Hosting Airbnb can be worth it in 2024 for those who:
Airbnb hosts have shared their experiences, offering mixed but generally positive perspectives. For example, Christina Dennis spent an investment of CA$50,000 for lake house renovation. According to her, Airbnb hosting can be rewarding despite the initial challenges. Kristen and Michael increased their earnings by adding a hot tub on their property. This led to a revenue increase of up to $1,200 to $1,300 per month.
Meanwhile, Lydia Patel experienced a slight decrease in earnings from 2022 to 2023. She shares about earning $34,833 from May to July in 2022 and then $32,057 in the same period the following year. Despite this, she believes Airbnb can still be profitable with continuous efforts to enhance listings.
Overall, Airbnb hosting can be worthwhile, though it requires strategic planning and ongoing investment.
Hosting Airbnb in 2024 probably isn't worth it for those who:
Getting a mortgage on an Airbnb property might not be the best decision right now. Interest rates are relatively high compared to where they have been in the recent years. For example, the average 30-year mortgage rate in the United States in 2021 was just 2.96%, while in 2024 it's over 7%. This higher rate can lead to substantially higher mortgage payments. So it will be even harder to use Airbnb earnings to cover monthly expenses.
The Airbnb boom in recent years has led to market saturation in many cities. Those looking to establish an Airbnb property in a city that already has a high supply of short-term rental options may want to reconsider. Generally, many hosts in these markets are no longer profitable.
Many Airbnb hosts recommend against getting an Airbnb property located far away from your place of residence. You wouldn't want to travel a long distance to manage a property. Also, paying a property manager to do the task for you can mean additional expenses. Besides the risk of hiring a bad property manager, these services can also take a massive portion of your profits. As one Airbnb host shares, property management can cost you as much as 22% of your earnings.
Hosting Airbnb is usually not worth it for those who want a stable cash flow business. The business model tends to generate inconsistent income throughout the year. Many locations have high and low seasons. Short-term vacation rentals are heavily dependent on the current economic conditions.
Those looking for an online business model that delivers consistent, recurring income can consider local lead generation. This entails setting up websites that attract customers for local service businesses. With this, you rent out website space to real local service businesses for $500 to $3,000 per month. Business owners tend to stick with a local lead generation website for the long term. The approach allows them to avoid spending money on paid ads while still generating more revenue for their business.
In the following article, we'll look further at whether hosting Airbnb is worth it. We'll be comparing the pros and cons of the business model. Plus we'll also check out the real opinions of 3 current Airbnb hosts.
Is Hosting Airbnb Worth It? (Pros and Cons of Airbnb Hosting)
Reasons Hosting Airbnb Is Worth It
Cash Flow. Hosting on Airbnb often results in a higher income than traditional long-term renting. According to iGMS, some earn triple the amount they make with traditional renting.
Meeting New People. Airbnb hosting provides opportunities to interact with guests from different backgrounds and cultures.
Tax Benefits. You’re eligible for certain tax deductions for your rental property.
Passive Income Potential. While it requires initial setup and ongoing management, Airbnb can offer a hands-off income stream.
Platform Assistance. Airbnb assists with guest bookings and communication, providing 24/7 customer support. Moreover, Airbnb even has a host damage protection that can provide reimbursements of up to $3 million.
Guest Preference. Some travelers prefer Airbnb’s homely feel over hotels. Guests also choose Airbnb for its unique and personalized experiences.
Guaranteed Payments. Payments are processed through Airbnb. Generally, they're released within 24 hours of a guest’s arrival. This ensures a hassle-free transaction process, reducing the risk of payment issues.
Control Over Hosting. You can choose your availability and vet your guests. Aside from setting your own house rules. you can also require guests to provide identification before booking.
Reasons Hosting Airbnb Isn't Worth It
Security Concerns. There are always risks of property damage, theft, and guest misbehavior.
Neighbor Complaints. Hosting can result in noise or other disturbances, leading to complaints from neighbors.
Inconsistent Income. Unlike long term rentals, Airbnb bookings are often sporadic.
Regulatory Issues. Some areas have regulations or bans against short-term rentals.
Increased Expenses. Airbnb hosting often requires more spending on amenities, cleaning, and maintenance than a traditional rental.
Economic Factors. Increases in interest rates and economic downturns can increase costs and reduce demand.
Demanding Work. Managing guest expectations to ensure positive reviews can take a lot of work.
