AirBnb
Everything you need to know about making money with AirBnb
Written by Emma Kansiz
Published 2022-07-05 / 4 min read
We’ll wager that if you are looking online for remote work that you haven’t been living under a rock for the past decade. Airbnb needs no introduction, having completely disrupted the vacation rental marketplace and sent hotels into an existential crisis. Airbnb is one of the few companies in the public consciousness that have completely reshaped an industry. Want to be a part of the paradigm shift? Keep reading.
What is AirBnb?
Founded in San Francisco, Airbnb allows you to rent out your home, room, or apartment to travelers for a night, a week, or even a year. It is a flexible option that has completely changed the game when it comes to planning out vacations and lodging. Airbnb has allowed millions to earn money on the side with their spare room, or make a small fortune renting out a second home or apartment in a covetable city or resort town. Airbnb has so radically changed the travel industry that now hotels are trying to imitate its success, and changing their business practices accordingly. Although it has been mired in controversy in recent years, it shows no real signs of slowing down. There has never been a better time to get involved in the travel industry, so don’t hesitate!
How does AirBnb's earning structure work?
Airbnb makes money by taking a cut from each booking made through its platform. It currently takes a 3% cut of the total cost of the booking. They pay out via direct bank transfers, Payoneer, PayPal, or Western Union. You will be paid 24 hours after the reservation begins. You can also choose to be a part of the early payout program and receive 50% of your payout three days after a guest books and then receive the remaining balance 24 hours after check in. Airbnb will take an additional 1% fee for the early payout option.
You can choose your own nightly rate on Airbnb, which gives you more agency and control over your income potential. Research hotel rates and competitors in your area to gain an idea of how much vacationers are willing to pay. Some municipalities will require you to pay an occupancy tax, which will be passed on to the guest. You can choose whether to itemize this tax in the price details or if you will simply factor it into the net price of your space.
Being an Airbnb host doesn’t come without its costs. A property management company is a solid solution if you are renting out a second home but be aware that their fees are high. Some property management companies charge 40% or more of your nightly rate. Cleaning companies can be a necessity, as well, but they don't come cheap. It can cost upwards of $100 for a deep cleaning service. Airbnb offers a Host Damage Protection program which can offer some reprieve from worry, but it doesn’t cover cash or personal heirlooms or jewelry. It is always a good idea to take out vacation rental insurance if you are renting your place out consistently.
You can choose your own nightly rate on Airbnb, which gives you more agency and control over your income potential. Research hotel rates and competitors in your area to gain an idea of how much vacationers are willing to pay. Some municipalities will require you to pay an occupancy tax, which will be passed on to the guest. You can choose whether to itemize this tax in the price details or if you will simply factor it into the net price of your space.
Being an Airbnb host doesn’t come without its costs. A property management company is a solid solution if you are renting out a second home but be aware that their fees are high. Some property management companies charge 40% or more of your nightly rate. Cleaning companies can be a necessity, as well, but they don't come cheap. It can cost upwards of $100 for a deep cleaning service. Airbnb offers a Host Damage Protection program which can offer some reprieve from worry, but it doesn’t cover cash or personal heirlooms or jewelry. It is always a good idea to take out vacation rental insurance if you are renting your place out consistently.
What is the time commitment for AirBnb?
You can rent out your space as rarely or as frequently as you want on Airbnb. You can use their calendar tool to decide the availability of your property.
When it comes down to it, the time commitment you will invest depends very much on what you want to get out of Airbnb. If you are planning on having your space available a few weeks per year you probably won’t need to put much work in on the back end answering inquiries and managing reservations. But if you plan to make it more of a full time endeavor, then Airbnb can easily become your main source of income. It is not uncommon for people to hire property managers or virtual assistants to manage the bookings and handle all communications with guests. If you want to manage it yourself, however, expect to be answering inquiries and responding to messages frequently. This obviously depends on the desirability of your property and the location, but it isn’t uncommon to get a handful of messages per week on the platform.
When it comes down to it, the time commitment you will invest depends very much on what you want to get out of Airbnb. If you are planning on having your space available a few weeks per year you probably won’t need to put much work in on the back end answering inquiries and managing reservations. But if you plan to make it more of a full time endeavor, then Airbnb can easily become your main source of income. It is not uncommon for people to hire property managers or virtual assistants to manage the bookings and handle all communications with guests. If you want to manage it yourself, however, expect to be answering inquiries and responding to messages frequently. This obviously depends on the desirability of your property and the location, but it isn’t uncommon to get a handful of messages per week on the platform.
How to get started with AirBnb?
