Is Hosting Airbnb Worth It In 2024? Insights From Real Airbnb Hosts

May 30, 2024

Hosting Airbnb can be worth it in 2024 for those who: 

  • Are looking to build equity in a second home
  • Already own a second property
  • Want to earn extra income by hosting a room in their primary home
  • Can own a property with a competitive advantage compared to other properties in an area

Airbnb hosts Kristen & Michael, who have detailed their Airbnb journey on their YouTube channel, note that their Airbnb purchase has been worth it because it has allowed them to build equity in their dream home in California. Building this equity hasn't come easy though, as the couple admits they spend extensive hours each week managing the rental property while profiting less than $800/month on average 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 and are looking for a way to monetize when not using it. An Airbnb host with a property in California wine country notes that they have put most of their Airbnb earnings into home updates and maintenance work. Therefore, hosting Airbnb to earn some extra cash from a property that would otherwise sit idle can be a useful strategy to maintain ownership of a property you might otherwise be forced to sell. 

Another strategy to earn money through Airbnb is to rent private rooms in your primary residence. An Airbnb host on Reddit that does this explains that they have been able to overcome the current downturn other Airbnb hosts are facing by not owning a second property. It provides extra income when the room gets booked and avoids the potential risk of defaulting on a second property by becoming over leveraged. 

Purchasing a new property as an Airbnb investment can still be worth it for those that do the proper market research to find a unique property opportunity that offers guests something different from other Airbnb properties in the area. For example, an Airbnb host on Reddit with a lake home says they have limited competition because their house has 5 bedrooms while other properties in the area only have 3 at most. This allows them to better guarantee sufficient bookings because they are one of the few options for larger groups in the vicinity. 

Hosting Airbnb in 2024 probably isn't worth it for those who:

  • Plan to get a mortgage to finance the property
  • Are considering a market already saturated with Airbnb properties
  • Live a far distance from the intended Airbnb location
  • Want a cash flow business

Getting a mortgage on an Airbnb property might not be the best decision right now because 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, as many hosts in these markets are no longer profitable. 

Many Airbnb hosts recommend against getting an Airbnb property that is far away from your place of residence because then you need to either commute a long distance to manage the property or pay a property manager to manage the property for you. Besides the risk of hiring a bad property manager, these services also take a massive portion of your Airbnb profits. An Airbnb host notes that after considering management and cleaning fees, they haven’t been very profitable from hosting Airbnb. 

Hosting Airbnb is usually not worth it for those who want a stable cash flow business because the business model tends to generate inconsistent income throughout the year. Many locations have high and low seasons, and 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. Local lead generation entails setting up websites that attract customers for local service businesses and renting out the 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 because it allows them to avoid spending money on paid ads while still generating more revenue for their business through digital channels. 

In the following article, we'll look further at whether hosting Airbnb is worth it by comparing the pros and cons of the business model and hearing 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.

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 once systems are in place.

Platform Assitance: Airbnb assists with guest bookings and communication.

Guest Preference: Some travelers prefer Airbnb’s homely feel over hotels.

Guaranteed Payments: Payments are processed through Airbnb and generally released within 24 hours of a guest’s arrival.

Control Over Hosting: You can choose your availability and vet your guests.

Reasons Hosting Airbnb Isn't Worth It

Security Concerns: There’s a risk 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: Often, hosting an Airbnb requires more spending on amenities, cleaning, and maintenance than traditional renting.

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 be demanding.

Platform Fees: Airbnb charges hosts a percentage fee on every booking, which 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. In the six months since she started renting it as a short-term accommodation, she faced various challenges and learned a lot. The house required more investment than anticipated, both in renovation costs (approximately 50,000 CAD) and in furnishing it with every amenity a guest might look for—from essential appliances to small details like coffee pods and dog treats.

Christina also emphasized the significance of choosing durable finishes; she commended her choice of luxury vinyl plank flooring but 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 while providing prompt responses to queries.

Christina Dennis's Verdict:

Hosting on Airbnb is worth it. Though 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 to 2022. After adding a hot tub to their property in February 2023, their earnings rose to $3,620 from $2,411 in February 2022. They observed similar patterns in the following months, with April 2023 fetching 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. Despite changes to Airbnb’s website affecting hosts, they’ve been able to adapt and 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, which she thinks 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. In total, over the three months of May, June, and July, her 2022 earnings were $34,833, whereas 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, with 50% drops as some Airbnb hosts experienced, nor exceptionally positive.

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

National parks like Joshua Tree and Yosemite are proven favorites among travelers. People frequently seek accommodations near these attractions, so areas around popular vacation destinations—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 or go the owner-occupied route with fewer restrictions. 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, creating an Airbnb that stands apart from the rest ensures 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 an unforgettable experience, not just a place to sleep. By doing so, you avoid competing solely on price and 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, which means increased profits. For instance, if you usually 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, securing an extra $600.

