gurus out there telling you they quit their 9-5 jobs because their Airbnb business is doing 6 or 7 figures annually. But it can be hard to believe, especially if you have any long term rentals (those margins are tight).

Lucky for you, I am going to show you how to know how much money a property can make on Airbnb. There are so many tools and resources out there that demonstrate exactly what project revenue and occupancy will be by address.

It’s literally insane, but just like a long term rental, revenue can be forecasted for short term rentals. Let’s dive in more below.

This post is all about how much money can you make on Airbnb.

But Really…How Much Money Can You Make On Airbnb?

Depending on your background, Airbnb could be familiar or completely unfamiliar. When I first dove in, I had some background knowledge on long term rentals but Airbnb was so attractive to me for so many reasons.

First, I loved making my properties beautiful and decorating was so much fun for me. These things aren’t necessarily rewarded in long term rentals but a host can earn outsized returns for good design in Airbnb.

Second, the potential revenue being double or triple my long term rentals was super attractive. I have the goal of exiting corporate America one day and this could get me to my goals faster than ever!

And third, I loved that I could personally use my rentals for my own trips. With an Airbnb, you could block off nights that you personally want to stay in the unit and use it for yourself! How awesome! Now, let’s dive into the pros and cons of being an Airbnb host.

Are you new to Airbnb? Use my referral link and I’ll coach you through setting up your first listing! Airbnb will give you a $48 bonus for using me as your Airbnb ambassador for listing set up after hosting your first guest!

Airbnb Pros And Cons For Hosts

Airbnb almost seemed to good to be true for me. But I quickly learned there’s good and bad to it, just like anything in life.

Pros

All my reasons above are pros. Getting to design a space, hosting guests who will pay to stay for an excellently designed house, using the property when I want and making more monthly revenue.

Cons

The management and expenses are so much higher than a long term rental. Also, the cleaning fees are hefty! Repairs and maintenance will be more because there’s more that can break with the listings being furnished.

But even so, some of these cons can really be good because the property will be kept up well with good cleaners each time a guest leaves.

How To Start An Airbnb Business

There are so many ways you can start your own Airbnb business. I’ve listed 5 ways below that are the most popular.

1. Purchase a property for Airbnb

You can buy a property specifically vetted for profitability on Airbnb. Using tools like Airdna, PriceLabs and Airbnb for market research to understand that what you’re buying is a profitable investment.

2. Airbnb business without owning property

You could do what’s referred to as Airbnb arbitrage. This strategy is an easy way to start if you have limited capital. The way to do this is to rent a house/apartment from a landlord with the understanding that they would allow you to sublease the unit as an Airbnb.

Newbies love this strategy because the capital needed is way less than purchasing a property outright! All you would need to pay for is the furnishings, security deposit and first month’s rent.

3. Convert a long term rental

If you’re already a landlord and wanting to move into a new strategy, you could convert one of your long term units into a short term rental. This is exactly what I did!

In hindsight, I should have done market research on the area to understand if this was going to be a profitable move but I’m so glad I did it anyway.

This article gives you all the information you need to learn how to analyze properties for Airbnb like an expert!

4. Cohost another host’s listing

Becoming an Airbnb Co Host is another way to get into the Airbnb business. This is literally the cheapest and easiest way to get started and requires no out of pocket capital.

You may be asking, what is a Co Host? A co host is a term or designation created by Airbnb where you can host another host’s property as their designated “co host”. The owner would add you to the listing and you would receive a percentage of every payout as payment for your work on the listing.

If you want to better understand Airbnb co hosting, I have all the top tips right here in this article!

5. Start a property management company

Finally, you could start a vacation rental property management company. This is another low cost way to get into the business but does require a ton of work to get clients.

Excellent co hosts can create great property management companies so starting with co hosting is a great way to grow into a full blown property management company. Property managers for vacation rentals charge between 15-30% of topline revenue which is considerably more than the average 10% paid for long term rentals.

Most Profitable Airbnb Locations

Real estate is all about location! Even in Airbnb. In my opinion, the most profitable Airbnb locations for first time hosts is going to be an area that you know well or that is close to you. There’s a steep learning curve with Airbnb and it is so helpful to be close to your property as you figure out how to run your business.

Aside from locations that are close you, these are the top locations I would look at:

1. Tourist attractions
2. National parks
3. Traveling professionals
4. Theme parks and zoos
5. State parks
6. Regional vacation areas located a 2-4 hour drive away from a major metropolitan city

If you’re super into data and willing to invest anywhere in the US, Airdna is always putting out the best articles about locations that are up and coming for short term rental investors. This info is gold!

Airbnb Average Occupancy Rate

Another super important metric is occupancy rate. Below are the best tools on the market to determine occupancy.

1. Airbnb

Airbnb doesn’t have a live occupancy rate tool but doing the “enemy method” where you check out other hosts listings is such a good approach. It’s a manual process but you can literally look at their calendar and see how many days are booked that month and the next and get a look at occupancy.

2. PriceLabs

PriceLabs has a Market Dashboard tool where you can purchase a dashboard for a specific market you’re evaluating and it will pull occupancy, revenue, average daily rate, etc.

3. Airdna

Airdna has to be the GOAT of all these tools. You can type in an address of a specific property for FREE and they will return all this information to you. It’s only good for a handful of addresses and then you need to upgrade to the paid version but still such an amazing resource for looking at occupancy rate quickly.

Airbnb Monthly Income Calculator

The difference between Airbnb and long term rentals is that Airbnb revenue is better to look at on an annual basis versus a monthly basis. This is because occupancy will fluctuate based on time of year.

The best way to calculate an average monthly income is to pull the average daily rate and occupancy rate from Airdna, calculate your annual revenue and divide by 12. The enemy method can really help in understanding seasonality or even government websites that track visitors.

What other tips on showing hosts how much money they can make on Airbnb? I’d love to know in the comments below!

This post was all about how much money can you make on Airbnb.