The simple answer to the question is yes, it is possible to make money with Airbnb. Today there are more than 650,000 hosts around the world and more than 6 million listings. The amount of money you can earn however is not fixed and it is highly dependent on your property and on the overall “experience” you provide.
To give you some ideas, a standard 2-bedroom apartment or a house in a major city can generate around $20,650 per year on average in profit.
Studies show that more than half of Airbnb hosts make more than $500 per month and some earn up to $10,000 each month by hosting multiple properties or via Airbnb arbitrage.
By just glancing at these numbers and statistics you won’t be surprised to hear that it is possible to earn a substantial amount of money through Airbnb. However, as good as it might sound, consistently receiving a stable income from the platform is not as easy as it might seem. There are several things you need to take into account before becoming a successful host on Airbnb.
This article will go through some winning tips and some of the things you need to consider to maximize your chances of being a great Airbnb host and therefore getting a higher return on your investment.
Keep in mind that during the process, especially at the beginning, you’ll have some considerable start-up expenses and it will require a lot of effort, to get things streamlined the right way. However, as with most things in life, the hard job will pay off and with Airbnb, the potential of earning good money is enormous.
Can I really start an Airbnb Business?
Again, the simple answer to the question is yes if you’ve got a property to rent out, and you’re a business-minded person. Airbnb allows you to make much more money than you would do by simply renting your property (usually between 2 and 4 times) as this article shows, However, to be successful, you’ll need to invest time and capital and a lot of energy.
The Time Factor
Running an Airbnb is not as easy as it sounds. Instead, it can be quite exhausting. You have to deal with new guests constantly, communicate with them, answer their questions and provide them with a good experience that will meet (if not exceed) their expectations you will find this does require a significant about of energy. However, this can be made easier by automating your listing as much as possible. Click here to read about this. Good tips to make automation successful include:
- Automate guest arrivals with a key box.
- Ensure you have a set of house rules so that guests know what is and isn’t permitted.
- Use automated communication for guest arrival information.
Happy Guests = Good reviews
You will benefit from happy guests as they’ll help you earn a good reputation as you build a portfolio of positive reviews that will help you generate more bookings and attract more potential guests.
Also, you need to consider that you’ll have an almost constant cleaning schedule. How you manage your time (and your budget) is essential here. If you start hiring staff (for example a cleaning service), managing such staff efficiently to get the best results will take time too. You can read my post about Airbnb cleaners here.
The Financial Side
Setting up an Airbnb can be quite expensive. You’ll need to furnish the property and provide amenities for your guests. Consider the initial investment you’ll have to make and the ongoing expenses to support your listing.
The ultimate success of an Airbnb host is given by a great balance between the two factors mentioned. If you have time at your disposal to manage your property and the flow of guests and enough funds to get started, you should consider being an Airbnb host provided you streamline your systems this can be a nice part-time extra income. Why not download my free profit tracking template here.
You will also have to clearly optimize your pricing and vary your nightly rates according to supply and demand. Fortunately, this is easy to do.
Can I Make A Profit As A Host?
To answer this question, you can take a look at some different Airbnb listing figures. The profitability of your listing being profitable will depend on the type of your property as well as the location.
Private rooms usually are less profitable than entire houses. Research on fifteen of the US major cities shows that on average studio apartments generate £1,400 per month on average, while the monthly profit for private rooms is around £650.
An average Airbnb house can make between £20,000 and £30,000 per year; an apartment can generate £15,000 per year and private rooms around £7,000. However, of course, all of these prices depend very much on your location, and the pricing strategy you adopt. See more about pricing here.
Of course, you’ll have to deduct the expenses of running your Airbnb but in general, we can safely say that you can make a good monthly profit as an Airbnb host as long as you carefully project and then keep track of your expenses.
What Expenses Will I Face When Becoming an Airbnb Host?
The question of expenses you’ll face as a host is an important one, which needs to be seriously addressed. It doesn’t cost you anything to list your property, but Airbnb will charge you a 3% commission for every guest you receive. Depending on your cancellation policy Airbnb’s commission fee might arrive to be up to 5%. To give you a general idea for a booking of £1000 you’ll have to deduct around £30 of fees.
Commission fees are not the only expense you’ll have to face as a host. You will need to consider the cost of:
- Occupancy Tax
The biggest initial expense will be furnishing your property, and you can be clever about this. Often you will find nice items for sale secondhand, which will considerably reduce your initial outlay.
Also, you’ll need to provide your guests with some amenities, some of which are essential, others necessary if you want to offer your guests a superior experience.
You can see how costs might start to add up and affect your profitability. But if you manage your property correctly and carefully track your expenses, you’ll be able to make good money from Airbnb.
How Will I Get Paid As An Airbnb Host?
This is a common and legit question that you might want to be clear about. This section aims at clarifying to you how Airbnb payments work so as to leave you without any doubt.
How To Select A Payment Method
To begin with, you’ll have to log in to your hosting account and go into the “Account Settings” section, which you can find by clicking on your profile picture on the top right of the web page.
Then, go to Payout Preferences, on the left menu. Here you’ll see your preferred payment method. You can change it at any moment by updating it and clicking the green button when you’re ready. You should also choose a billing country from the drop menu. Each country will have different methods and currencies.
Here are the steps you’ll have to follow to select a payment method:
- Click on Account Settings
- Select Payout Preferences
- Choose your billing country and preferred currency option.
How Does Airbnb Pay You?
Airbnb pays the hosts 24 hours after a guest has checked in. Depending on the payment method you selected, the money will hit your account within a different time frame. PayPal usually takes three to four hours to process the transfer of money but it will charge you fees. Payoneer Prepaid Debit Master Card will take around 4-5 hours and will also charge you some fees. Instead, if you selected a bank transfer as your payment method, you’ll get the money in five to seven business days and you won’t be charged any fees.
My recommendation to you is that you opt for a bank transfer. It is my preferred option and I’ve been a host on Airbnb for many years now and I’ve always received all my payments usually within three days.
How Does Airbnb Make Money?
As mentioned before Airbnb charges its hosts a flat 3% fee covering the cost of processing the payments. If you choose a stricter cancellation policy, the commission fee will be raised to 5%.
On the guest side, Airbnb charges between 5-15% fee depending on the total amount paid by the guest for the booking. This cost covers the running of Airbnb. The higher the payment to be made, the lower the total commission charged by Airbnb to its guests.
As you can see, Airbnb charges guests a higher percentage, meaning that hosts can enjoy lower fees and overall increase their expected revenue. This is unusual for short-term rental websites, as usually, the host absorbs the entire commission.
So, I hope you found this to be an essential guide on everything you need to know before becoming a host on Airbnb. As you can see, to be successful takes effort, time, and a considerable investment but you’ll be able to make good money if you play your cards right. I hope you’ve found this useful, and I do welcome your comments below!