Platform Fees. Hosts have to pay Airbnb fees on every booking. This usually costs more than you’d spend on a direct booking website.
Insights from Real Airbnb Hosts: Do They Think Hosting on Airbnb Is Worth It in 2024?
1. Christina Dennis
Christina Dennis, founder of “The DIY Mommy,” launched a renovated lake house project in Canada. She encountered several challenges within six months of renting it out as a short-term accommodation. The house required more investment than anticipated. Renovation and furnishings costed her approximately CA$50,000. She wanted to have every amenity an Airbnb guest might look for. This includes everything from having essential appliances to small details like coffee pods and dog treats.
According to Christina, choosing durable finishes is a must. She commended her choice of luxury vinyl plank flooring. However, she regretted not extending it to the bathroom and installing a white sink in the kitchen. To ensure guest satisfaction, she invested in communication tools like guidebooks and instruction signs. She also provided prompt responses to customer queries.
Christina Dennis's Verdict:
Hosting on Airbnb is worth it. Although she hasn’t recouped her investment yet, the experience of hosting and interacting with guests has been incredibly rewarding. If you want to host, be prepared financially and mentally for its challenges and responsibilities.
2. Kristen and Michael
Kristen and Michael saw an increase in their Joshua Tree property’s bookings in 2023 compared with 2022. After adding a hot tub to their property, their earnings rose to $3,620 from $2,411 in February 2022. They observed similar patterns in the following months. April 2023 made them $6,560 against $5,186 in April 2022. The couple credits their Airbnb’s continued success to reinvestments in the property. While the hot tub led to a few issues, it also boosted their competitiveness in the market. They’ve also been diversifying on Vrbo and Lodgify, as well as their own direct booking site. Moreover, they've managed to adapt to Airbnb website changes affecting hosts. As a result, they’ve been able to maintain consistent bookings.
Kristen & Michael's Verdict:
Airbnb is worth it in 2024, especially if you’re strategic and open to reinvesting in your properties. While now might not be the ideal time to buy a short-term rental, you’re positioned well if you already own one.
3. Lydia Patel
Lydia Patel is an Airbnb host from Jacksonville Beach, Florida. Here’s a partial comparison of her earnings in 2022 and 2023.
Lydia attributes the drop in May to an exceptional month-long booking. According to her, this is a rare occurrence. She also just launched her property that year. So she believes it was boosted by the Airbnb algorithm since it was a new listing. She made a total of $34,833 over the months of May, June, and July. In 2023, she earned $32,057—a difference of nearly $2,800 or an 8% decrease, not accounting for inflation.
Overall, she says her experience was neither disastrous nor exceptionally positive. Besides, some Airbnb hosts had it worse and experienced up to 50% in drops.
Lydia Patel's Verdict:
Airbnb can still be profitable in 2024, but it’s not the time to be complacent. You should continually enhance your listings to remain competitive in the market.
7 Tips to Make Hosting Airbnb Worth It
1. Choose a Strong Market
Choosing a strong market can lead to Airbnb success. National parks like Joshua Tree and Yosemite are proven favorites among travelers. People frequently seek accommodations near popular attractions. So areas around vacation destinations - such as lake towns, beach towns, or ski resorts - can guarantee a steady flow of guests.
As usual, be wary of cities with stringent short term rental regulations, such as Dallas and New York. You should opt for vacation areas with a historic reliance on tourist traffic. You can also go the owner-occupied route with fewer restrictions.
That said, avoid locations with no existing regulations. They’ll likely introduce them sooner or later, and there’s no way of knowing the rules.
2. Build a Unique Stay
Building a unique stay significantly enhances your Airbnb’s profitability. Rather than opting for mundane designs and facilities, you want to create an Airbnb that stands apart from the rest. You want to ensure guests choose your listing over competitors.
For instance, an Airbnb in Yucca Valley, California, distinguishes itself from nearby rentals with its secluded hilltop location and floor-to-ceiling windows offering panoramic views. Another cost-effective avenue to create distinctiveness is through glamping setups, such as tents, yurts, or domes. Your primary objective should be to offer guests more than a place to sleep. Instead, you want them to have an unforgettable experience. By doing so, you avoid competing solely on price. You can charge a premium for the unique experience you’re providing.
