Whether you’re looking to retire early, start a side hustle or simply increase your cash flow, you’ve probably thought about becoming an Airbnb host.
But is it the right move for you?
Here’s everything you need to know about using Airbnb to replace or supplement your income.
Price: Free to list
Price: 3% to 5% service fee
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What Is Airbnb?
I’d argue that 90% of the population has heard of Airbnb by now. But just in case you haven’t, here’s what it is.
Airbnb is an online community where everyday people can rent their homes out to travelers.
The platform has become quite the household name. Here are some shocking facts to prove it:
- Over 150 million people use Airbnb as of 2020
- Over 2 million people stay in Airbnbs each night
- There are over 6 million Airbnb listings worldwide
Airbnb has given the hotel industry quite a run for its money. In fact, it operates more listings than Hyatt—one of the largest hotel chains in the world.
And it doesn’t show signs of stopping.
If you want to use Airbnb to make some extra money, now may be the perfect time to dive in.
How Does It Work?
Have you ever wondered how Airbnb hosting actually works?
The process is simple: if you have extra space in your home, you can make extra money through the platform by renting it out to travelers.
There are three ways to rent out your space on Airbnb:
- Rent out your entire house or apartment
- Rent out a spare room
- Rent out a shared room
Airbnb acts as the middleman. It connects hosts with travelers and takes a small cut of each transaction when someone books a stay at your place.
How Often Do I Get Paid?
Airbnb pays you within 24 hours of a guest’s scheduled check-in time.
So regardless of how long someone stays in your place, you’ll get paid within one day of their arrival.
There’s one catch, though. If a guest is staying for more than 28 days, you’ll receive the first month’s payment within 24 hours of their arrival and subsequent payments each month.
Airbnb pays you through Paypal or direct deposit. Although there may be other payment methods depending on your location.
Plus, there are no credit card processing fees, which means you keep 100% of the profits after you pay routine hosting fees.
Airbnb Hosting Fees
There are several fees you’ll need to plan for as an Airbnb host.
We recommend building these fees into your listing price, so they don’t eat into your profit.
Airbnb service fee. Listing your home on Airbnb is free, but you’ll pay a 3% to 5% service fee each time someone books a reservation.
Cleaning fees. You get to set your own cleaning fee as the Airbnb host.
This fee is added on to the price of your booking, so you’ll want to make sure that it’s high enough to cover some of your cleaning costs—but not so high that it deters people from booking with you.
Transient Occupancy Tax (TOT). Depending on your location, you may have to pay an occupancy tax to your local government (similar to a hotel tax).
If this is a requirement in your area, expect to pay anywhere from 9% to 18%.
Vacation rental insurance. Airbnb has a Host Guarantee that insures damaged property up to $1 million, but it doesn’t cover everything.
To fully protect yourself from the unknown, consider getting vacation rental insurance.
Utilities. Don’t forget to factor in the cost of utilities. Fixed expenses like internet and cable won’t change from month-to-month.
But electricity, water, and gas will fluctuate depending on the number of occupants and time of year.
Miscellaneous expenses. Last but not least, you’ll need to account for the regular upkeep of your Airbnb.
This includes restocking toiletries and basic food supplies, replacing furniture or painting walls, routine maintenance, and so on.
Earn money as an Airbnb host
Is Airbnb Hosting Safe?
Letting strangers into your home is risky. But thankfully there are a few ways to protect yourself with Airbnb.
First, you control who gets to stay at your place. You can choose to approve reservations beforehand (this is a hands-on route where you have to respond to each request).
Or, you can turn on Instant Book and set parameters on who gets to book without messaging you first.
For example, you could say that someone doesn’t get to instantly book if they have a negative mark on their profile.
Even if you have Instant Book turned on, you can cancel a reservation without penalty if you get any uh-oh feelings.
Airbnb Host Guarantee
Say you let someone stay in your place—who you thought was responsible—but they end up damaging your property.
What happens then?
Airbnb has a Host Guarantee that covers up to $1 million in property damages. But there are holes in this coverage.
For example, the Airbnb Host Guarantee doesn’t cover lost or damaged:
- Cash and securities
- Rare artwork
- Personal liabilities
- Normal wear and tear
Many Airbnb hosts opt for extra coverage through a vacation rental insurance policy that fills in the gaps left by the Host Guarantee.
If you have any of the items listed above in your home, it may be worth looking into.
Is Airbnb Profitable For Hosts?
Most Airbnb hosts make an average of $924 a month.
Although serious hosts can make upwards of $10,000 a month and casual hosts can make as little as $200.
How much money you make with Airbnb will depend on your location, the size of your space, and how frequently you rent it out.
Reddit user TorontoLandlord has a two-bedroom condo in downtown Toronto steps from many of the city’s hottest attractions.
They make an average $3,500 to $4,500 a month.
Another Reddit user named sleep-n-eat rents out two of the three bedrooms in their Santa Cruz County, California home.
They’re booked 95% of the time and make about $40k a year.
_WeAreTheLuckyOnes_ is a Reddit user in Portland who rents their three-bedroom, one-bath home and grosses about $36k a year.
All these people have been profitable with Airbnb. But note that they live in sought after cities that are usually brimming with tourists.
If you don’t live in a bustling area, your take-home pay could be significantly lower.
7 Steps to Becoming An Airbnb Host
Here are the 7 steps you can take to become an Airbnb host and start making extra money.
Before you open your home up to travelers, you’ll want to make sure Airbnb is actually profitable.
