How much money can you make on airbnb

How Airbnb Works

What Is Airbnb?

Airbnb (ABNB) is an online marketplace that connects people who want to rent out their homes with people who are looking for accommodations in specific locales.

The company has come a long way since 2007, when its co-founders first came up with the idea to invite paying guests to sleep on an air mattress in their living room. According to Airbnb’s latest data, it has in excess of six million listings, covering more than 100,000 cities and towns and 220-plus countries worldwide.

In this article, we break down how Airbnb works, how it makes money, and the pros and cons of using its online marketplace.

Key Takeaways

How Airbnb Works

Airbnb has revolutionized the hospitality industry. Prior to 2008, travelers would have likely booked a hotel or hostel for their trip to another town. Nowadays, many of these same people are opting for Airbnb.

The idea behind Airbnb is simple: Find a way for local people to make some extra money renting out their spare home or room to people visiting the area. Hosts using this platform get to advertise their rentals to millions of people worldwide, with the reassurance that a big company will handle payments and offer support when needed. And for guests, Airbnb can offer a homey place to stay that has more character, perhaps even with a kitchen to avoid dining out, often at a lower price than what hotels charge.

Airbnb stands for «Air Bed and Breakfast,» a name that reflects the company’s early origins—its co-founders invited paying guests to sleep on an air mattress in their living room to help cover the rent.

Step by Step for Guests

To make a booking, you generally need to take the following steps:

Reading reviews is a key part of finding the right place to stay. However, they can’t always be 100% relied on: Reviews sometimes tend to be more generous than usual, perhaps because guests are worried a bad review will lead the host to fire one back.

How Does Airbnb Make Money?

Airbnb’s business model is quite profitable. The company, like Uber, Lyft, and others, has capitalized on the sharing economy, essentially making money renting out property that it doesn’t own.

Every time a reservation is made, Airbnb takes a cut. When you click on a property, you’ll find to the right of the page a breakdown of the fees you’ll be charged if you go ahead and book. One of these fees is a service fee, which covers the cost of running the platform and providing support; this basically makes up the bulk of Airbnb’s revenue.

According to the company’s website, most guest service fees are under 14.2% of the booking subtotal. Hosts, meanwhile, are charged 3% or more of the total amount earned for each booking.

Airbnb also operates an alternative payment structure that you might see from time to time. It’s mandatory for hotels and some specific types of hosts (including software-connected ones) located in certain regions of the world to cover the service fee in full rather than split it with guests. When this is the case, the person offering accommodation will usually be charged about 14% to 16% of the booking subtotal. Exceptions include mainland China, where the host-only fee is fixed at 10%.

Airbnb Competitors

Though relatively unique, Airbnb does face competition, including from the likes of Agoda, Booking.com, Expedia, HomeToGo, Google, Hopper, Tripadvisor, Trivago, and VRBO.

Some of these competitors, such as VRBO, offer solutions that are similar to Airbnb’s. Others are effectively online travel agencies that help travelers find hotels and other private accommodation in the area they are visiting.

Advantages and Disadvantages of Using Airbnb

For hosts, participating in Airbnb is a way to earn some income from their property, but with the risk that the guest might do damage to it. For guests, the advantage can be relatively inexpensive accommodations, but with the risk that the property won’t be as appealing as the listing made it seem.

Here’s a more in-depth look at some of the pros and cons:

Wide Selection: Airbnb hosts list many different kinds of properties, from single rooms, apartments, and houses to houseboats, caravans, and even castles.

Free Listings: Hosts don’t have to pay to list their properties. Listings can include written descriptions, photos with captions, and a user profile in which potential guests can get to know a bit about the hosts.

Hosts Can Set Their Own Price: It’s up to each host to decide how much to charge per night, per week, or per month.

Customizable Searches: Guests can search the Airbnb database—not only by date and location, but by price, type of property, amenities, and the language of the host—and add keywords (such as “close to the Louvre”) to help narrow their search.

Additional Services: Airbnb offerings include experiences and restaurants. People searching by location will see a list of experiences, such as classes and sightseeing, offered by local Airbnb hosts. Restaurant listings also include reviews from Airbnb hosts.