Signing up for Airbnb is straightforward and intuitive. To create an account you must input basic contact information and the location of your property. You will then choose the property type, number of bedrooms and bathrooms, and maximum guest count. List the sleeping arrangements so guests can have a clear understanding of what to expect.
After that, you must include high quality, clear photographs of the property. The quality and quantity of photos is one of the biggest factors in attracting prospective guests to your listing. Stay away from grainy or dark photos and ensure your place is tidy and uncluttered. You can then choose your price point. Airbnb has a nifty ‘What’s my Place Worth’ tool that can help you calculate a rate based on your location and your property’s attributes. You can manually update your prices for long weekends or holidays but you can also use the Smart Pricing tool which will calculate and adjust your rates for different events or seasons. You can then choose your own cleaning fees, which will be included in the price of your property. You are also able to choose from a flexible, moderate, or strict cancellation policy. Be firm but fair, as you don’t want to be out of pocket for unforeseen circumstances - but you don’t want to scare guests off either if they need a degree of flexibility in their travel plans.
Once you are up and running, you can select the Instant Book feature if you want a less hands-on experience. We recommend not choosing this option, however, as you won’t get to curate who is staying in your place. We recommend messaging prospective guests who want to book your place and viewing their profiles to ensure they will be a good fit.
After that, you must include high quality, clear photographs of the property. The quality and quantity of photos is one of the biggest factors in attracting prospective guests to your listing. Stay away from grainy or dark photos and ensure your place is tidy and uncluttered. You can then choose your price point. Airbnb has a nifty ‘What’s my Place Worth’ tool that can help you calculate a rate based on your location and your property’s attributes. You can manually update your prices for long weekends or holidays but you can also use the Smart Pricing tool which will calculate and adjust your rates for different events or seasons. You can then choose your own cleaning fees, which will be included in the price of your property. You are also able to choose from a flexible, moderate, or strict cancellation policy. Be firm but fair, as you don’t want to be out of pocket for unforeseen circumstances - but you don’t want to scare guests off either if they need a degree of flexibility in their travel plans.
Once you are up and running, you can select the Instant Book feature if you want a less hands-on experience. We recommend not choosing this option, however, as you won’t get to curate who is staying in your place. We recommend messaging prospective guests who want to book your place and viewing their profiles to ensure they will be a good fit.
AirBnb requirements
Required Resources
In order to rent something out on Airbnb you need a space to rent out - no big shock there! You can rent out your primary residence, apartment, second home, chalet - the list goes on and on. Some people rent out laneway homes or custom-designed treehouses on Airbnb. Airbnb rentals don’t have to be hotel-like and they can be as personalized or unusual as you so desire. Some people prefer a unique, lived-in, homey vacation rental. This allows you a degree of freedom with the space you rent out.
You must also have access to a smartphone or computer where you can regularly monitor the app for messages and inquiries.
You must also stock your rental with basic amenities like towels, dishware, glassware, and first aid kits. Keeping spare light bulbs and nails on hand is recommended. If you are renting out your second residence you need to ensure that you have access to plumbers, electricians, or handymen who you can call in to assist guests should problems arise.
You must also have access to a smartphone or computer where you can regularly monitor the app for messages and inquiries.
You must also stock your rental with basic amenities like towels, dishware, glassware, and first aid kits. Keeping spare light bulbs and nails on hand is recommended. If you are renting out your second residence you need to ensure that you have access to plumbers, electricians, or handymen who you can call in to assist guests should problems arise.
Required Skills
Because you will be working with prospective guests from all over the world it is vital that you are gracious, communicative, accommodating, and welcoming. No one wants to rent from someone cold or abrasive, so ensure you have the right personal attributes to engage with the various personalities that you’ll be meeting through the site. You must also have the ability to persevere in difficult situations as things can and will go wrong and you might be dealing with unreasonable guests and unforeseen circumstances. Maintaining composure and professionalism will help you maintain your reputation and thrive on the platform.
Required Documents
While you don’t need to show any documentation to Airbnb, be aware that more and more cities are requiring vacation rental owners to apply for the appropriate licenses or even register as a business. If this is required in your municipality, you must have these documents on hand should you need to prove compliance.
Other important details
Be very wary with restrictions and bylaws in place for your city or region. More municipalities are cracking down on short term rentals, largely due to the reach and influence of Airbnb. Many cities will only let you rent out your primary residence and many have maximum stay stipulations in their bylaws. Some bylaws are straight-up bizarre, like New York’s new one, which states that you can rent out a portion of your place but that you must be present in the home during the vacationer’s stay. Read through your region’s regulations with a magnifying glass, as fines for non-compliance can be outrageous and put you out of pocket before you’ve even turned a dime!