3. Sell Time, Not the Property
By focusing on selling time, you’re ensuring higher occupancy rates. This can lead to increased profits. For instance, you earn $1,000 a night but have this 3-day gap between two weeklong bookings. A good strategy is to drop your rate to $200 a night for those days to secure an extra $600. You can also make extra money by upselling certain perks, like late check-outs, early check-ins, curated experiences, or specialized items like movie boxes.
Keep this in mind, especially during busy days. Labor Day Weekend, Fourth of July, and Memorial Day Weekend are the most profitable for Airbnb hosts. In fact, Airbnb data reports significant earnings during these periods.
4. Save Your Profits and Build a Reserve
Consistently saving profits and building a financial reserve will protect you from unforeseen expenses like maintenance, property tax, and other associated costs that arise. High-season months often bring higher profits. However, you must efficiently manage this to bridge the income gaps during off-peak periods. By maintaining a dedicated reserve, you’ll avoid overspending during profitable times. You won't be financially strained by taxes and upkeep later.
5. Diversify on Other Platforms
Diversifying beyond the Airbnb platform opens new revenue streams. Platforms like Vrbo have introduced competitive advantages like the One Key loyalty program. This was created in partnership with Expedia and Hotels.com. This program allows hosts and guests to earn rewards from vacation and car rentals. Listing properties on multiple platforms increases your visibility as you tap into different guest demographics.
6. Find a Real Estate Agent with Short-Term Rental Expertise
STR-specialized real estate agents understand the local market. They can help you pinpoint properties that would make great Airbnb listings. Plus they can assist in verifying your financial projections on local trends to ensure profitability.
7. Take Advantage of Failed Short Term Rental Leftovers
Taking advantage of failed short term rental leftovers can help you save money. Some hosts exiting the market are selling furniture at discounted rates. You can buy furnishings for around $2,500, which is way lower than their typical cost of $6,000 or more. You can even negotiate monthly payments of $300 to $400 for 10 months if you can’t do the $2,500 upfront. You can find hosts that are quitting Airbnb on local Facebook groups.
Who is Hosting Airbnb Worth It For in 2024?
Hosting Airbnb is worth it for homeowners who have properties they can rent out. Airbnb hosts Kristen & Michael have detailed their Airbnb journey on their YouTube channel. According to them, their Airbnb purchase has been worth it. The investment has allowed them to build equity in their dream home in California. However, building this equity hasn't come easy. The couple admits they spend extensive hours each week managing the rental property. Also, they earn a profit of less than $800 per month on average. This is after considering expenses like mortgage, utilities, and short-term rental insurance.
Hosting Airbnb can also be worth it for those who already own a second property. Doing so can help them earn extra cash from a property that would otherwise sit idle. However, an Airbnb host in California Wine Country says investing in a property mainly for Airbnb hosting is "not worth it." This host has put most of their earnings into house maintenance work but bookings are still slow. Therefore, they are planning to try long term rental instead.
Another strategy to earn money through Airbnb is to rent out private rooms in your primary residence. An Airbnb host on Reddit that does this explains that they've been able to overcome the current downturn other Airbnb hosts are facing by not owning a second property. It provides extra income without the risks of maintaining another property.
Purchasing a new property as an Airbnb investment can still be worth it. This requires proper market research to find a unique property. You want to offer guests something different from your competitors in an area. For example, an Airbnb host on Reddit with a lake home says they have limited competition. This is because their house has 5 bedrooms while other properties in the area only have 3 at most.
As a result, they get a lot of bookings because they are one of the few options for larger groups in the location.
9 Deciding Factors Before Listing Your Airbnb Property
1. Local Short Term Rental Laws
Local short term rental laws will dictate whether you can do Airbnb in a certain area. Not every city welcomes Airbnb. Many have specific laws governing short term rentals, with some even banning it. You should review your area’s STR codes to avoid hefty penalties that could cost you $1,000 to $5,000 in fines. You should also stay updated with changes since states and counties pass new STR laws from time to time. If you can’t comply with local regulations, hosting an Airbnb is not worth it.
For example, New York City’s Local Law 18 mandates Airbnb hosts to register their listings. This law took effect on September 5, 2023. It limits NYC landlords to host only two guests at a time. You’re also required to live in the same unit and be present during the guests’ stay. Furthermore, your guests must have unrestricted access to your entire home. According to Christian Klossner of the NYC Mayor’s Office, this move aims to keep travelers safe from unlawful accommodations. The law also curbs illegal short term rentals. However, this significantly limits a host's capacity to scale their Airbnb business.
