How much money can you make from Airbnb? A question that became very common among real estate investors ever since the establishment of Airbnb in 2008.
This trusted company is growing day after day and making concerns for the traditional hotels and motels industry. However, what matters for real estate investors is how much money can you make from Airbnb and to answer that, let us take a look at effective ways to rent out Airbnb and the best places for this real estate investment that allow you to have a lucrative Airbnb investment.
How Much Money Can You Make from Airbnb: A Closer Look at Airbnb
Airbnb is an accommodation rental website that provides hosts with a platform to rent out their properties such as an extra bedroom in your primary house, an entire house, a condo, a beach house or even a tree house or any kind of property you might think of as long as it is habitable and matches Airbnb standards. This fast-growing company began in 2007 when Brian Chesky and his roommate Joe Gebbia started what they called back then AirBed & Breakfast on the living room floor of their San Francisco apartment. They provided three air mattresses and breakfast for guests who did not find an alternative accommodation in the same location. A year later, Nathan Blecharczyk joined them and together they launched Airbedandbreakfast.com and then it was shortened to Airbnb.com.
The company started its overseas expansion in 2011 and opened its first international office in Hamburg, Germany. Airbnb mainly generates its revenue through service fees on hosts and guests and its revenue was valued at 31 billion US dollars in May 2017.
For hosts, Airbnb is an accessible platform to generate positive cash flow and that is why many people are asking how much money can you make from Airbnb. On the other hand, Airbnb provides alternative cheaper accommodations for guests and travelers compared to what hotels and motels provide, not to mention the home-like experience that Airbnb offers for guests. According to Airbnb, the company has around 4 million listings in more than 190 countries, and its properties have hosted more than 260 million guests and counting. According to Priceonomics, Airbnb hosts make an average of $924 per month and nearly half of all hosts make more than $500 per month.
If you want to know more about how Airbnb works, read How Does Airbnb Work? Learn Here.
How Much Money Can You Make From Airbnb: What to Do to Maximize Your Airbnb Profit
First and foremost, you need to make sure that the property you want to rent on Airbnb is legal in your city and that renting it won’t cause any violation of your lease. Keep in mind that laws about renting out an apartment or a property for a short-term stay differ by city and state. A law in New York, for example, makes it illegal to rent an apartment for less than 30 days if the owner is not around. There are also tax and insurance laws that you have to be aware of and follow. After you make sure that renting out a property on Airbnb is legal in your target market and location, try to test out a few close-by Airbnb rentals as a guest. This will actually give you a flavor of what works best for Airbnb, what does not and what you need to offer. Once you are convinced that renting out an Airbnb rental is the right investment for you, take into consideration the following points to maximize your Airbnb profit and to know how much money can you make from Airbnb:
Advertise Smartly for your Airbnb property
This can be done by uploading clear photos for your property because that is all that guests have when deciding whether or not to book your property. Furthermore, make sure to provide your guests with all the basic amenities they might need. This point is related directly to the occupancy rate since you need to keep a high occupancy rate in order to generate positive cash flow.
Be a Superhost
Being a super Airbnb host means being able to effectively and constantly communicate with guests, check on them and make sure you answer all their inquiries and provide them with the best Airbnb experience they could ever ask for. Being a friendly host increases positive reviews on your Airbnb profile and hence gradually enhances your occupancy rate and your Airbnb profit.
Do you need more tips and tricks on how to become an Airbnb Superhost? Read Is Becoming an Airbnb Super Host Feasible?: Less Obvious Tips and Tricks.
Know How to Price Your Airbnb Rental
The first thing you need to do in order to know how to price your Airbnb rental is conduct real estate market analysis. As a real estate market changes, so does the value of real estate properties and that is why it is important to know the value of your property in comparison to other similar properties in your location. This will help you put a realistic price of your rent which will allow more people to book it.
Check Out Your Competitors
Now that you know how to value and price your property, it is important to check other Airbnb properties around your area in order to enhance your Airbnb property and make it more appealing for guests which, in a way, answers the question of how much money can you make from Airbnb.
How Much Money Can You Make From Airbnb: Find the Best Locations for Airbnb Rentals
How much money can you make from Airbnb depends heavily on the location of the property, meaning that it’s more profitable if the property is closer to touristic sites, restaurants, and public transportation. There are different ways to define the best or most profitable locations for Airbnb rentals such as focusing on capitalization rate (cap rate) and cash on cash return as accurate metrics to measure Airbnb profitability. In a nutshell, Airbnb locations with the highest cash on cash return or return on investment are the most profitable Airbnb locations.
Do you want to know the best locations for Airbnb rentals? Make sure to read Top 9 Most Profitable Airbnb Locations with Double-Digit Cash on Cash Return.
There are many ways to approach the question of how much money can you make from Airbnb. In all cases, Airbnb is a great way to make money but the how much question depends on many interrelated factors such as the location of the property you choose to purchase and how good of a host you can be.
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