How Much Money Do You Need to Be an Airbnb Host?

About $6,000.

Airbnb host welcoming guests
Image by freepik on Freepik

Alright, thank you very much for reading! (Hope you manage to find a decent rental, what with the housing crisis and everything.)

Joking aside, the six thousand we mentioned would be the short answer to how much money you need to jump-start an Airbnb business - on average.

If you create your business plan after you’ve donned your super-frugality knickers, you can shave down the costs of hauling in new sofas, and fixing the boiler, so you can start renting having invested just under $4,000. (The amount of success and how much you can generate passive income streams this way will vary, though.)

At the far end of the Airbnb upfront investment spectrum, on the other hand, you are looking at sums as large as $30,000, or even more if you’re targeting high-end customers. In some cases, obtaining capital assistance for businesses can significantly alleviate the initial financial burden.

In this article, we’re going to offer a comprehensive guide about the financial aspect of running an Airbnb business. Among other matters, we will discuss the starting capital you need to invest, the maintenance costs, and how much you can make after you’ve deducted all of the expenses.

Plenty to cover, so let’s begin.

How to Learn to Do Airbnb?

As a general rule of thumb, running an Airbnb business is a simple enough premise that gets more and more complicated the more time, effort, and money you invest in it.

As a beginner, all you need is some empty space such as a pantry, a chair, and a functioning light bulb that you can offer to someone that needs a place to crash for a couple of nights and boom! - you’ve got yourself a potential Airbnb setup.

OK, maybe you won’t get much interest from potential customers that way, but it will be a start.

In terms of learning the ropes of Airbnb, enrolling in some Airbnb courses online where you can receive Airbnb training and learn how to make one fantastic Airbnb listing after the other, can be a great idea. Taking Airbnb classes or finding the best Airbnb courses that you can get your hands on can give you a fast ticket into the world of Airbnb hosting business.

An Airbnb instructor is typically a seasoned Airbnb expert who can help you in mastering Airbnb secrets by giving you lectures on a range of topics. These include rental income, improving the Airbnb experience for the customer, figuring out vacation rentals (which is peak-season renting), and long-term self sustainability.

Well-proven experts in the field such as Nathan Rice can help you become an Airbnb superhost and create systems that will secure your ongoing Airbnb profits and rank your Airbnb profile among the first page entries. (This is MAJOR when it comes to attracting new guests!)

Enrolling in some of the best Airbnb classes means having a private room, 1-on-1 lessons with an instructor, and a possibility for lifetime access to Airbnb hosting courses as well as Airbnb online course materials that you can re-read for years to come.

Generally speaking, starting an Airbnb business means paying a bunch of real estate-related expenses and then hoping you’ve dolled the place up enough for it to rent for more than you’ve spent on it.

How much you spend depends on a wide variety of factors. What kind of renter you are targeting, how much money you have to play with, where the location of your prospective property is, what Airbnb class you want to be in (regarding luxury), the list goes on.

Here are some of the starting costs that you would typically have to cover no matter your approach.

The Starting Costs

The biggest expense that Airbnb hosts have is renting the property you plan to re-rent. (If you actually own the property, that’s a different story and you don’t have to worry about this part. Free Airbnb spare rooms can save you a tonne of extra money right off the bat!)

This is a brief rundown of the basic teething costs of setting up one or more Airbnb properties:

A Starter’s Best Airbnb Business Plan Outline

To get a clearer and more precise idea of how much you will be spending on your Airbnb startup, you will definitely need to develop a business plan. This especially goes for those who plan to get their money from an investor or a lender.

While not every business plan is the same, you can make an Airbnb concept with the following basic business structure starter pack. (Plus minus some steps that you think may be relevant for your particular plan.)

Summary - Deciding if you’re renting or buying, or you already have a property.

Market Analysis - Researching the potential in your area for Airbnb demand. Figuring out the competition and pinpointing your target market. (Do you want your Airbnb’s appearance to attract young festival-goers, or elderly tourists. Pets or no pets? Do you want to accommodate couples of kids, in particular?)

