Do you have a second home? A spare room? If so, you might consider becoming an Airbnb host to make some extra cash.
Airbnb is an online vacation rental marketplace that lets anyone rent their house, room, apartment, backyard, camper, etc.
Becoming an Airbnb host is pretty straightforward, but it is a business, and how much you can make gets complicated. On average, Airbnb hosts earn $924 per month. Of course, average earnings don’t mean much with this gig economy company.
Based on Airbnb’s fees, a host can expect to gross 95% to 97% of the listed nightly rate.
Below, we’ll explore how much hosts make, common Airbnb host expenses, and some tax information.
Airbnb Host Average Monthly Earnings
According to a survey from Earnest, Airbnb hosts make an average of $924 per month. This is three times more than other gig economy workers, like those using TaskRabbit, Lyft, Uber, Doordash, and Postmates.
Earnest also found that the median monthly income for an Airbnb host was $440.
Airbnb Host Monthly Income Ranges
Earnest’s data also revealed a wide range of monthly earnings. For example, some hosts surveyed earned less than $200, while others made more than $10,000 per month. Here’s a breakdown of their survey results:
- 15% of hosts earn $0 to $99 per month
- 38% of hosts earn $100 to $499 per month
- 22% of hosts earn $500 to $999 per month
- 11% of hosts earn $1000 to 1499 per month
- 5% of hosts earn $1500 to $1999 per month
- 10% of hosts earn $2000+ per month
Airbnb Host Monthly Rental Income By Location
Location matters with Airbnb, especially if you’re looking to invest in a new property to rent out. The following cities were named on Mashvisor’s list of 50 Best Cities for Airbnb Rental Income in 2020.
Best Cities with a Median Home Listing Price: $100,000 to $200,000
- Orangeburg, SC: $2,940 in monthly Airbnb rental income
- Cuyahoga Falls, OH: $2,660 in monthly Airbnb rental income
- Belleville, IL: $2,618 in monthly Airbnb rental income
- Warren, OH: $2,390 in monthly Airbnb rental income
Best Cities with a Median Home Listing Price: $200,000 to $300,000
- Benton, AR: $4,836 in monthly Airbnb rental income
- Levittown, PA: $4,417 in monthly Airbnb rental income
- Bridgeport, CT: $4,327 in monthly Airbnb rental income
- Martinsburg, WV: $4,040 in monthly Airbnb rental income
Best Cities with a Median Home Listing Price: $300,000 to $400,000
- Arlington Heights, IL: $4,581 in monthly Airbnb rental income
- Milford, PA: $4,360 in monthly Airbnb rental income
- Vorhees, NJ: $4,187 in monthly Airbnb rental income
- Lake Zurich, IL: $4,179 in monthly Airbnb rental income
Best Cities with a Median Home Listing Price: $400,000 to $500,000
- Plymouth, MI: $4,894 in monthly Airbnb rental income
- Grapevine, TX: $4,576 in monthly Airbnb rental income
- Saline, MI: $4,491 in monthly Airbnb rental income
- Parkville, MO: $4,484 in monthly Airbnb rental income
Ways Airbnb Hosts Make Money
Airbnb hosts make money when a guest books their listing and stays, or a guest books their listing and cancels.
Airbnb gives you full control over how much you want to charge per night. Set the rate based on the research you do yourself or use Airbnb’s Smart Pricing tool. The tool sets prices to automatically fluctuate based on changes in demand for listings similar to yours.
When a guest books your listing, you earn 95% to 97% of the booking fee plus any additional fee you set for cleaning.
Depending on the policies you choose, you can also earn money when a guest cancels their stay.
Here are the short-term cancellation policies available to hosts:
Flexible: If a guest cancels within 24 hours before check-in, the host keeps the first night. The rest of the guest’s money minus the Airbnb service fee is refunded.
Moderate: If a guest cancels within 5 days of check-in, the host keeps the first night and 50% of any other nights. The rest of the guest’s money minus the Airbnb service fee is refunded.
Strict: Guests can cancel free-of-charge for 48 hours after booking so long as it’s 14 days before their stay. If a guest cancels at least 7 days before check-in, the host receives 50% of the per-night rate. If the guest waits until it’s within 7 days to cancel, the host keeps 100%.
How Much Does Airbnb Charge?
Airbnb charges a host service fee per booking. Fees range from 3% to 5%, with most hosts incurring a 3% fee. This is lower than competitors like Homeaway (5%) and Booking.com (15% to 20%). Airbnb doesn’t charge a listing fee or credit card processing fees. Airbnb even gives hosts $1M protection for property damage. If you decide to charge a fee for extra guests or house cleaning, Airbnb takes a percentage.
Airbnb also makes money by charging guests an additional fee for booking through Airbnb.
What Affects How Much You Can Earn by Being an Airbnb Host?
Earnings for any gig economy job vary greatly, but this is especially true with a side gig like Airbnb. Airbnb lets you list your property at any price, but you only get paid if someone books your space. That means you need to carefully price and market your property if you hope to turn a profit.