What You See May Not Be What You Get: Individual hosts create their own listings, and some may be more honest than others. One way to avoid disappointment is to read comments from previous guests.

Potential Damage: Although most stays go without incident, property damage is probably the biggest risk for hosts. Airbnb’s Host Damage Protection program provides some assurance, but it may not cover everything, such as cash, rare artwork, jewelry, and pets. Hosts whose homes are damaged may also experience considerable inconvenience.

Added Fees: Like hotels, Airbnb imposes a number of additional fees. For each booking, both guests and hosts pay a service fee to Airbnb, which can be steep. Banks or credit card issuers may also add fees, if applicable.

Taxes: Hosts and guests in several countries may be subject to a value-added tax (VAT). And depending on their location, hosts may be subject to rental income taxes. To assist with U.S. tax compliance, Airbnb collects taxpayer information from hosts so they can provide an account of their earnings each year via Form 1099 and Form 1042.

It Isn’t Legal Everywhere: Before listing a property on Airbnb, a would-be host needs to check local zoning ordinances to make sure it’s legal to rent out their property. Hosts may also be required to obtain special permits or licenses.

Is an Airbnb Cheaper Than a Hotel?

In many cases, yes. Airbnb prices tend to be lower than those of hotels, in part because the owners of these places don’t have the same overhead costs. Moreover, Airbnb hosts do not typically have to pay for lodging or hospitality licenses or permits, which can be expensive.

How Do Airbnb Hosts Get Paid?

Hosts are paid out after Airbnb deducts its service fees. Hosts are usually paid 24 hours after the reservation begins, even for long-term stays which also include a monthly payout. Payout methods include direct bank transfers or ACH, international transfers, PayPal, Payoneer Prepaid Debit Cards, Western Union, and AliPay (for Mainland China hosts only). Remember, banks do not process payments over the weekend of holidays, so Airbnb processing will resume the next business day.

Can You Stay in an Airbnb Long Term?

Yes, some hosts provide an option for longer-term stays and may even throw in a discount for these types of reservations. Bear in mind, though, that stays longer than 28 days require paying each month upfront and are subject to Airbnb’s long-term cancellation policy, which states that guests must give 30 days’ notice before checking in to receive a full refund. If you miss this deadline or wish to cancel during your stay, you will be billed for 30 days or the total cost of the reservation if it is for less than a month

What Is Airbnb’s Refund Policy?

Airbnb hosts select how strict their cancellation policy will be, from very strict to free cancellations. This will be detailed in each listing. When the reservation has been made, you may be able to get a full or partial refund if you decide to cancel. Generally, the amount you’re entitled to depends on the host’s policy and how much time is left before checking in. If you click on the option to cancel your reservation, you’ll be presented with a complete breakdown of how much you‘ll get back if you proceed.

It’s also possible to get a partial refund after you’ve checked in, provided you file a request within 24 hours.

What Are the Rules for Having an Airbnb?

The allowability of hosting an Airbnb will differ by location. People interested in renting out a spare room or property need to do their homework before adding a listing on Airbnb. In many cities, there are licenses and permits that must be obtained before a property owner is legally permitted to take in paying guests. Certain restrictions may be put in place, too.

Airbnb also reports all earnings to the designated tax authority, like the Internal Revenue Service (IRS).

How Airbnb Makes Money

Airbnb is a platform for individuals to rent out their primary residences as lodgings for travelers. Renters typically seek accommodations with a homey feel that hotels cannot provide, while most hosts want to rent out their homes to supplement their income. The majority of its revenue comes from service fees from bookings charged to both guests and hosts.

The Sharing Economy

The sharing economy is a commercial or economic model often referred to as a peer-to-peer economy. This model allows buyers and sellers to conduct their business more easily by sharing human and physical resources. This includes the collaborative consumption of goods and services of shared ownership and value.