Combine the ongoing STR crackdowns with the industry getting more competitive, and it’s no wonder why Airbnb hosts are struggling. AirDNA data shows that the supply of Airbnb listings in the U.S. alone saw a 23.2% year-over-year increase to 1.38 million listings in September. This surge caused a decline in occupancy rates and many hosts ended up shutting down operations.
2. HOA, Condominium, and Co-op Rules
Some homeowners’ associations (HOAs), condominium boards, and co-ops also have rules on subletting or short term rentals. Even if your city allows Airbnb, the local housing association might not. So before diving into hosting an Airbnb, review your association’s bylaws or consult directly with the board. If you’re renting your residence, ensure you have your landlord’s explicit approval to host. Adding a hosting clause to your lease agreement is usually enough.
3. Profitability
Profitability plays a big factor in determining if running a rental property is worth it. You can still make good money hosting an Airbnb today, but it’s harder now than ever. Factors like increased competition can affect your Airbnb income. Even external elements, such as rising airline ticket prices, can have an impact on your business.
Your business’s profitability is highly reliant on the short term rental market you’re in. That said, you can make the most money if you have:
Great locations are usually vacation destinations where travelers visit all year round. Airbnb hosts Kristen and Michael testify to this. Their Joshua Tree listing remained profitable despite reports of profit drops from other hosts.
Airbnb is profitable for hosts who are strategic about where they start their Airbnb business and how they manage it. Vacation rental profits vary by location. For instance, you can earn between $4,000 to $6,000 per month per Airbnb rental in Canberra, Australia. Average mortgage cost in the city is at $1,500 per month, so profit margins are favorable.
In Seattle, the average apartment rent costs $2,197 per month. This translates to $26,364 in gross revenue for a 12-month lease. In comparison, Airbnb rental occupancy rate is about 77% and the average daily rate (ADR) is $157. Your short term rental business can gross approximately $42,000 per year. You can earn over $15,000 more than you would with a long term tenant.
Airbnb hosts can make $1,910 per month on average. Hosts may earn anywhere between $200 to $25,000 per month. Income widely varies for hosts, depending on location, listing type, and pricing strategy. For instance, US-based hosts can earn an average of $44,235 annually. This is significantly higher than their Australian and UK counterparts, who respectively make $27,988 and $22,196 per year.
You can calculate your Airbnb income potential and operating costs by using Airbnb calculators online. For example, AirDNA’s Rentalizer can provide estimates for your Airbnb unit based on property details and past booking data specific to your location. For a hands-on approach, use this formula:
Average Daily Rate (ADR) x Year-Round Occupancy Rate = Annual Revenue Potential
Remember to account for significant expenses, such as utilities, cleaning, maintenance, and the Airbnb fee. Airbnb takes around 3% of the booking subtotal from hosts.
4. Startup Costs
5. Taxation Laws
Taxation laws are also important to consider before offering Airbnb accommodations online. Your rental income is subject to local taxes. In general, your income isn’t taxable when renting out your residence for less than 15 days a year. But for periods exceeding this, you must report your income on Schedule E of your tax return.
You’re also responsible for any local taxes that apply in your state or county. Transient occupancy tax (TOT) is common in many areas, though Airbnb handles this for you. The platform automatically collects and remits occupancy tax on your behalf during bookings. This service ensures compliance without altering your total payout as a host. Take note, however, that this is only available in certain jurisdictions.
In any case, it's best to check with your local government. Find out about existing tax laws and if there are any requirements you should meet as an Airbnb owner.
6. Risks and Liabilities
Risks and liabilities are also inevitable when it comes to Airbnb hosting. While Airbnb’s AirCover offers up to $3 million in damages, you shouldn’t treat it as a substitute for personal homeowner’s or renter’s policies.
If you’re already insured, verify if your current policy covers home sharing. Or check if a supplementary fee allows you to add it. If not, obtain proper coverage before venturing into the industry. Proper Insurance can be a good choice for hosts. The company offers a coverage specifically for vacation rental owners You can also look into other insurers like Allstate and CBIZ.
Beyond these, consider establishing a limited liability company (LLC) for added protection. According to Hospitable.com, forming an LLC lets you "separate your personal assets, such as your house, car, and bank account, from your Airbnb business." Through this, your assets will not be at risk "if your business incurs debt or faces a liability."
What Are Airbnb Risks for Hosts?
