Will You Make Or Lose Money If You Airbnb Your Home?
Over 150 million guests have booked over 1.5 billion stays on the Airbnb app. Private vacation rentals offer guests a "home-away-from-home" feel that is lacking from most hotels. They are also more family-friendly, group-friendly, budget-friendly, and in some cases, pet-friendly. Over five million hosts currently list properties with Airbnb, with an average yearly income of around $14,000. Many of these properties make much more, some break even, and some actually lose money.
Now, if you're thinking about being a host, that raises a question — which category will your home fall under? The good news is that it's not a total crapshoot. With proper research, you can get a good idea of how much money you stand to gain or lose before booking a single guest.
The first step, as you'll know if you've ever watched "Vacation House Rules" on HGTV, is to follow host Scott McGillivray's #1 rule of "Do Your Research." Search similar properties in your area to see what they are charging, and how often they are getting booked. Keep in mind that prices and bookings will vary throughout the year, especially if your home is in a weather-dependent area, like a ski resort or beach. You should also check out Airbnb's calculation tool, which can project your potential monthly earnings based on your location and remove any unrealistic expectations for your Airbnb. Once you know how much you can earn, you need to figure out how much you'll have to spend. There are many costs for an Airbnb host, and not accounting for them is what leads to negative income for many properties.
What are the actual costs for an Airbnb host?
Cleaning and maintaining an Airbnb can feel like a full-time job, but if you are able to do it yourself, you can save a lot of money. Of course, if your vacation home is in a different city than your primary residence, then cleaning between guests, restocking necessities, and seeing to unexpected needs is not an option. Look into the vacation rental management companies in your area and find out if they charge a flat monthly fee or are commission-based (typically 20%). As for restocking fees, Airbnb requires hosts to include necessities like toilet paper. You don't absolutely have to stock additional items like laundry detergent, pantry staples, and coffee, but doing so will lead to better reviews (and thus, more bookings).
Listing with Airbnb is free, but there is a three percent charge per booking to cover payment processing. Depending on your area, you may have to purchase a business license, and you will need to pay taxes on your earnings. It is also advisable that you get an insurance policy that covers theft, damage, and liability in case someone is injured while staying at your property.
Finally, you need to get your Airbnb in shape for guests. This could include a complete renovation, changing the decor, or simply adding some outdoor furniture. You may also want to invest in a professional stager or photographer that will perfectly capture your Airbnb. Add all of these expenditures to your utility bills and mortgage payment, and you'll know what you need to charge per booking to earn a profit.
Additional tips for making money on Airbnb
The "Do Your Research" rule applies to every facet of hosting, such as decorating, staging, marketing, and so on. One of the most important bits of research you can do is to ... well, book a stay at an Airbnb (or several if your budget allows). Take notes of things you like and dislike as a guest. Next, stay in every room of your home for at least one night to see if any such problems exist. Small things like not having an outlet near the bed for phone charging, a draft, or too-flat pillows — all of these factors can make or break a stay.
When it comes to decorating and staging tips, remember the key is to stand out and make a fun, memorable vacation spot. People choose Airbnbs for the character they offer opposed to stark hotel rooms. Feel free to lean into any themes (essentially the opposite of staging to sell your home, where all personality is taken away). Spend your money wisely on things that enhance the experience. For instance, instead of an expensive backsplash, get an outdoor fire pit or gazebo.
Once you've started welcoming guests, it is important to be a responsible host. Airbnb offers a list of expectations for hosts, which includes health and cleanliness, safety, and privacy. It is important to be available to your guests and keep lines of communication open. Good reviews + more stays = more profits!