You can also make extra money upselling certain perks, like late check-outs, early check-ins, curated experiences, or specialized kits 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, with Airbnb data reporting 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, but 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 only to 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, 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 and can help you pinpoint properties that would make great Airbnb listings. They can help verify your financial projections and insights on local trends to ensure profitability.

7. Take Advantage of Failed Short Term Rental Leftovers

Some hosts exiting the market are selling furniture at discounted rates. If you’re savvy enough to buy these properties for $2,500, significantly less than the usual $6,000 furnishing cost, you’ll save a lot of money. You can negotiate monthly payments of $300-$400 for ten months if you can’t do the $2,500 upfront. You can find hosts that are quitting Airbnb on local Facebook groups.

9 Deciding Factors Before Listing Your Airbnb Property

1. Local Short Term Rental Laws

If you can’t comply with local regulations, hosting an Airbnb is not worth it. Not every city welcomes Airbnb. Many have specific laws governing short term rentals, with some even banning specific short-term bookings. 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 because states and counties pass new STR laws from time to time. For instance, New York City’s Local Law 18, which mandates Airbnb hosts in the city to register their listings, has just taken effect on September 5, 2023. This law limits you (if you’re a landlord in NYC) to host only two guests at a time, and 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 from the NYC Mayor’s Office, this move aims to keep travelers safe from unlawful accommodations while curbing illegal short term rentals. But as a host, this limits your capacity to scale your Airbnb business.

Combine the ongoing STR crackdowns with the industry getting more competitive, and it’s no wonder 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 for many hosts, and many ended up shutting down their operations.

2. HOA, Condominium, and Co-op Rules

Even if your city allows Airbnb, your housing association might not. Homeowners’ associations (HOAs), condominium boards, and co-ops often have declarations prohibiting subletting or short term rentals. So, before you dive 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

You can make good money hosting an Airbnb, but it’s harder now than ever. Factors like increased competition, seasonality, and even external elements such as rising airline ticket prices—up by 25% according to CNBC—can affect your Airbnb income.

Your business’s profitability is highly reliant on the short term rental market you’re in, as some markets are more lucrative than others. That said, an extremely unique stay in a great location, complete with high-demand amenities and “Instagrammable” aesthetics, is the type of Airbnb that makes the most money. Great locations are usually vacation destinations, like Joshua Tree National Park, where travelers visit all year round. Airbnb hosts Kristen and Michael testify to this, as they have a Joshua Tree listing that remained profitable despite other hosts reporting a drop in profits.

Is Airbnb Profitable for Hosts?

Yes, 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, in Canberra, Australia, you can earn between $4,000 to $6,000 per month per Airbnb rental, with mortgages averaging $1,500 monthly, so your profit margins are favorable. You’ll also make more with Airbnb than traditional renting because you can adjust your rates dynamically. In Seattle, the average apartment rents for $2,197 monthly, translating to $26,364 in gross revenue for a 12-month lease. On the other hand, the occupancy rate for Airbnb rentals is about 77%, and the average daily rate (ADR) is $157, so if you rented short-term, you can gross approximately $42,000 annually—which is over $15,000 more than you would with a long term tenant.

How Much Do Airbnb Hosts Make?

Airbnb hosts make $924 per month on average, according to fintech lender Earnest. However, the average Airbnb income for hosts varies depending on location. For instance, in the US, hosts can earn an average of $44,235 annually, significantly higher than their Australian and UK counterparts, who make $27,988 and $22,196, respectively.

How to Calculate Your Airbnb Income Potential and Operating Costs

To calculate your Airbnb income potential and operating costs, use Airbnb calculators online, like AirDNA’s Rentalizer, that 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 like utilities, cleaning, maintenance, and the Airbnb fee. Airbnb takes 3% of the booking subtotal from hosts.

4. Startup Costs

It costs an average of $6,000 to start an Airbnb, though it can be as low as $3,900 or as high as $30,000, depending on your choices and the location of your rental property. Furniture usually ranges between $2,000 to $3,000, and professional photography services start at $100. Integrating amenities, such as a hot tub or mini-golf course, could range between $8,000 to $25,000. You can leverage a credit card to manage these expenses.

5. Taxes

With Airbnb hosting, your rental income is subject to various taxation laws that influence your earnings. This 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 local taxes that apply to your state or county, such as transient occupancy tax (TOT), which is common in many areas, though Airbnb handles this for you. Occupancy tax collection and remittance by Airbnb works by automatically collecting occupancy taxes on your behalf at the time of booking. This service ensures compliance without altering your total payout as a host, but it’s only available in certain jurisdictions.

