3 Surprising Ways You Can Increase Profits with Airbnb

Written on January 8, 2016 by , updated on December 9, 2016

Increase Profits on AirbnbDespite some investors making $50,000, you should not assume that Airbnb will be profitable for you. Many do quite nicely, but they work hard at it.

But before you think I’m a hater, you should know I’ve been an avid Airbnb guest as well as a host since 2012. I have enjoyed each and every one of my Airbnb experiences. I’m actually a foaming-at-the-mouth fan.

However, I’ve had a lot of time to think about the platform from a landlord’s perspective. I, more than most, realize that the playing field can be challenging for landlords, so let’s talk about it.

Landlords Aren’t Normal Hosts

The platform was originally intended to help people share their personal homes, not for landlords to lease their rentals. The typical Airbnb host can use the service as a way to help them pay their personal bills. So a “profitable hobby” works for them.

On the other hand, an Airbnb landlord needs to clear a higher hurdle to be considered profitable.

An Airbnb landlord is a rental owner that focuses on short-term rental engagements. For an Airbnb landlord to be profitable, they need to make more than a traditional landlord would. Otherwise they’re doing extra work without getting paid for it.

So even though an Airbnb landlord might enjoy hosting, if their net income doesn’t exceed that of a traditional rental, then their additional efforts aren’t fruitful.

3 Ways You’ll Increase Profits

I don’t want to discourage you from using Airbnb. It can be a very profitable tool. However, if you go that route, you should avoid these common pitfalls.

1. Updating Your Listing Regularly

Airbnb is not like Craigslist; it is not an electric bulletin board.

Airbnb is more like an active matchmaker. They try to help users quickly find a hotel alternative that suits them best. Airbnb’s search engine displays listings in a sorted, intelligent manner.

Since you, as an Airbnb landlord, need to exceed a traditional landlord’s net income to be profitable, you want your listing displayed as much as possible. You want to minimize vacancies. That’s why you can’t just set-it and forget-it.

In addition to striving to collect 5-Star reviews and uploading compelling photos, you need to routinely update your listing’s description. Airbnb is always adding categories to better describe amenities and neighborhoods.

If you don’t routinely update your listing description, you risk losing money by getting filtered out.

2. Attracting Longer Term Guests

Airbnb landlords don’t share rooms in their primary homes. This means preparing for a guest’s arrival requires both time and money. That’s obvious – right?

While you do have the option to pass along the full cost of cleaning to your guest, it isn’t a good idea. You’ll end up making your listing look unattractive.

So what do you do? Turnaround costs really stack up when you book several one and two night guests in per week. Under this scenario, your cleaning cost may devour your income and leave very little left.

Hosting frequent short stays is a niche where on-site hosts can find success. They can discount their time while working on their hobby.

Your time has value

Your time has value, and you will certainly be spending more of it managing turnovers.

You, as an Airbnb landlord, should at least “pay” yourself minimum wage. If you do, you will quickly find that short stays are not worth your time.

3. Track the Long-Term Rental Potential

The rental market is always changing, especially these days. As Baby Boomers and Millennials seem to prefer renting over owning, long-term housing rents are climbing.

If you don’t routinely check your net income against the changing long-term market standard, then you won’t know if your short-term rental business is your most profitable option.

If your local long-term rates catch fire, you need to reevaluate. Chances are good you could simply require a 1 month minimum on Airbnb, lower your rate slightly, and still make a huge profit.

Calculate Your Potential

I encourage all landlords to experiment with Airbnb. The company has a pricing calculator that estimates how much you can earn, based on occupancy and location.

If you do try your hand as an Airbnb landlord, be sure to compare your net income to that of a traditional rental.

In summary, to give yourself an edge, you should:

  • Diligently maintain your listing
  • Aim for longer term stays, and
  • Keep an eye on rising long-term rental trends

There are a growing number of ways you can use your rental in the collaborative economy. Play to your strengths and you can find success.

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6 CommentsLeave a Comment

  • Justin A Bilyj

    Awesome article Al, thanks for the calculator link!

  • Al Williamson

    Thanks for the kind words Justin.

  • LA landlady

    Just a reminder that many people considering Airbnb landlording assume that standard homeowners’ coverage is sufficient – as it would be for a long-term rental. It’s not – and your insurer will drop you or refuse to pay if you make a claim and they learn it’s due to Airbnb hosting. Insurance that actually covers you is classified as innkeepers’ insurance – and it’s much more expensive. The back-up coverage that Airbnb offers is not a replacement for primary home and liability insurance.

    You can still make a profit with Airbnb in many markets, just do your homework first and make sure you are covered!

  • Bob

    Hello,
    Your pricing tool for Palo Alto, Ca is way off. You can see what is currently available – only a few days available next month on each place listed rooms of $100 and apartments or backyard cottages $200-$300 per day. These are basically fully rented and making much more than the tool projects. Off by $1000 per month. The projection is also lower than current full time tenants are paying monthly rents on 6-12 month terms. I believe the tool needs to be updated.

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