It is also becoming more common for governments to require you to get a business license to operate your property as a vacation rental. You will have to pay to register your business and for any licenses or tourism taxes that may apply. If you live in a condo or townhouse read through the homeowner’s bylaws before getting excited. There are new regulations cropping up every day as Airbnb and its peers become more and more ubiquitous. You will have to fill out an IRS 1099 form along with your tax return to ensure tax law compliance. You must pay tax on any profits after you have deducted any rental-related expenses. Luckily, you can deduct expenses like cleaning fees, repairs, amenities, and property agency fees that are related to your vacation rental business. Consider hiring an accountant that has experience working with people who make a side income through rental properties. Put away a percentage of your income from each stay into a special account so you won’t be surprised at tax time.
It is also becoming more common for governments to require you to get a business license to operate your property as a vacation rental. You will have to pay to register your business and for any licenses or tourism taxes that may apply. If you live in a condo or townhouse read through the homeowner’s bylaws before getting excited. There are new regulations cropping up every day as Airbnb and its peers become more and more ubiquitous. You will have to fill out an IRS 1099 form along with your tax return to ensure tax law compliance. You must pay tax on any profits after you have deducted any rental-related expenses. Luckily, you can deduct expenses like cleaning fees, repairs, amenities, and property agency fees that are related to your vacation rental business. Consider hiring an accountant that has experience working with people who make a side income through rental properties. Put away a percentage of your income from each stay into a special account so you won’t be surprised at tax time.
Our review
Airbnb changed the vacation rental game, there’s no doubt about it. Because of its reach and market presence Airbnb is a solid option for homeowners looking to make some extra money. And the profits can certainly be significant! That being said, Airbnb is not some side gig Shangri-La. There are pitfalls, as well. Airbnb can make it difficult for new, unreviewed properties to rank in the search results. In order to gain the coveted Super Host label on the site you must have hosted at least ten stays over the previous year and gained a minimum of 4.8 out of 5 stars from your guests. If you cancel a stay you can have your Super Host label revoked which is super frustrating if it was down to a scheduling error or communication conflict with the guest.
If you want to make Airbnb a more consistent gig, consider putting your valuables in storage. Even if you have to pass on a few requests, it's always good to err on the side of caution and turn down people who might have wild parties or pull an all-nighter at your home. While you can’t always tell ahead of time, vetting potential guests by reading their reviews and being explicit about your rules when messaging them can go a long way in ensuring the quality of your guests. Accept that there is risk involved in renting out your home on Airbnb and that damages can and do occur. Create a strategy for these occurrences but don’t let it keep you up at night. This will ruin your experience as a host and will detract from the quality of life improvements that an extra income will bring.
Airbnb is not the unregulated goldmine it once was, either. This shouldn’t discourage you but is worth keeping in mind. You may need to procure a business license, vacation rental insurance, or pay additional tourism taxes in order to operate. It isn’t as simple as taking a few pictures and listing your property in most urban areas in the U.S anymore. Renting out an Airbnb comes with responsibilities and if that’s not your jam, it might be too much of a headache for you. That caveat aside, though, we think Airbnb is a great way to make money off property you already have. The upside can be very high, particularly if you are renting out your space over long weekends or for long-term stays. The profit can roll in quickly and can help you achieve many of your financial goals. If you are able to reimagine your home as a business then Airbnb could be the side hustle you’ve been dreaming of!
If you want to make Airbnb a more consistent gig, consider putting your valuables in storage. Even if you have to pass on a few requests, it's always good to err on the side of caution and turn down people who might have wild parties or pull an all-nighter at your home. While you can’t always tell ahead of time, vetting potential guests by reading their reviews and being explicit about your rules when messaging them can go a long way in ensuring the quality of your guests. Accept that there is risk involved in renting out your home on Airbnb and that damages can and do occur. Create a strategy for these occurrences but don’t let it keep you up at night. This will ruin your experience as a host and will detract from the quality of life improvements that an extra income will bring.
Airbnb is not the unregulated goldmine it once was, either. This shouldn’t discourage you but is worth keeping in mind. You may need to procure a business license, vacation rental insurance, or pay additional tourism taxes in order to operate. It isn’t as simple as taking a few pictures and listing your property in most urban areas in the U.S anymore. Renting out an Airbnb comes with responsibilities and if that’s not your jam, it might be too much of a headache for you. That caveat aside, though, we think Airbnb is a great way to make money off property you already have. The upside can be very high, particularly if you are renting out your space over long weekends or for long-term stays. The profit can roll in quickly and can help you achieve many of your financial goals. If you are able to reimagine your home as a business then Airbnb could be the side hustle you’ve been dreaming of!