6. Risk and Liability

You’ll also have your fair share of liability concerns when you become an Airbnb host. While Airbnb’s AirCover offers impressive coverage, including up to $1 million in damages and guest liability, 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 if a supplementary fee allows you to add it. If not, Proper Insurance is an optimal choice for hosts, providing $1 million in business liability and unique benefits like unlimited theft coverage. You can also look into other insurers like Allstate and CBIZ. Beyond these, consider establishing a limited liability company (LLC) for added protection against legal actions. Running an Airbnb is stressful sometimes, but the financial rewards can outweigh the challenges if you’re prepared and proactive in managing potential risks.

What Are Airbnb Risks for Hosts?

Property damage, theft, inappropriate guest behavior, and potential squatting are Airbnb risks for hosts when renting Airbnb properties. When you host a rental, you’re opening your home to strangers, so you’re vulnerable to potential damages, ranging from minor wear and tear to significant property destruction. And unlike traditional long term rentals, Airbnb accommodations are usually furnished, which makes theft more likely to happen. If you live in the property, there’s the inherent risk of strangers violating your private space. Legal loopholes also allow guests to overstay and claim residency rights, which can trap you in prolonged legal battles.

7. Cleaning and Maintenance

Guests nowadays expect hotel-quality cleanliness when booking Airbnb rentals. Consequently, the platform penalizes hosts with low cleanliness ratings. So, maintaining a clean property is non-negotiable to sustain your Airbnb business, and you have three options: Clean the property yourself, build your cleaning crew, or hire professional cleaning companies through Turno or TIDY. Out of all those, having your team is the most cost-effective. Here are some basic tasks to do between every guest stay:

  • Clean the dishes
  • Dispose of waste
  • Make the beds
  • Mop and vacuum the floor
  • Wash toilets and bathrooms
  • Sanitize high-contact surfaces

Also, make sure to deep-clean the place every month, wash linens, and take inventory of all furniture, decor, and amenities, in case you need to report property damage. You’re also responsible for broader property maintenance tasks like leak repairs, roof inspections, and pest control.

8. Guest Communication

Communication is pivotal for enhancing guests’ Airbnb experience. As soon as a potential guest expresses interest in your listing, effective communication can set the tone for their entire stay. Firstly, ensure you’re transparent to each Airbnb guest. It’s also vital to always be available for any concerns, whether about the amenities or any potential issues arising during their stay. Always check the Airbnb app and keep a record of all your conversations in case of disputes. Moreover, be responsive and aim to answer all inquiries within 24 hours.

The post-departure phase is also equally important because this is the point where you can encourage reviews from your guests and address any criticisms head-on. But be constructive about it, not defensive. After all, the biggest problem with Airbnb is poor customer service. A 2021 Twitter study found that 72% out of 125,000+ complaints on Airbnb were tied to lousy customer service. So, making your guests feel valued can make all the difference, even if they had a negative experience.

9. Airbnb Algorithm Changes

Airbnb is an online platform, and just like other online platforms, it updates its algorithms occasionally. This 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, maintain a high quality, and exhibit popularity among users. Increasing your listing’s availability, responding promptly to reservation requests, and minimizing booking restrictions also boost visibility. While having superhost status doesn’t necessarily guarantee improved rankings, guests can specifically filter their searches to view listings from superhosts, increasing the chances of these listings being booked.

Separate from the algorithm, Airbnb Plus is a special program where homes are vetted for quality and comfort. Joining this program can help you stand out with benefits like premier placement. However, to be eligible, you must meet specific requirements, including a top review status, a high acceptance rate, and no last-minute cancellations in the past year.

Related Airbnb Posts

  • Airbnb Startup Cost: Today’s Airbnb startup cost averages $6,000. In this article, you’ll find a breakdown of what you’ll be spending with your initial capital to launch an Airbnb.
  • How To Build An Airbnb Empire: Lean the keys to constructing a robust Airbnb empire, including selecting the right property, understanding local regulations, researching target customers, and more.
  • How To Earn 6 Figures In 6 Months On Airbnb Without Owning Properties: Find out how to earn a significant income on Airbnb without owning properties through Airbnb arbitrage, short-term rental property management, Airbnb consulting, and offering experiences.

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 seems promising, especially if you own a furnished property in a high-traffic tourist destination. However, staying competitive is hard. According to Search Logistics, the market is saturated with over 4 million hosts and 6 million listings. So, 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.

Tree Care Lead Gen Site

If you’re one of the 39% of adults engaging in side hustles to seek more lucrative avenues, then local lead generation is a great option. Unlike Airbnb, where the average host earns $13,800 annually, excluding operational costs, local lead gen can yield between $3,000 to $5,000 monthly per website. With startup costs averaging only $500, you can profit quickly without years of waiting to break even.

Local lead generation focuses on driving traffic to local businesses by ranking a lead gen website on top search results in Google. Backlinko says the top 3 results get 75% of organic traffic from searches. So, if you manage to turn your websites into prime digital real estate with this method, they become valuable assets for businesses that are willing to pay a premium for generated leads. Dive into local lead gen training to build a sustainable online business.

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