Is Airbnb Profitable 2024?

Did you know Airbnb reported 448M bookings per night in 2023 and has over 150 million users? The stunning figures might make entrepreneurs wonder: Is Airbnb profitable as a business?

Airbnb is the first choice of travelers who are looking for comfortable, aesthetic, and affordable properties near a destination. And so they receive an immense number of bookings each day.

So keep on reading as we reveal to you the average cost of starting an Airbnb, the profits that you can make in this business, and share other essential facts. How can you satrt this business is a nig thign to know and deal with

Is Airbnb profitable

How Does Airbnb Hosting Works?

Airbnb offers a great opportunity to those looking to make extra money while working on their daily jobs. Airbnb hosts go through a four-step sign-up process before they actually start listing their property on the platform. The sign-up process includes:

  • Filling in your personal and property information.
  • Uploading the pictures of your property along with the description.
  • Establishing your prices and booking settings.
  • Finally, publishing your properties for listing.

Once you are certified as a legal homeowner, the platform requires 30 days of minimum availability during a twelve-month period per listing. 

After this, it is the host’s responsibility to provide the guest with towels, soaps, and other toiletries. They are also required to handle the bookings and requests and are supposed to reply to the customer’s messages promptly.

Hosts who do not take care of these things often end up with poor ratings, underbooking, etc.


How Much Can You Make as an Airbnb Host?

How Much Can You Make as an Airbnb Host

One can become quite financially stable by renting out their place at Airbnb. The amount that you can make from this can vary depending on your location, type of property, service, etc.

However, Airbnb hosts make $10,000 a year or $924 a month on average, and those with multiple successful Airbnb properties even make as much as $300,000 a year.

Having said that, how much financial freedom you can achieve from this brilliant side hustle idea depends on how meticulous you are with your planning and your Airbnb property.


Is Airbnb Profitable?

There are two things that highly influence the profitability of an Airbnb: your location and how aesthetic your property is. Yes, people love Instagrammable-worthy properties, and obviously, having a good location is always a plus.

As mentioned earlier, an Airbnb owner makes $924 a month on average, so renting out on Airbnb is definitely quite profitable. However, you cannot expect to make this kind of money right from day one. Attracting guests, building a good rating, and generating revenue takes time.

And the best thing about Airbnb is that you can scale up and maximize your revenue in this business and get into this full-time.

Of course, this will take time, but if you start making a consistent income and use that money to acquire and list more properties, then the sky is the limit for you.


How Much Does it Cost to Start an Airbnb Business?

Assuming you already own a property, the average cost to start an Airbnb business in the U.S. is $6,000. Here’s what the minimum and maximum cost looks like:

  • Minimum cost to start an Airbnb business: $3,900
  • Maximum cost to start an Airbnb business: $30,000

Here’s a table showing the cost associated with starting an Airbnb business

Type of expenseCost
Insurance$500 and up
Purchase Cost$0 and up
Home Outfitting$200 and up
Furniture Cost$2,000 – $3,000
Services$100 and up
Utilities and Other Subscriptions$40 – $70
Consumable Goods$50 and up

Common Expenses in Airbnb Business

Common Expenses in Airbnb Business

No how matter how big or small your business is, operating expenses are the most common type of expense that you will have to bear. Operating expenses can be split into two: Variable and Fixed expenses. So let us have a look at the cost of these expenses for an Airbnb business:

Airbnb Fixed Expenses:

  • Rent or mortgage
  • Insurance
  • Listing through Airbnb
  • Accounting
  • Subscriptions and TV
  • Airbnb renter service fee of 3%

Airbnb Variable Expenses:

  • Professional cleaning services
  • Repairs and maintenance
  • Toiletries & other soft products
  • Utilities

Calculating Airbnb Profit Margin

On average, an Airbnb owner generates a profit margin of 4%-8%. However, this could vary depending on a lot of factors.