Companies in the sharing economy don’t provide individuals directly with goods and services, but make their money by connecting buyers and sellers. This model has the potential for continued revenue growth. Both eBay and Craigslist have taken advantage of the peer-to-peer business model for more than a decade. Newer companies like Uber, Lyft, and Airbnb have modeled their companies to meet a variety of consumer demands.

Read on to learn more about how Airbnb has exploited this business model to become the behemoth it is, and about how the company makes money.

Key Takeaways

Airbnb: A Brief History

The idea for Airbnb evolved after its founders, Brian Chesky and Joe Gebbia, put an air mattress in the living room of their San Francisco apartment, turning it into a makeshift bed and breakfast. The pair rented the space out to travelers as a way to offset the high cost of rent. In 2008, the two, along with Nathan Blecharczyk, developed a website for short-term rentals that would eventually become Airbnb. 

The company went through a few major leadership changes in 2018. Airbnb announced the hiring of Dave Stephenson as its chief financial officer (CFO) after Laurence Tosi left the company in 2018.   Airbnb also appointed its first chief operating officer (COO), Belinda Johnson. 

The company began to raise capital in 2009.   Several years later, it expanded into the international market, opening offices in the United Kingdom, Germany, France, Spain, Russia, and Brazil.   The company also offers other services including:

As a conduit between hosts and travelers, Airbnb provides an established marketplace platform where both hosts and travelers can safely exchange goods and services. In a peer-to-peer model such as Airbnb, an in-depth review system adds value to prospective hosts and guests looking to accommodate their lodging needs. In online marketplaces, participants trust reviews, allowing individuals to safely choose quality products rather than purchasing lemons.

How Airbnb Makes Money

Airbnb has more than seven million listings in more than 200 countries.   The site has more than 150 million users,   with an average of six renters checking into an Airbnb-listed property every second. 

The primary source of Airbnb’s revenue comes from service fees from bookings charged to both guests and hosts. Depending on the size of the reservation, guests are required to pay a nonrefundable service fee based on the type of listing—usually under 14.2%. A more expensive reservation results in lower service fees for guests because families or groups with larger reservations can save money for other travel expenses. 

Hosts are also charged a 3% fee with every completed booking to cover the processing of guest payments. This fee may be higher for Airbnb Plus listings. When a reservation is booked, guests pay the service fee—unless the host cancels or retracts the listing. If the reservation is altered, Airbnb adjusts service fees to accommodate users. 

Taxes

Users are also subject to a value-added tax (VAT)—a tax assessed on the final sale of goods and services—in the European Union (EU), Switzerland, Norway, Iceland, and South Africa in addition to Airbnb’s service fees.   Guests in the EU are also subject to taxes based on the rate found in the guest’s home country.

Guests are also subject to exchange rates if they pay for bookings in a different currency. Rates are determined by Airbnb.   Hosts are also subject to a value-added tax which is deducted from income earned from booking reservations. 

Airbnb IPO?

Airbnb saw its bookings plummet and revenue tumble in 2020 as the coronavirus pandemic shut down global travel. In May, the company cut a quarter of its staff as reservations were down 70% from the prior year.   However, Airbnb bounced back over the summer and reported that bookings were down only 30% in June compared with the same month in 2019. The surge in demand was driven largely by travelers seeking nearby vacation rentals to escape cities and take advantage of work-from-home policies.

Challenges to Airbnb

The Bottom Line

The sharing economy continues to experience rapid expansion, thanks to more accessible transportation and lodging. Companies like Airbnb have taken advantage of technological innovations to create platforms that connect individuals to exchange everyday needs. Even though it doesn’t directly offer goods or services to individuals, its platform connects individuals who want to transact business with each other. Due to a large number of bookings, Airbnb’s revenue continues to grow while only charging a minimal service fee.

How Much Can You Make On Airbnb?

Whether you’re thinking of putting your vacation home on Airbnb, have been hosting guests for a while, or are even thinking about investing in a vacation rental property, the biggest question for most is simply, “How much money can I make?”

The answer to that question depends on a lot of variables. What’s your property like? Where is it? How many guests can it host? How much will you be using the property yourself? What kind of average occupancy rate can you expect? At what price will you offer your Airbnb listing for rent? The answer to these questions and many others will be the main determinant of how much you’ll make from your property.

