Airbnb arrived on the short-term rental scene in 2008 to completely change how the world sees accommodation. Giving travellers options to get out of the hostel and into a furnished room, unit or entire property, Airbnb has set the standard for what has become an incredibly popular way to travel. Nowadays, used for more than just backpackers and budget-seeking explorers, Airbnb has evolved to not only host but support entire families as a successful means of passive income.
So, how profitable is it? And how can you find success in what is already an established and densely populated market?
Read on to find out.
What makes an Airbnb profitable?
Many people who host Airbnb properties have either decided against traditional renting methods or created a purpose-built means of second income. While an Airbnb property doesn’t always offer the consistent flow of income of a traditional rental, it has many financial perks that cannot be found through a 6 – 12-month lease.
Greater nightly revenue
While traditional rental properties have fixed pricing charged weekly, an Airbnb host can adjust their pricing based on demand, market needs and their offering. Airbnb guests are often willing to pay more to book, and the fees are charged per night, offering a greater earning potential overall.
The potential for additional services
Traditional renting features a closed relationship between landlord and tenant, with an intermediate such as a property manager maintaining communication. In an Airbnb, however, the opportunity exists for extra revenue through add-on services such as catering, laundry, cleaning, and partnerships with local attractions.
Greater control over your property
No matter your rental type, one cost is inevitable: maintenance and upkeep. If you have a traditional tenancy with the same people residing at the property for 12 months or more, you can only conduct a handful of inspections at allocated times. This can make it easy to miss maintenance or repair needs, resulting in a higher lump sum at the end of the tenancy. Additionally, a lease would have you locked into the same price for up to a year. On the other hand, an Airbnb host can visit their property between stays, keep on top of maintenance issues as they arise, adjust the pricing based on special local events or demand, and even block out a few nights for their own enjoyment.
Advertising and management
While this may be another upfront cost, the payoff from having great photos, descriptions, advertisements, and property management will be well worth it. Where you can generally get by without making significant improvements or renovations to your space, you cannot advertise it well without professional photography. Moreso, your experienced Airbnb property partners will be able to tell you what’s hot and what’s not, making your property stand out among the sea of competitors. Partnering with professionals from the get-go is the best way to make your Airbnb as profitable as possible.
Expenses of owning an Airbnb
Owning an Airbnb can have significant financial returns, but like any investment, there is a certain amount of risk. With Airbnb CEO Brian Chesky stating that in a post-pandemic world, millions of new hosts will be needed to keep up with demand, there has never been a better time to take up the mantle as Airbnb’s newest host.
Some of the expenses you should expect include:
Airbnb fees and charges
Airbnb must make their money somewhere! Airbnb charges a standard host service fee of 3% of your set price for every booking. This can go up to 5%, depending on your cancellation policy. Your guests will also pay a fee, from 5 – 15%, depending on the length of the stay, the subtotal, the type of listing and other factors.
Time is money
There is no hiding the fact that managing a short-term rental will require a good chunk of your personal time. Some hosts even turn hosting into their full-time job. Managing your rental will be ongoing, with many tasks needing your attention, often all at once.
Maintenance and upkeep
Generally, around 10 – 15% of every booking should be reserved for ongoing maintenance or replacing broken items. Damage happens, and by having a portion of your kitty set aside to anticipate it, you will be setting yourself up for less of a headache when it does.
Airbnb hosting is becoming a common side hustle for those wishing to make an income from an existing asset: their home. However, while it might seem perfect to you, your property likely needs some improvements or upgrades before it's ready to host. Some of these expenses include:
- A digital keyless entry system
- Wi-Fi and a Smart TV
- Extra laundry items (you can never have enough towels!)
- Toiletries (and an ongoing budget to replace them)
- Pantry and fridge staples
- Generically appreciated amenities such as an ironing board, wine openers, cold water dispenser, and more
How to find success in the short-term rental market
So is Airbnb profitable? The answer is it CAN be if you do it right.
With the demand of short-term (and long-term) rentals at an all-time high, there has never been a better time to become an Airbnb host, particularly if you have a property in a popular holiday region such as the Sunshine Coast. Much of the industry's growth in the past few years has been concentrated in areas with high demand, with well over half of Sunshine Coast Airbnb’s experiencing a consistent occupancy rate.
Partnering with an Airbnb property management team is one of the best ways to increase your profitability through higher occupancy rates, improving your guest's experience, boosting your income, and actually enjoying the process of hosting your home. With so many balls in the air all at once, being an Airbnb host can quickly become overwhelming. Let us take care of everything from your styling to your photography and the laundering of your piles of towels and sheets. We are proud to be an investment owner’s best friend and are ready to help you get the most from your investment property.
Simply get in touch today on 0492 949 642 to get started on your free appraisal.