So, you want to know just how much money can you make on Airbnb? This is important information that can help you decide to list your property and see if it’s right for you! Your friends have probably been telling you how much they make with their Airbnb property and you’ve decided to look into it and see if it makes sense for you. Getting started can be a little overwhelming at first. Thankfully, when it comes to profitability, accurate numbers never lie.
To begin, we’re going to use an imaginary 2-bedroom, 1-bathroom property that is located near the downtown area and has a washer and dryer in the unit. How to get started?
First, you’ll want to add up how much it costs to rent out your place. Costs may include:
- Mortgage/Rent, Electric
- Internet service
These costs will always vary by location; check your most recent statements to get a good grasp of your costs. Let’s see what it costs with some hypothetical numbers!
Second, you’ll want to see how much places like yours are renting for. Don’t forget to account for special things that make your listing unique like: saunas, hot tubs, great view, etc. that allow you to command a higher price. Also, factor in the seasonality of your location; if your summers are busier, and your winters are slower, then you’ll want to factor that in.
Here are some of the results that have come up in our search of the neighborhood:
3-Bed, 2-Bath listing $170/night
1-Bed, 1-Bath listing $95/night
2-Bed, 1.5-Bath listing $145/night
Third, looking at these numbers and, depending on the square footage of the other listings, your ideal pricing might be around $120/night. That’s great! That’s the first half of the equation!
The second half is occupancy: how many nights a month will people stay at your place.
Occupancy rates vary widely across the country and even across neighborhoods. There are several sources online that can give you data or you can collect your own by looking at the availability of the Airbnbs near you. Keep in mind that price also affects occupancy: price your unit too high and you will have few bookings, or too low and you may drive down the city’s fair market rate!
For example, let’s say your occupancy is 60%, or you will get (on average) 18 nights out of 30 booked.
The math will look like this:
$120 x 30 nights = $3,600
$3,600 x .6 (60%) = $2,160
Total Costs = $1,275
$2,160 – $1275 = $885
In this fictional case, your profit would be $885 per month. We also haven’t detailed the nuance of cleaning the unit, and cleaning fees you can charge, which we will cover in another post. It’s important to have a good sense of what kind of money your potential Airbnb can make. It’s also necessary to be mindful of all costs attached to a listing. For instance, we have snacks, welcome cards, and bottled water available to our guests. The cost for special touches is usually minimal, but important to record to give yourself an accurate picture of your listings potential for success.
Accurate numbers are the bedrock foundation upon which all successful endeavors rest. They allow you to both know if your property could be profitable and to track the income on an ongoing basis.
We’ve outlined steps that account for some common costs that can occur.
What are some costs unique to your property or location? What are the occupancy rates in your area?
Leave a Reply