Some Airbnb risks for hosts are:
When you host a rental, you’re opening your home to strangers. So your property is vulnerable to potential damages. Unlike traditional long term rentals, Airbnb accommodations are usually furnished. This makes theft more likely to happen. If you live on the property, there’s the inherent risk of strangers violating your private space. Legal loopholes also allow guests to overstay and claim residency rights. This can trap you in prolonged legal battles.
7. Cleaning and Maintenance
Cleaning and maintenance are important requirements to sustain your Airbnb business. Guests nowadays expect hotel-quality cleanliness when booking Airbnb rentals. Consequently, the platform penalizes hosts with low cleanliness ratings.
To maintain a clean property, you have three options:
- clean the property yourself
- build your cleaning crew
- hire professional cleaning companies
Out of all those, having your own team is the most cost-effective. Some of the basic cleaning tasks to do between guest stays include:
- washing the dishes
- disposing of waste
- making the beds
- mopping and vacuuming the floor
- cleaning the bathrooms
- sanitizing high-contact surfaces
You’re also responsible for broader property maintenance, such as:
- leak repairs
- roof inspections
- pest control
Make sure to deep-clean the place every month. Also, take inventory of all furniture, decor, and amenities. Doing this can help in case you need to report property damage.
8. Guest Communication
Guest communication is pivotal for enhancing your client's Airbnb experience. As potential guest express interest in your listing, effective communication can set the tone for their entire stay.
Ensure you’re transparent to each Airbnb guest. It’s also vital to always be available for any concerns. You want to address any questions or other potential issues that arise during their stay. Always check the Airbnb app and keep a record of all your conversations in case of disputes. Be responsive and aim to answer all inquiries within 24 hours.
The post-departure phase is also equally important. This is where you can encourage reviews from your guests. You may also want to resolve any criticisms with them before they leave. But be constructive about it, not defensive. After all, the biggest problem with Airbnb is poor customer service. A Twitter study found that 72% out of 125,000+ complaints on Airbnb were about lousy customer service. So, making your guests feel valued can make all the difference - even if they had a negative experience.
Of course, this doesn't mean you'll have to constantly get in touch with your guests. An Airbnb host on Reddit shares they only send 2 messages: to welcome them and to thank them after leaving.
9. Airbnb Algorithm Changes
Airbnb's algorithm changes also play a role in your operations. As an online platform, it implements updates on their algorithms. Such updates can affect your property’s visibility, booking rates, and overall success.
Various factors influence Airbnb’s search algorithm. Listings that rank high in search results tend to be priced competitively. These listings also maintain high quality and are popular among users.
Enhancing your listing's visibility on Airbnb involves several key strategies:
While achieving Superhost status doesn't directly improve your search result rankings, it can offer significant advantage. Guests can filter their searches to display only listings from Superhosts, increasing the likelihood of your property being booked.
Meanwhile, Airbnb Plus offers benefits such as premier placement in search results. This exclusive program highlights homes that have been thoroughly vetted for quality and comfort. To qualify, you must meet certain requirements, such as:
Go visit the Airbnb website for updated information on how you can be eligible for this program.
Why Digital Real Estate Is Better Than Hosting Airbnb
Digital real estate is better than hosting Airbnb because it’s more stable, less competitive, and more profitable. So, is being an Airbnb host worth the effort after all this? Initially, Airbnb hosting can be promising. You can earn profit if you own a furnished property in a high-traffic tourist destination. However, staying competitive is the real problem. According to Search Logistics, the market is saturated with over 4 million hosts and 6 million listings. You must continuously update and invest in your property to maintain steady revenue. In short, it’s not the easiest side hustle if you’re looking to make some extra income.
If you’re someone engaging in side hustles to seek more lucrative avenues, then local lead generation is a great option. Airbnb hosts earn $1,910 per month on average. In comparison, local lead gen can yield between $500 to $3,000 monthly per website. Furthermore, lead gen startup costs average only at $500. You can profit quickly without years of waiting to break even.
With lead gen, your focus is on driving traffic to local businesses. You can do this by creating a website and then ranking it on top of Google search results. As you manage to turn your websites into prime digital real estate, they become valuable assets. Many businesses are willing to pay a premium for leads you can generate for them. In fact, I earn up to $52,000 per month providing local lead generation services to multiple businesses. I also have a coaching program for learners of all skill levels who want to master effective led gen strategies.