However, you can still get a good idea of what is possible and which factors are most important by looking at the data. We’ve compiled Airbnb revenue statistics across the world to see what the average host makes on Airbnb.

Table of Contents

Estimate How Much Your Short-Term Rental Could Earn With AllTheRooms

Estimate Your Airbnb Rental Property Income

Estimate a vacation rental’s Airbnb earnings using the AllTheRooms Airbnb Calculator.

Project Your Airbnb Rental Property Costs

Running a short-term rental property incurrs a lot of costs, some of which you might not even have thought of. The AllTheRooms Airbnb Calculator helps you plan for these expenses.

Calculate Your Airbnb Rental Property Profit

Using your projected Airbnb earnings and costs, the AllTheRooms Calculator then creates your Airbnb property’s financial statement, giving you a detailed estimate of your expected Airbnb rental property’s return on investment.

How Much Can You Earn As A Host On Airbnb?

The easiest way to try and work out how much you can make as a host on Airbnb is by looking at the market average gross revenues. To calculate this we take all the money made by hosts and the total number of listings in a market and divide the former by the latter. This gives you a quick feel for how much the average host is making on Airbnb.

If you want an estimate specifically for your property, give the tool at the top of the page a try – it’ll tell you have much you should expect to make in your market based on some of your property’s key parameters. Being armed with a data-driven expectation of what your property could earn comes in handy when evaluating a potential investment or when talking to prospective vacation rental property managers.

How to Make Money with Airbnb and What Services to Sell

Though making money with Airbnb takes quite some time and effort, many people are joining the sharing economy. As of 2021, there are over 4 million Airbnb hosts. Launching an Airbnb business looks promising from different perspectives. If you want to generate extra income or become an entrepreneur, Airbnb is a great way to accomplish all of this.

There is no secret recipe for maximizing your profits, but there are some ground rules to follow. Find out how to establish a prosperous vacation rental business that will bring in a good income.

How do you make money with Airbnb?

1. Estimate your annual earnings

Before you list your property on Airbnb, it makes sense to estimate its income potential.

If you are deciding on where to buy an investment property, you need to find the most lucrative location. If you are renting out your accommodation, you should get an understanding of its earning potential to set the right price.

After you’ve estimated the earning opportunity of your rental, you can begin to look at other essential factors.

2. Calculate operational and additional expenses

To create a solid strategy for making money with Airbnb, you need to estimate your expenses.

Unlike a traditional rental, you’ll need to provide your guests with supplies, utensils, and pay for cleaning and maintenance.

Should you hire a property manager to handle your rentals, subtract these costs from your overall revenue as well. The average property management fees range between 20% and 40% of the monthly rental income. The cleaning costs can also affect your revenue especially if you are lucky to handle a sufficient number of guest turnovers.

To help account for this, consider introducing a cleaning fee for your guests. It will certainly help you save on cleanings and keep your property spotless.

You should also account for additional costs for repairs and maintenance. A good idea would be to request an Airbnb security deposit and get vacation rental insurance. This will help you not to go into the red in case of property damage or other accidents.

3. Be aware of legal issues and liabilities

Staying on the right side of the law is essential for ensuring your business will go a long way. Make sure you are aware of legal requirements in your location to start making money with Airbnb.

Renting laws vary by city and some cities have strict rules and regulations regarding Airbnb. For example, in San Francisco, only permanent residents are allowed to become Airbnb hosts. You should live in your rental for at least 275 days a year and be present during your guests’ stay.

Whether you are establishing a side hustle for generating passive income or starting a full-time business, contact your local authorities. Here is a quick look at the legal aspects you should take into account before you start making money with Airbnb:

Business license: some jurisdictions may require you to obtain a business license. Otherwise, your business will be considered illegal.

Taxation rules : In some locations, Airbnb collects the occupancy tax on your behalf. However, there are a lot of jurisdictions where you need to pay all the taxes yourself. They may not be explicitly described on Airbnb, so consult a local tax advisor to avoid penalties.

