For many travelers, short-term rental services like Airbnb are becoming a popular alternative to hotels. According to the vacation rental company, Airbnb listings worldwide passed five million as of June 30, 2021, with over a billion guest arrivals since the service started.
If you own properties and wish to become a professional host on Airbnb, you must first understand what it entails and weigh whether or not it’s all worth it. This article covers the pros and cons of hosting rental properties on Airbnb and how much your potential earnings could be. You’ll also learn the steps to take to start your career as a host and tips to make more money.
What Is Airbnb?
Airbnb is an online platform that connects hosts and potential guests. It enables people to list and rent out their properties for short-term use. Guests can often book large accommodations for a price that is typically cheaper than hotel rates. The rented space can be anything from an entire house, a spare bedroom, a tent, or even just a couch.
The company has its roots in San Francisco, California in 2008 and now operates in more than 220 countries and 100,000 cities worldwide. It was formerly called AirBed & Breakfast before the company shortened the name in 2009 to simply Airbnb. After 13 years, Airbnb has grown from an innovative idea to a firm with a value of $130 million.
How Does Airbnb Work?
Airbnb allows independent hosts to make income on short-term rentals while also providing guests with a more unique alternative to hotels. You can access Airbnb’s services through their website or mobile app.
As an Airbnb host, you must first create a free account and register your listing on the platform. You will need to provide your property’s location, size, number of rooms, amenities, and price. Airbnb securely provides the payment to the host after the guest checks into the property. Airbnb will typically take a three percent host fee and less than 14 percent guest service fee per booking.
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A guest searching for the perfect lodging can then browse through the various short-term rental properties on the app or website. There are filtering options available to make the search easier. Once the guest finds a suitable property, they may be able to book it immediately if the Airbnb host enabled the Instant Book feature or send an inquiry and express their interest in renting the place.
How Much Can You Actually Make on Airbnb?
Homeowners looking to make extra income from their properties will find Airbnb to be a good side hustle. Some real estate investors have even turned Airbnb hosting into a full-time rental business. According to the company’s data from April 2021, a host can earn an average of $9,600 annually.
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Research shared by low-interest lender Earnest reports that Airbnb hosts make an average of $924 per month. Variables such as the location of the property, the occupancy rate, and the quality of the home can affect earnings. In addition, property taxes, the Airbnb host service fee, and other operating expenses will also be subtracted from any revenue.
If you want to estimate your potential earnings, look into the historical data of Airbnb listings in your local real estate market. Total the average number of days booked and multiply it with the daily rate to get the estimated revenue. From that data, you can subtract the average expenses to calculate your potential net profit.
The Pros and Cons of Hosting on Airbnb
Although hosting on Airbnb can be a lucrative opportunity, there are still a few risks and disadvantages that come with it. Like any other business or side hustle, you’ll need to invest your time and energy to figure out the best practices for hosting on Airbnb. Below are some pros and cons to weigh up before you get into Airbnb hosting.
Pros of Hosting on Airbnb
- It can be a great source of income. Hosting a residential or vacation rental property that’s fully furnished, well photographed, and located in a popular area on Airbnb has great income potential. With the right rental strategy, you could earn $9,600 annually or even reach a six-figure income.
- Airbnb does most of the work for you. Instead of spending time on developing marketing strategies and looking for potential short-term lodgers on your own, Airbnb will handle most of the work by showing your property to potential guests. It also has an efficient system that helps hosts book guests and receive payments.
- They offer protection to hosts. In some countries, the company offers a Host Guarantee Program that covers up to $1,000,000 of property damages. If your property is covered by this program, it will be protected in the rare event that a guest damages your home during their stay.
- You have the option to accept guests or not. Hosting on Airbnb gives you the freedom to choose your guests. The online platform has a feature that allows hosts to review guests that have stayed at their property. If a guest is requesting to rent your property, you have access to some information about them as a guest.
- You have the freedom to set your price. As an Airbnb host, you can also enjoy the freedom of setting your property’s nightly rate.
Cons of Hosting on Airbnb
- Bookings are not guaranteed. Although hosting on Airbnb allows you to tap into its plethora of users, bookings are still not guaranteed. Unlike getting a long-term tenant who will sign a contract and stay for a fixed period, hosting on Airbnb means you may go for periods of time without any bookings. Income can be erratic and unpredictable.
- It can be time-consuming and disruptive. Airbnb will handle the booking tasks, but you’ll still need to manage your account. You have to be attentive and respond to potential guests within 24 hours, welcome guests, and clean the space. Some hosts hire someone to work as a virtual assistant and communicate with guests on their behalf.
- It’s not legal everywhere. Short-term rentals are not legal in some cities, so you will need to check local laws before you start hosting. There may be instances where you need to get permits and licenses or register your property with the government.
- Airbnb takes a percentage of your earnings. Although listing your property on Airbnb is free, the company charges the host a service fee of at least three percent for every booking.
- You may be subjected to paying taxes. Aside from typical Airbnb fees, you may also be required to pay occupancy taxes and VAT, depending on your location. It’s best to consult with a tax professional to understand what your tax obligations are as a host.
How to Become an Airbnb Host
After learning how much you can make on Airbnb and weighing the pros and cons of Airbnb, the next step is to start your journey as an Airbnb host. Fortunately, listing your property with this short-term rental company is easier than you may think. To help you set up a successful Airbnb business, make sure you follow the simple steps below.