Below, we have shared a list of expenses that you can expect to have in an Airbnb business and there estimated costs, which you can use to do your own calculation:

Airbnb Property Assumption

  • Cost to buy an Airbnb Property – $250,000
  • Estimated Monthly Mortgage Payment – $1,000
  • Weekend Daily Rental Rate – $185
  • Weekday Daily Rental Rate – $125
  • Property Taxes per month – $100
  • Weekday Occupancy – 35%
  • Weekend Occupancy – 85%
  • Cleaning Fee Charged to Guest per Stay – $100
  • Average Length of Stay – 3 days

Airbnb Expense Assumption

  • Landscaping, Lawncare, and Snow Removal – $100 per month
  • Security – $75 per month
  • Utilities – $500 per month
  • Internet, cable, streaming services – $125 per month
  • Insurance – 100 per month
  • Parking – $100 per month
  • Cleaning Cost – $100 per stay
  • Other Costs – 100 per month
  • Consumables – $10 per stay

Now you can change the value of these expenses, add them up, and deduct them from your total revenue to find out your Airbnb business’s cash flow.


Is Airbnb For You?

Is airbnb for u

The idea of being able to make $10,000+ a year from a passive income seems tempting, but this can’t be reason enough for you to start an Airbnb.

Here are some things that you should consider before you choose to start an Airbnb:

It’s like running a hotel

If you think you will simply list your property on Airbnb and then things will happen on their own, then you are wrong.

You will receive floods of tourists and their queries that you will be required to answer promptly.

You will have to coordinate check-in and check-out times, get cleaning done every day, and take care of any trouble your guest may face.

And you might not have to be present at the property at all times, but you will have to be available on the phone.

You are essentially running a business.

You might think of hiring a property manager to take care of the above-mentioned problem.

But your manager might cost you an arm and a leg because of the intensity of work. This means giving away a large chunk of your profits.

There will be down months

Even the most successful Airbnb property owners face down months (depending on the location). This means they don’t get enough bookings, especially during the off-season.

So, if you are relying on this Airbnb property to pay off your mortgage or some other kind of loan, then you should have backup money ready to cover up for these down months.

Other things you’ll be doing

Other than these, as an Airbnb property owner, you will be required to do these things:

  • Clicking aesthetic property pictures or hiring a photographer for the same.
  • Coordinating check-in and check-out
  • Checking and answering emails and messages constantly
  • Writing property description
  • Property maintenance
  • Updating furniture and amenities
  • Dealing with problematic or fussy guests
  • Having a cleaning crew ready
  • Dealing with negative reviews

If you can manage to deal with all these roadblocks while still managing your full-time job, your kids, your home, etc., then maybe Airbnb is for you.


Factors That Affect Airbnb Profits

In order to start a successful and profitable Airbnb, here are some key factors you must keep in mind:

Location

Location is king when it comes to running a profitable Airbnb business. If your Airbnb is located near a tourist spot or popular destination, then there are higher chances of you getting bookings frequently.

Not only this, you can take advantage of your location and charge a higher price for that.

Most people are willing to pay the price for convenience. However, if you don’t want to go overboard with pricing, make sure it is still competitive.

While searching for a property customers usually look for stays that have:

  • Proximity to highways
  • Proximity to restaurants
  • Quiet? 
  • Proximity to activities
  • Neighborhood appeal
  • View

If you don’t have all this, then you can compete with fellow Airbnb’s with:

  • Price
  • Service
  • Reviews
  • House Amenities

Asthetics

A study done on 1000 millennials shows that 40% of them choose a hotel or any property based on its Instagram worthiness.

So, if you don’t have the advantage of location and still want to attract customers to your Airbnb, then working on the interior and making the place Instagram-worthy will give you the edge.

Not only this but having your guests show off your property will also help you gain more customers. So consider this aspect carefully.

Service

The above two factors are needed to attract customers, but if you want to keep them coming back and want positive ratings, then you cannot ignore customer service.

We know that you cannot be available on the property at all times. So, to give your guests a good experience, make sure you reply to their queries promptly, keep the property clean & hygienic, and offer the basic amenities that customers expect from a property.

Do this, and you will receive a good rating and more customers for the future.


