Airbnb Hosting Basics
Instantly find out exactly how much I earn as an Airbnb host! Full breakdown of revenue, expenses, profit and the drivers behind each.
If you’re about to (or just started) an Airbnb, you’ve got to be wondering–Is owning an Airbnb still profitable? Will my Airbnb earn as much as I think it will? The truth is, the amount you earn as an Airbnb host can vary a lot. During my second year hosting, my revenue was far lower than I ever expected or wanted it to be. But why was that? Keep reading to find out exactly how much I earned my second year Airbnb hosting, including a full breakdown of my revenue, expenses, profit and the drivers behind each.
(If you missed the income report from my first year hosting, you can check that out here.)
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Is Owning an Airbnb Still Profitable? Second Year Income Report
Recently, I came to the sad realization that my Airbnb revenue for my second year hosting is far lower than I ever expected or wanted it to be.
When I launched my Airbnb in July 2021, I couldn’t have been happier with my revenue–I grossed just under $19k that first month alone! I was blown away and couldn’t have been more excited about what was to come. And, while it wasn’t easy, I was incredibly proud of myself for grossing over $85k in total that first year! But a lot has changed since then.
As my second year Airbnb hosting comes to an end and I tally up allll the revenue and expenses from this past year, I can’t help but be a little disappointed in my Airbnb’s performance. My revenue was lower than expected while my expenses remained about the same. This begs the question–is owning an Airbnb still profitable?
So, while putting together this year’s income report, I dug into what exactly went wrong–how I missed my revenue target and why. Get exclusive access to my full report (including a complete breakdown of my monthly revenue, expenses, profit, and the drivers of each) below.
Get instant access to the income report:
How Airbnb Hosts Earn Revenue
As an Airbnb host, the amount of revenue you earn is determined by your nightly rate (how much you charge per night) and your occupancy rate (how many nights get booked).
That said, your nightly rate and occupancy rate are impacted by several factors. The location of your property is probably the biggest and most important factor. That’s because your location is what drives guests to your area. It’s part of what determines when they stay, how long they stay, and how much they’re willing to pay.
The best way to understand the revenue potential of a specific location is by using AirDNA’s revenue forecasting tool. You can use AirDNA’s revenue forecasting tool for FREE by entering an address here, where you’ll immediately get a revenue projection for the address you enter.
Other important factors include how many nights out of the year your property is available, the quality of your property, how many people it comfortably sleeps, your ratings, and much more.
For reference, my Airbnb is located in Lake Tahoe, which is a heavily-touristed town with two busy seasons: summer and winter. It’s a 3 bedroom, 2.5 bathroom condo that comfortably sleeps six people. It’s newly renovated and I use it solely to Airbnb, so guests can rent it out 365 days a year. This is all designed to maximize my profit, and over the past two years, doing so has certainly paid off.
Pro tip: One of the best things you can do to increase your profitability is optimize your listing.
And, when it comes to your revenue, you need to know that it most likely won’t be a smooth, steady income. This is especially true if your Airbnb is in a heavily-touristed area, where people mostly travel there for certain seasons, like summer and winter.
For example, my Airbnb in Lake Tahoe grossed nearly $19,000 my very first month hosting because that month was the height of busy season in the area. Other months can have so few travelers that I earn $0.
All that’s to say, as an Airbnb host, you should expect your revenue to fluctuate a lot.
In addition to your nightly rate, you’ll charge your guests a cleaning fee, which is a flat rate that you set for each booking. Airbnb will pass this cleaning fee directly on to you, which you’ll then pay directly to your cleaning crew. For guidance on how to set your cleaning fee read this blog post.
Pro tip: Download my free income report to see exactly how much revenue I earn every month.
Airbnb Hosting Expenses
Importantly, your “host payout” (what Airbnb pays you) isn’t just what you earn in revenue. Before paying its hosts, Airbnb first subtracts a couple of expenses: its host service fees (the 3% fee Airbnb charges all hosts for using its platform) and local occupancy taxes (which it then remits to taxing authorities on your behalf).
The amount remaining is what Airbnb calls your “host payout”, which gets paid to you 24 hours after the scheduled check-in for each booking.
That said, host fees and occupancy taxes are just a couple of expenses you’ll have as an Airbnb host. Other expenses include:
- Mortgage interest (if you own your property) or rent (if you’re renting the property)
- Homeowner’s association dues (if applicable)
- Cleaning fees
- Mangement fees
- Supplies (get 100+ essentials for your Airbnb in this one simple checklist)
- Utilities
- Maintenance (get my full guide to property maintenance)
- Property improvements
- Property taxes (if you own your property)
- Homeowners’ insurance
- Legal fees (if applicable)
- Pricing tool (I highly recommend using AirDNA to determine your pricing)
- Other
Pro tip: Download my free income report to get a complete breakdown of my expenses.
How to Estimate Your Airbnb Hosting Income Potential
The easiest way to estimate your Airbnb revenue is to use AirDNA’s free revenue forecasting tool. With AirDNA, you can get a revenue estimate in less than one minute and there’s no limit to how many free estimates you get. But, AirDNA only tells you how much revenue you can earn – it doesn’t tell you anything about your expenses or profitability.
To calculate your expenses and understand if your Airbnb business will be profitable, you need to use an Airbnb profit calculator. This free profit calculator can help you determine whether or not an Airbnb property is a good investment overall, including how much the value of your Airbnb property is expected to increase over time and how much you expect to earn when you sell the property. It’s an incredibly comprehensive tool that’s essential for anyone considering investing in an Airbnb property.
Takeaway
The truth is, the amount you earn as an Airbnb host can vary a lot. During my second year hosting, my revenue was far lower than I ever expected or wanted it to be. But why was that? Download my income report to find out.
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What questions do you have about Airbnb hosting income? Let me know in the comments.
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