Use an Airbnb calculator to see how much money you could earn.
Simply enter your city, the type of space you have (an entire home, personal room, or shared room), and the number of guests you can accommodate.
Once you enter this info, you’ll get a rough estimate of your monthly earnings based on the average nightly price for similar bookings in your area.
Next, you’ll need to make sure it’s legal to host your home on Airbnb. This varies wildly from local government to local government.
Unfortunately, Airbnb doesn’t list city ordinances on its website, so you’ll need to do some digging to find out if it’s okay in your area.
Some cities allow Airbnb rentals as long as you have a permit or license.
If you’re a renter, you’ll also need to make sure it’s okay with your landlord and neighbors.
Airbnb asks that each host be able to meet five basic obligations for each listing.
You must respond to at least 90% of messages within 24 hours
You accept guest requests whenever you’re available
You avoid cancellations except when absolutely necessary
You maintain a high customer rating
You provide basic amenities such as toilet paper, hand and body soap, towels, linens, and pillows
If you can meet these five basic obligations, then Airbnb allows you to list your place on their site.
If it seems as though Airbnb hosting is a lucrative option for you—and it’s okay with your city or landlord—then it’s time to list your space on Airbnb.
It takes just a few minutes to create your free Airbnb listing. Here are the steps you’ll take:
1. Go the official Airbnb website and click Host a home at the top of the screen.
2. Enter your location, type of rental, and the maximum number of guests and click Get Started.
3. Select details about your listing including your property type, sleeping arrangements, number of bathrooms, available amenities, and location.
4. Add professional photos to your listing along with short descriptions of your space, availability, neighborhood, and transportation options.
5. Review Airbnb’s guest requirements, set house rules, update your calendar, and price your space.
Once you finish these five steps, click Finish and your listing will officially go live.
Now it’s time to wait (which is arguably the hardest part).
To jumpstart your bookings, Airbnb lets you offer 20% off to your first three guests.
If you wish to take advantage of this offer, you can activate it when you create your listing.
If time has passed and it still seems like guests aren’t biting at the bit to stay with you, try adjusting your prices.
And don’t forget that timing is everything. If your city is expecting an influx of visitors, you may want to wait to publish your listing until right before this time.
If you live in a college town, publish your listing when there’s a big college game or event happening.
If you live in a big city, aim for a holiday like Christmas or Labor Day when a lot of travelers come to town.
Once your first guest makes a reservation with you, it’s time to wow them.
Adding special touches here and there can be a great way to get a glowing 5-star review and catapult you to Airbnb superhost status.
When your guests leave with warm, fuzzy feelings, they’re also more likely to recommend your place to friends and book with you again in the future.
I’m proof of that. A few years ago I stayed at an Airbnb in Seattle where the host left so many personal touches.
She created a personalized neighborhood guide of the best places to eat and shop in her area.
She stocked her kitchen with coffee, tea, creamer, snacks, spices, and all the basics you’d need to eat in.
She kept plenty of board games, books, and records in the living room.
Plus, she had a basket of wool socks waiting by the front door because she knew her concrete floors could be cold at times.
It was incredible! You could tell she poured so much thought into the guest experience.
Not to mention her place was cleaner than any hotel I’d ever stayed at.
It’s been years since I first stayed there and I still recommend it to anyone visiting Seattle.
Long story short: Airbnb hosts that wow their guests are the ones that get repeat business (and have a shot at becoming a superhost).
Once your first guest leaves, it’s time to clean your space and prepare for the next guest’s arrival.
Depending on how hands-off you want to be, you can either do all the cleaning yourself or get a quote from a local company and have someone else do it for you.
Having a dirty place is one of the quickest ways to get a bad review.
Make sure you scrub the bathrooms, pick up loose hairs, wash the sheets and towels, clean out old food from the fridge, and empty the trash cans.
If this all seems overwhelming, don’t worry.
We created this Airbnb Host Checklist to help you keep your place in tip-top shape.
(Pro tip: Print this Airbnb Host Checklist off and use it as a guide each time you prepare for a guest.)
Should You Become An Airbnb Host?
Airbnb hosting isn’t for everyone. Even if the money is nice, be realistic with yourself and make sure it’s a good fit for you.
If you answer yes to these three questions, then you should definitely consider becoming an Airbnb host.
But if you hesitate on any of them, you may need more time to decide.
Do I live in an area that people travel to? Believe it or not, there are some small towns that simply don’t have a market for Airbnb hosting. (I’ve lived in several of them.) Even if you have a nice place, make sure enough tourists actually visit your area.
Am I okay with inviting strangers into my home? If you’re a go-getter who welcomes the idea of letting people crash at your place while they explore a new area, that’s a good sign that Airbnb hosting is for you. But if the thought of letting a stranger sleep in your home makes you even a teeny bit nervous, you may want to reconsider.
Is the amount of money I’d make worth the time? Calculate how much money you’d make after you deduct fees, insurance, taxes, and routine upkeep, and ask yourself if the money you’d take home is worth the time and energy.
Airbnb can be a great way to replace your current salary or earn some steady side-hustle money. But it’s not for everyone.
You’ll have the most success if you live in a great location and you’re committed to making sure your guests have a stellar experience.
If you’re thinking Airbnb is the right move for you, follow the steps outlined above to get started—and don’t forget to download your Airbnb Host Checklist, so you can ensure your guests have a comfortable and enjoyable stay.
Have you hosted your home on Airbnb before? Share your experience with us in the comments below.
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