Zoning rules: There are certain rules that define the way you can use your home. These rules are detailed in a zoning code, planning code, or city ordinances.

4. Research your competitors

To position your listing, you should analyze your competitors first. This is essential for setting your nightly rate and crafting the right strategy to move forward. To find comparable properties, use Airbnb filters to narrow down your search.

You can find them by filtering the neighborhood, the number of rooms, and the amenities they provide. Check their calendars and estimate their average occupancy rate to assess their value proposition.

Another way to position your listing is to get marketing insights by using tools such as AirDNA and Mashvisor etc. These tools will help you to see the full picture and understand how much money your competitors make per month. On top of that, you can get actionable insights on occupancy rates, amenities, and trends in your market.

5. Come up with a unique selling proposition

After having researched your competitors, you’ll get an understanding of what their strong and weak attributes are. Using this data, you’ll be able to shape your offer to get ahead of the curve.

Positioning your rental as the cheapest one can give you an edge at the beginning. However, if thinking long-term, this strategy won’t help you maximize your earnings. If you want to make money with Airbnb, keep your price competitive and provide a unique guest experience.

Think about the amenities or services that your competitors don’t have. A few ideas include a smart lock for self-check-ins, a digital guide book, a hot tub, etc.

Make sure your property photos highlight your unique selling points and your description provides proper insight into your home.

Is running an Airbnb profitable?

There are other factors that can influence your rental profit. They include seasonal trends, the type of property you have on offer, and the pricing strategy that you follow.

Airbnb vs. long-term rental

A short-term rental with a high occupancy rate can earn you more than a long-term lease. With your home on Airbnb, you can charge a higher nightly rate and change your pricing whenever you find it necessary.

Though you can make more money with an Airbnb, your income might be irregular depending on the seasonal trends. On the other hand, long-term rentals can generate a more steady income. It is best practice to do your research and consider all pros and cons before starting your own vacation rental business.

What additional services can I sell to make money on Airbnb?

Offering additional services for your guests is a great way to make extra money with Airbnb. Another advantage is that adding something extra can help you enhance the guest experience and stand out from your competition.

To help you get started, here are 8 ideas for additional services that you can offer:

1. Guided tours

Most tourists will likely end up paying for local guided tours once they arrive in your area. By offering tickets for a guided tour, you can help them achieve something that was probably on their to-do list. Set up a partnership with a local tour agency to offer your guests tickets with pleasant discounts.

2. Bicycle/Motorcycle rental

Make it easier for your guests to get around by providing bicycle or motorcycle rental as an additional service. The guests will likely need to rent some type of vehicle for the duration of their stay at your property. Offering bike or motorcycle rental is a popular option to make extra money on Airbnb for many hosts. It can significantly increase your earnings and help guests save time on searching for a rental service in your area.

3. Airport pickup/dropoff

Travelers will appreciate the fact that you are making it convenient for them to get to and from their flights. As an option, you can use a local transportation service to arrange rides and just collect a fee for the convenience. Make sure that it is reasonably priced, otherwise, guests will prefer to call Uber or another car service.

4. Extra cleaning

If guests stay longer than a week at your rental, cleaning once before they arrive won’t be enough. If you want to make more money on Airbnb, offer extra cleaning as an additional service. Discuss with your guests how often a cleaning service should come and clean up. Negotiate the price before they book, so they won’t get caught by surprise by extra fees after the checkout.

5. Tickets to events

If there is an exciting event taking place in your area, consider offering an event package for your guests. Offer tickets or passes and highlight them in your listing description and title to encourage travelers to book with you. This will help them avoid the hassle of searching for the tickets themselves. Guests will express their gratitude in five-star reviews and can even give you a shout out on social media.

6. Cooked meals (breakfasts, lunch, dinners)

Though leisure travelers tend to explore local restaurants, offering meals is an option that is greatly appreciated by business travelers. They are willing to pay more for convenience especially if you serve breakfast. If your location is popular among business travelers, consider adding this extra service to your listing.

7. Laundry and dry cleaning services

Offering laundry and dry cleaning services is a major bonus for business travelers.