1. Know your local laws and legal restrictions
Before getting into Airbnb hosting, you must first ensure that short-term rentals are legal in your city and country. In many places, you will be required to register, obtain a license, or get a permit before listing your property as a vacation rental. Additionally, laws may also subject you to various taxes.
2. Prepare Your Airbnb Space
Whether you’re planning on renting out your entire house or just one room, you’ll need to make sure it’s ready for guests. You may need to invest in a few amenities like extra towels, clean sheets, and toilet paper to make their stay more comfortable. If you have a larger budget, you can provide extras like a welcome gift, board games, or a sound system for guests to enjoy.
3. Take High-Quality Photos of Your Property
Before guests choose a property to stay in, they’ll first browse through several listings on the platform. That’s why making a good first impression is crucial. You must capture the best photos of your property to catch their attention and influence them to click on your listing. Tidy up your place, stage your home, and draw out what makes it naturally appealing.
4. Sign Up on Airbnb
Once you understand the laws for short-term rentals and prepare your place for guests, it’s time to sign up on Airbnb. Creating an account is free and will only take you a few minutes to complete. All you have to do is open the Airbnb app or visit the host page online, enter your personal information, create a bio, and verify your account.
5. Create a Listing
After your account is verified, you can finally create a listing to show potential guests what you have to offer. Make sure you provide the basic information, including the type of property you’re offering, how big it is, the number of rooms guests can access, and the amenities it includes. Your listing should feature an eye-catching title and plenty of photos.
6. Set Your Prices and Calculate Your Fees
When determining how much you want to charge your guests, try to look at other listings in your area and compare prices. You should ensure that your price will cover all your operating costs, Airbnb fees, taxes, and still leave you with a profit. Try to monitor the local market closely and adjust your pricing during high and low seasons accordingly.
7. Wait for Guests to Book Your Airbnb Rental
With your property set and listed on Airbnb, the last step is to wait for guests. Be sure to respond to potential guests on time and review their profiles. If you noticed that you aren’t receiving any bookings, you might need to review and tweak a few things on your listing to make it attractive to travelers. Airbnb provides handy tips to help hosts optimize their listings.
How to Make More Money on Airbnb
While most Airbnb hosts make a few thousand dollars from their Airbnb listings, some have been able to earn up to six figures. With more than 5 million Airbnb listings across the globe, competition within the online platform is fierce. If you want to get the most out of your listing and increase your Airbnb revenue, consider following the tips below.
Invest in Multiple Properties
A single listing can only help you earn so much. Once you’ve set up the highest rental rate your market can support and reached the maximum occupancy number, there’s nothing left for you to do to increase revenue from that property. If you have the budget to invest in multiple properties, consider hosting more listings on Airbnb to make more money.
Become an Airbnb Superhost
Becoming an Airbnb Superhost can add credibility to your listings. This prestige is given to hosts that have consistently received positive reviews from guests and provided excellent services. It can help you earn more bookings and increase income since guests usually look for this badge to ensure a reliable host. In addition, Airbnb prioritizes Superhosts in the search results.
Use High-Quality, Realistic Photos
Keep in mind that you have to put your best listing forward if you want to stand out from other Airbnb hosts. Posting high-quality and captivating photos of your rental property can make a huge difference. If you’re not confident in capturing good angles and highlighting the best features of your home, you might want to consider hiring a professional photographer.
Provide a Heightened Experience
Another great way to attract more guests is to show them the activities they can enjoy near your property. Creating a guidebook for your area is a simple way to go the extra mile for guests. The guidebook can highlight your favorite restaurants, outdoor activities, and museums. With specific recommendations, you can help ensure your guests enjoy every aspect of their trip.
Plan How Often You Want to Host
It’s crucial to have a clear plan on when and how often you want to host on Airbnb. Fortunately, the platform allows hosts to set up highly-customized rules for bookings and adjust the minimum and maximum stay limits. If you want to maximize your earning potential, then you’ll need to accept booking requests as much as possible.
Is Hosting on Airbnb Worth It?
Hosting on Airbnb is a worthwhile venture if you’re willing to learn the right strategy and invest your time, energy, and money into the opportunity. It’s one of the smartest ways you can boost your passive income and earn an average of $9,600 per year. However, you’ll also need to consider the drawbacks of Airbnb hosting and decide for yourself whether or not you can manage it.
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Making Money on Airbnb FAQ
Can you make a living off Airbnb?
Running an Airbnb can be a profitable venture. However, the amount you can earn will still depend on various factors. There may be times when you don’t get bookings, which means income may be irregular. Solely depending on your Airbnb income might not be the best idea unless you’re generating big numbers and managing multiple properties.
Is Airbnb still profitable in 2021?
There’s been a recent surge in international and domestic travel. This sudden rise in travelers may increase the demand for vacation rental services, providing the perfect opportunity for Airbnb hosts to earn money. If you’re located in areas that are starting to accept travelers, listing your short-term rental on Airbnb can be a lucrative move.
How does Airbnb pay hosts?
Airbnb sends payment to hosts through several payout methods, including bank transfers or ACH, PayPal, Payoneer Prepaid Debit Cards, Western Union, and more. The company will typically send the money to the host 24 hours after their guest checks in.
Is it safe to be an Airbnb host?
Hosting on Airbnb comes with a few risks. You may encounter irresponsible guests that cause problems like damage to property and theft. Luckily, Airbnb offers hosts damage protection and liability insurance through AirCover. Plus, hosts do not have to accept bookings from any guests that they are not comfortable hosting.
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