Business Model - Includes making a business plan, determining the price structure, and outlining what service’s you’re offering. (In this case - renting.)

Operating Plan -.. . should include organizing ‘the troops on the ground’. It comes down to pinpointing the location, the property, the technology you’ll be using for marketing and other business-related exploits. Also, here you should outline your marketing strategy and how you plan to use your Airbnb online presence as a means of furthering your business.

Management - You probably won’t need this one that much until your Airbnb business model grows. Management involves how you plan to hire and train staff and employees. If you’re running the thing on your own, however, it can be about determining your work hours and daily obligations and tasks as an efficient Airbnb host.

Financial Plan - Representing possibly the toughest part of the equation, figuring out the potential financial gains, losses, and forecasts requires serious analysis and number-crunching. Take your time with this step.

Can You Make a Living Doing Airbnb?

Not only can you make a living by means of getting people nice and comfy seated on a rented Airbnb sofa, but you can also make quite a few bucks and save a little something-something for posterity. You can even get dirty rich from Airbnb if you care enough to learn the ‘trade’!

There are several major ways to make most money with Airbnb and not all of them even include obligatorily owning or even renting property. Here’s what you can do:

#1 Rental arbitrage route - Representing possibly the most common way of pursuing Airbnb as a business venture, rental arbitrage is a fairly straightforward process - you rent a property, do the necessary changes you deem important, and then rent the place again and make big bucks on the difference.

#2 Becoming an Airbnb co-host - For complete rookies in the real estate rental business, finding a partner to set up an Airbnb operation can be a great way to learn the ropes of the trade. Depending on the arrangement you agree to with your co-host, your range of duties as a beginner may include communicating with Airbnb guests, running your Airbnb account, bookings, evaluating positive reviews, analyzing bad reviews as ‘constructive feedback’, Airbnb listings, occasional property inspections, maintenance tasks, and so on. You will not earn money as easily this way as if you were going solo, but the significant experience you earn this way can be incredibly valuable in the long term.

#3 Short-term rentals property manager - Possibly the best renting option would be to get your introduction to the world of Airbnb hosting through property management. Property managers are almost always in high demand, especially during the vacation season. Again, you probably won’t earn as much as a property owner would, but managing the thing for a while can be a great way to get your start. The duties you will be tasked with might include securing more bookings, marketing, supervision of the check-in processes, creating digital brochures (especially popular nowadays) and so on.

How much does an Airbnb make you?

An Airbnb-based real estate rental arrangement can make you anywhere from $5,000 annually all the way to $20,000 for a single business. On average, Airbnb rentals make about $11,000 a year.

The more properties you own or manage, and the more prestigious your customers and more unique the location, the better the earning opportunity will be for you.

Across the classiness strata, so to speak, the profit margin is roughly the same, though - from 4 to 8%.

The biggest influence on how much you can make would be the expenses you need to take into consideration. The deal is simple - to maximize profit, cut down the expenses.

Some of the fixed expenses of running an Airbnb business include: rent or mortgage, insurance, accounting, TV and Internet subscriptions.

The expenses with a degree of variety to them from month to month include: cleaning services, toiletries and other soft products, utility bills, and various repairs and maintenance.

How Much Money Do You Need to Be a Successful Airbnb Host?

If you have a decently put-together extra room in your house or apartment that you can rent out to other people, you can start straight away with virtually no money.

For a renting business kind of arrangement, if you factor in all the different expenses, the number of $6,000 is what many businesses start with. (Although this is just a median sum and definitely not a rule!)

Conclusion

All in all, hosting on Airbnb can be a great way to get into the world of real estate and rental services.

Getting good at handling bookings, refurbishing old buildings, and adding a personal touch to the home sharing decor of your rental may take years to learn and perfect. That said, it would definitely be time well-spent, especially if you like decorating houses and being a part of a bustling services industry.

The fact that you can earn considerable amounts of money after a couple of years of hard work and dedication definitely recommends this line of work, too. For a person not shying away from some high-intensity number-crunching, picking up new curtains every couple of months, and negotiating rates with clients - Airbnb is where the fun and money’s at!