Including hotel-like services at your place will encourage business travelers to select your rental over your competitors.

8. Decorate for a special occasion

Many people use Airbnb to travel to celebrate a special occasion. Whether it is an anniversary, birthday, or another event, you can help them celebrate it. To make more money with your Airbnb, you can offer decoration services. Guests will appreciate an opportunity not to worry about doing this themselves once they arrive.

How do you sell additional services to guests?

To get your guests interested in additional services, explain how they will save them time or money. Add the information about extra services to your listing and describe them in a catchy way to attract travelers’ attention.

For example, travelers to Venice will be amazed by the opportunity to take a gondola ride as part of the stay. If you live in a rural area, offering bicycle or motorcycle rental will allow guests to take delightful scenic trips.

Keep in mind that you need to be honest about how much your additional services are worth. Being overly promotional may drive your guests away from booking with you. If you want to make money on Airbnb, remember to always think about long-term profits ahead of short-term gains.

How to charge for extra services?

If you’re wondering how you can charge guests for additional services, here are several ways to do this:

1. Special Offer

If a guest sends an inquiry and requests one of your extra services, you can create a special offer on Airbnb. Using a special offer feature allows you to set a custom price for your guests. Send a special offer only when you are ready to confirm a reservation.

The cost of the additional services will then be included in the calculation of the guests’ total payment. Inform your guests that additional costs will be included in the total price at the checkout.

2. Alteration Request

You can create a special offer only for pending reservations. However, if your guest has already submitted a reservation request or confirmed a reservation, this feature won’t be available.

In this case, you’ll have to alter a reservation and update the total price.

When making an alteration request, make sure to specify the total price (including cleaning and other fees) in the amount box.

3. Resolution Request

A resolution request is the easiest way to charge guests for additional services. Go to the Resolution Center and choose “Request payment for extra services”. This option is available before, during, or after the guest’s reservation.

If you use this option, you only need to include the cost of the additional services. Another benefit is that the cost of your additional services will be charged as a separate transaction.

Your total price will remain unmodified, helping your guests to avoid any confusion at the checkout.

Conclusion

Whether you are a part-time or full-time host or property manager, making money with Airbnb requires commitment and planning.

The key to generating maximum profit lies in ensuring that your calendar is full while keeping your price competitive. Try to delight your guests by providing a unique experience and offer additional services to go the extra mile.

To keep your business under control, consider using automation. Vacation rental software like iGMS can literally put your business on autopilot. You can take advantage of the following features:

How To Make Money with Airbnb [Ultimate Guide]

How to Make Money with Airbnbв„ў

3 Ways to Profit from Short-Term Rentals in 2022

In This Article

If you have any property that’s gathering dust—even just a spare bedroom—becoming an Airbnb host is one way to make extra money with what you already have. The best part is that you have the freedom to either spare rooms every so often or build an ENTIRE business on Airbnb.

Read further for a closer look at how to make money with Airbnb and leverage the platform to create a thriving income stream.

How Profitable is Airbnb?

Founded in 2008, Airbnb helps people find affordable and memorable hotel alternatives around the world.В

There are over 4 million Airbnb listings worldwide, and on any given night, 2 million people are staying in Airbnb rentals across the globe.В

But it’s not just the guests who benefit from Airbnb. As it turns out, the sharing economy is helping countless people turn a profit using nothing but free space in their homes.В

Many people use Airbnb as a source of income, and some people are full-time Airbnb hosts.

If you are wondering how to make money on Airbnb, you are probably also curious about how much extra income you can realistically expect as a host.В

The nightly rate is calculated based on offer and demand, so large stand-alone homes in sought-after areas produce a much higher income than a private bedroom in a family home off the beaten track that is rented sporadically.В

You don’t need several swanky spaces to enjoy Airbnb success, but you do need to take a good, hard look at the numbers.