Here are three factors that affect how much you can earn by hosting:
Where you’re located affects what someone will really pay to stay at your house or apartment. Unless you’re offering a truly unique experience, you want to price your listing close to similarly-sized listings in your area to stay competitive.
Research pricing by searching for rentals near you using the Airbnb website or by using the website AirDNA. AirDNA is a vacation rental data site that gives you details about occupancy rates, revenue, average daily rate, and active vacation rental units in any specified location.
Your Property’s Marketability
Hosts who work to make their properties attractive to a specific market can gain a competitive advantage and increase reservation rates. This might mean:
- Creating themed rooms to attract families if you’re located near a theme park or the zoo
- Providing beach towels and chairs if your property is near the beach
- Advertising your property as a romantic honeymoon destination
- Offering a quiet space with a coffee maker, Wi-Fi, and a printer to cater to business travelers
Time of Year
Earnings fluctuate throughout the year, especially if you’re in a vacation town. Most hosts charge different rates depending on the season. If you’re by the beach, expect to make more during the summer. If you’re by the slopes, expect to make more during skiing and snowboard season.
Local events also influence how much you can expect to make. If there’s a big event—like a college graduation or music festival—nearby, you can typically charge more for your listing due to higher demand.
What are Some Common Expenses for Airbnb Hosts?
How much you’ll need to spend to get your space ready for hosting depends a lot on its current state, what you want to offer guests, and how much you want to charge. For an idea of the cost, look at this expense spreadsheet from a current Airbnb host.
Remember, when you host for Airbnb, you are competing with nearby listings, so going the extra mile can sometimes pay off big. And you may be able to deduct some of the expenses you incur.
Here are some common expenses:
New Furnishings & Decorations
Even if you love your home as-is, it might not be exactly what an Airbnb guest is looking for. According to Dan Weber, founder of Airbnb Hell, hosts need to spend around $1,500 per bedroom they’re renting out plus $2,000 to $3,000 for other areas in the house.
Items you might need to purchase include new mattresses, bed frames, shower curtains, rugs, wall art, sheets, pillows, trash cans, a TV, etc.
Some hosts choose to provide guests with amenities like towels, yard games, coffee, snacks, an iron, an ironing board, pot and pans, and toiletries. What you want to offer depends entirely on your Airbnb strategy. For example, if you live in a beach town and expect to host guests who will fly to your location, offering beach towels, beach chairs, snorkeling equipment, etc., could help your listing stand out.
Some expenses—like toiletries and coffee—will be recurring, while others are a one-time expense.
Utilities & Subscriptions
Some hosts purchase a second home, condo, or apartment to list on Airbnb. Others just rent out their family home or a spare room. In either situation, you can expect to pay more for utilities when you have guests. When deciding which subscription services or amenity utilities to provide, consider this: offering internet will help your property rank higher in the Airbnb search results.
You’ll need to account for the cost of cleaning between stays. Some hosts use a professional cleaning service while others clean the property themselves. Airbnb does give hosts the option to charge a cleaning fee on the Airbnb website, which means guests would pay for the expense.
Depending on local ordinances, you might need to purchase a business license or a business permit. Visit your local or state website for information about the licensing process and cost.
Most hosts are protected by Airbnb’s Host Protection Insurance and Airbnb’s Host Guarantee. The first is a liability insurance program covering up to $1,000,000 in liability, and the second is a damage protection program covering up to $100,000,000 in property damage.
Some hosts choose to add additional short-term rental coverage to their existing policy. To best protect yourself as a host, you should talk to your insurer and read your policy to determine if there’s a coverage gap. Click here to read more about Airbnb’s insurance and host guarantee.
Rent or Mortgage
If you’re renting a property to then rent on Airbnb, you’ll need to pay rent monthly in addition to a security deposit. How much you’ll owe depends on the size and location of the apartment. If you’re using your family home, you need to continue paying the mortgage and property taxes.
How Does Paying Taxes as an Airbnb Host Work?
Paying taxes as an Airbnb host is very complicated because every situation is different. If you want to become an Airbnb host, contact a tax professional for specific advice. What you’ll owe will depend on how often you rent out your home, what other services you offer guests, and what expenses you incur.
Some IRS publications that you might want to read include:
- Publication 527 Residential Rental Property (Including Rental of Vacation Homes)
- Topic No. 415 Renting Residential and Vacation Property
- Know the Tax Facts About Renting Out Residential Property
- Tips on Rental Real Estate Income, Deductions and Recordkeeping
Is Becoming an Airbnb Host Worth It?
Of all of the side gigs out there, Airbnb hosting seems to make people the most money. Unlike other side gigs, though, hosting for Airbnb requires a spare room or home or some upfront money to purchase a rental unit. You’ll also need to be willing to accept some risk. Airbnb tries to minimize the risk by offering liability and damage protection for hosts, but you’re still inviting strangers into your home.
Whether being an Airbnb Host is financially worth it for you will depend on several factors, including:
- How much you can reasonably expect to charge per night based on your property and location
- The upfront and recurring costs of renting
- How often you’re able to rent the property
- Your financial goals
If Airbnb hosting sounds appealing, use a website like AirDNA to estimate earnings before investing in a new property or purchasing furniture to update a spare room.