Pros & Cons of Starting an Airbnb Business

Pros of Starting an Airbnb Business

  • More revenue potential than traditional leasing
  • Scalable
  • Diverse portfolio of guest
  • You get more control over your property

Cons of Starting an Airbnb Business

  • Competitive market
  • Dealing with fussy guests
  • Property maintenance takes time, effort, and money
  • Takes time & effort before you start seeing results
  • You’re required to adhere to Airbnb’s rules & regulations

Best Way to Buy Airbnb Property

Best Way to Buy Airbnb Property

The biggest expense in an Airbnb business is the mortgage for your property. The price you pay for your Airbnb will directly affect how soon you can break even and start enjoying profits completely. So here are some great ways to buy a profitable Airbnb property:

Buy off-market

Buying properties that are not listed on the real estate market is a great way to buy a property for a cheaper price.

This is because when you buy a property that is off-market, you save the extra cost of paying the middleman. And you also save yourself from bids that other buyers may make.

Buy from Wholesalers

There are Wholesalers who negotiate directly with sellers and put deals in the escrow.

You can get a steal deal if you buy from wholesalers. However, you will most probably need to make full payment in cash.

Use Brrrr method

The Brrr method stands for Buy, Rehab, Rent, Refinance, Repeat and is a popular method of purchasing real estate.

This method can help you “recycle” your cash and secure good deals for the money that is left in the deal after you get tenants in place.

D4D

D4D, or driving for Dollars, is another great strategy you can use to buy an Airbnb property for less. So, for this, you have to drive around and find a distressed-looking property.

After this, you will have to cold email or contact the owner’s property and ask them if they are willing to sell their property.


Airbnb Vs. Traditional Renting: Which One is Better?

In traditional renting, you buy a property and rent it out for fixed or longer periods (6-12 months) to a single or a group of tenants.

However, renting on Airbnb involves renting out a property just for a few days to different guests (typically for several days to a few weeks)

Both traditional and Airbnb renting have their pros and cons. Let us look at them and compare the two options:

Greater revenue potential

In traditional renting, you set a fixed price for a duration and get that only.

But when renting out an Airbnb, you can change and adjust the pricing according to the season, demand, and availability, which allows you to make more money.

A diverse portfolio of guest

When renting out in a traditional way, you have the same tenant for a long period and would have to deal with them.

But when using Airbnb, you get to welcome different kinds of guests and interact with them. You might also have to deal with fussy guests, however.

Involvement

In traditional renting, your involvement after you have rented out your property remains limited to collecting rent or dealing with some issues that may arise during the tenant’s stay.

But when using Airbnb, you are required to reply to guest queries via message or email on a daily basis.

If you want more revenue and can deal with customers and give them the needed time, then Airbnb is a much better option than traditional renting.


Wrap Up

Starting an Airbnb can be quite profitable for you if you wish to start a passive-income business. The success and profitability of this business depend on many factors, such as pricing, location, etc.

However, with the right strategy, you can make a lot of money in this business and can even scale up and maximize your earnings.

We hope by now you have found the answer to your burning question: Is Airbnb profitable?


FAQ’s

How to start a profitable Airbnb business?

Here are some key points to remember and apply if you wish to start a profitable Airbnb business:

  • Do in-depth market research
  • Come up with a solid business plan
  • Choose a wise location for your Airbnb
  • Make your Airbnb property insta-worthy
  • Identify your USP
  • Develop a good marketing strategy
  • Be responsive as a host
  • Set competitive pricing
  • Focus on customer service

How much does Airbnb take from your earnings?

Airbnb takes 3% of your earnings on the platform and also charges a payment processing fee from your customers. You, as a host, can choose to pay between 14 and 16% to allow your guest to rent out your space without paying the service fees. This fee could vary depending on the location, your rental type, etc.

Which Airbnb locations has the highest monthly income?

Here is a list of 10 locations with highest monhtly rental income for an Airbnb:

  • Newbury Park CA
  • Bar Harbor ME
  • Plymouth Meeting PA
  • Manzanita OR
  • Atlantic Beach NY
  • Juneau AK
  • Charlottesville VA
  • Asbury Park NJ
  • Hood River OR
  • Bainbridge Island WA

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