If this sounds intimidating, don’t let it worry you — it’s a lot more straightforward than it seems.В

Traditional Lease vs. Short Term Airbnb Rental

Short-term rentals via Airbnb can be a lucrative alternative to traditional leases. They offer more flexibility in many aspects, from the length of the lease to pricing.В

Not only are the rates for short-term leases typically higher than long-term ones, but Airbnb also allows to increase or decrease the nightly fee depending on the offer and demand.В

For example, the nightly rate on the weekends, during the high season, or during the holidays is typically higher.В

The hosts can also offer discounts for longer or mid-week stays to maximize occupancy.В

To understand how to make money with Airbnb, you need to have a good understanding of your local market as well as the laws and regulations in your city.В

For those who own property in touristy areas, you may be able to earn more money by renting it on Airbnb than going the traditional route.В

Some landlords in seasonal locations also offer winter leases at a lower rate to rent their property as a vacation rental and maximize their profit.В

Of course, you’ll need to put the work in if you want to learn how to make money with Airbnb, but it’s totally doable.В

Step 1: Calculate the Worth of Your Property

Before listing your home, you need to take a look at the actual property you want to turn into an Airbnb rental.

The first step is to determine the property’s value and figure out how much you could charge. A lot can go into these calculations, and it’s easily one of the most involved steps here, so be ready to crunch some numbers.

The simplest way to start out is by comparing your property to existing Airbnb listings. Use Airbnb’s built-in search engine to find properties near yours that are similar in four categories:

If possible, pick out 5-10 listings that are similar to yours, and make a note of their prices and fees—be sure to include the nightly rate and any cleaning fees or host service fees that may apply.

There are tools that can help when conducting market research:

Only after conducting this research will you will have a good idea of what your property is worth as a rental.

When you’re first learning how to make money with Airbnb, understanding your property’s value will have a huge impact on your success, so it is critical to NOT gloss over this step.

Step 2: Set Your Rates

Now that you know how much your property is worth as an Airbnb, it’s time to set your rates.

Naturally, you’ll need to consider how much similar properties near yours are charging, but there are other important factors to assess when thinking about how to make money with Airbnb.

First, think about affordability. Ideally, people want to stay in a space that has good value for their money.

This doesn’t mean you need to undercut your competitors, but you do need to think about how you can create a better offer than them, and this may mean a lower nightly rate. If you can provide a competitive experience and help your guests save money, that’s great!

Second, consider the fees involved. With Airbnb, both the guests and hosts pay different fees. The guests are responsible for a variable booking fee (usually around 6% to 12%) while the hosts are responsible for a 3% service fee.

On top of those fees, you’re able to add other applicable fees, such as:

Consider the related expenses involved in hosting. Hosts are required to provide certain essentials to their guests, such as soap, towels, toilet paper, pillows, and clean sheets.

It’s also highly advantageous to provide other perks (like a coffee maker or even a stocked pantry/refrigerator), so if you’re thinking about going above and beyond, be sure to factor those costs into your rates.

There’s also utilities to keep in mind, since you’ll naturally have a higher bill.

Step 3: Prepare Your Home and Establish a Process

Make sure your space is clean and tidy before you photograph it and present it to guests.

A  professional photographer isn’t a requirement, but you do want crisp photos that clearly show your space off in the most appealing way possible.

It’s also worthwhile to spend a significant amount of time on your actual listing. After all, potential guests will scour your page looking for more insight about your space.

Here’s a 3-step process to ensure your listing is ready:

1) Create a list of all your amenities and benefits (e.g., Wi-Fi, balcony, proximity to public transit and/or tourist hotspots, etc.).

2) Write about yourself so your potential guests can get to know you better.

3) Look at high-rated listings and, if something catches your eye, take an idea from their book.

For example, if you see a host using a bullet point list to outline amenities and like that format, use it for your own listing as you try and determine what works best. Feel free to experiment!

Also, it’s critical that you have a process in place for everything related to your guests. You should know exactly how check-in will go when guests arrive, how guests should contact you, and what happens when guests check out.

Bonus: Become an Airbnb SuperhostВ

Another way to make money with Airbnb is to become a Superhost.В

It is automatically attributed to landlords who satisfy the following requirements in the past 12 months of hosting:В

Superhosts’ listings are more visible in the sea of available listings, and, therefore, are booked more frequently.В

Besides, booking with a Superhost with a reliable track record gives a sense of confidence to travelers which translates to a higher conversion rate.В

Since your listings are more desirable, you may also be able to increase your nightly rate.В

Making Money With Airbnb FAQsВ

Next, we’ll take a look at some of the most commonly asked questions associated with starting an Airbnb business.

Q. How many times does an Airbnb listing get cleaned each month?В

Knowing how often their listings should get a deep clean is an important question for those considering how to make money with Airbnb.В

After all, unless you do it yourself, paying a cleaning crew frequently will impact your rental income.В

That said, a dirty home will also negatively affect your guests’ experience and your rating.В

Your Airbnb listing should be cleaned before and after each party arrives and departs. It is uncommon for hosts to offer daily cleaning (like a hotel), but they may offer for the property to be cleaned weekly for longer stays or provide cleaning products to their guests.В

It is also reasonable to expect guests to do some basic clean up before they leave the property, such as:

Airbnb has also implemented a 5-steps enhanced cleaning process in the wake of the COVID-19 pandemic.В

Q. Do you need a license to run an Airbnb?В

Whether or not you need a license to run a short-term rental depends on your location.В

When deciding how to make money with Airbnb, your first step should be checking the local regulations regarding vacation and short-stay rentals.В

Q. How much can you make from Airbnb?

How much you can realistically expect from this side gig depends on your location and the type of property you offer.В

Q. Can you make money with Airbnb without owning property?В

If you are exploring options on how to make money with Airbnb, chances are that you are already a property owner. However, even those who don’t own a home can still earn extra income thanks to short-term rentals.В

If your landlord agrees to it, you may be able to sublet your accommodations — whether you are living there full-time and leasing a room in the property you live in or staying with someone else as guests use your rental.В

You can also earn money by managing properties for Airbnb hosts, offering your services ranging from listing the rental to cleaning it and ensuring that the check-in and check-out process goes on smoothly.В

Finally, Airbnb offers services that do not require hosting.В You can create experiences in your areas that guests can book through the platform (a tour of your city or teaching a special skill, for example) or take advantage of the Airbnb referral program.В

Starting an Airbnb Business? Keep these factors in mind.

You may be excited about the numerous possibilities of making money with Airbnb, but not everything is cupcakes and rainbows in the world of short-term rentals.В

Here are some things to consider before starting your Airbnb business.В

Legality

Make sure that your property can legally be used as a short-term rental.В

You will want to check your city ordinance, but also the HOA rules.В

You may need to apply for a license and have your paperwork in order before listing your property.В

Insurance and Liability

Your homeowner insurance probably does not cover your Airbnb business.В

You will need to contract an additional insurance and liability policy to protect yourself and your guests.В

Home Safety

You will likely need to make some adjustments to your home to bring it up to Airbnb safety guidelines.В

It can be an issue if you live there as well and incur additional costs if your home is not equipped.В

Taxes

You may be required to pay some taxes to ensure everything is legal.В

Some hosts will need to pay local taxes, and if you don’t own the space you’re renting out, you’ll need to get the approval of your landlord or management company — it doesn’t hurt to strike up a contract with these entities specifically for Airbnb hosting

Time commitment

Running an Airbnb business is a very involved process, especially if you are located in a high-traffic area and run your business full-time.В

With more guests coming and going than a regular lease, it is often more demanding in time than being a typical landlord.В

The Bottom Line: How To Make Money With Airbnb

By now, you have a solid idea of how to make money with Airbnb. There’s no doubt that starting an Airbnb takes a lot of work and preparation, but it can also be incredibly profitable by creating another cash flow stream.В

If you have a spare room or even an entire house that’s not seeing any use, turning that space into an Airbnb might be the perfect job for you.

About The Author

Ian Chandler

After growing a successful freelance writing career while in college, Ian Chandler cofounded Writing Launch to share his knowledge with others. He is the author of The No B.S. Guide to Freelance WritingВ and writes about marketing, entrepreneurship, and freelancing. He holds a Bachelor’s of Arts in English from Kent State University.

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