This post may contain affiliate links. Please read my disclosure for more information.
Yes, you read that correctly! I pull in on average $8,500 per month with my Airbnb side hustle. And, it’s passive income! Which means it doesn’t require a lot of effort from me.
Now, some months are more than others. And that $8,500 is not profit, it’s just revenue. I pay over $1,000 a month in city and state taxes, plus there’s the mortgage, utilities, cleaning service fees and general upkeep.
But even with all that, there is profit. A lot of profit! Even if there wasn’t any, I’m purchasing that home for free. Or rather, all my Airbnb guests are buying it for me!
Best of all, this Airbnb rental side hustle doesn’t require a lot of work from me to run. That makes this one of the better real estate side hustles out there.
So basically it is a no-brainer. If you are looking for passive income ideas I absolutely, completely recommend you try this amazing side-hustle yourself.
An Airbnb side hustle is a wonderful way to make extra money, and basically start your own business that you otherwise might not have the chance to.
If you want to know how to make money from an Airbnb business read on!
My Airbnb Business Guide:
- Is renting your home on Airbnb profitable?
- How much money can you make with Airbnb?
- What do you need to start making money with Airbnb?
- Rental preparation checklist for your Airbnb side hustle
- What do you need to do once you’ve listed your home on Airbnb?
What is Airbnb?
Airbnb is simply a website and platform where you can list your house, or a space within your house for rent.
It turns your house into a hotel and you become an Airbnb host! People book spaces on Airbnb instead of hotels so that they can stay in real homes, and possibly save money.
Listing your home allows you to make passive income on Airbnb, income that just keeps coming in without a lot of required work on your end.
Technically speaking, the true term for this is short term rental. It is just that Airbnb has made such a name for themselves and created this industry, that their brand name is now synonymous with the act of short term renting.
And, becoming an Airbnb host is super easy!
More Reading: Best Books on Passive Income
Can You MAke Good Money on Airbnb?
YES! And I have the proof to back up that yes with. I have been operating an Airbnb business out of my second house since March of 2016.
Not only does the Airbnb property pay for itself (mortgage, utilities, taxes etc.), I also make a profit 9 months out of the year as an Airbnb host.
So basically, the guests are buying the home for me first of all. And then, they are providing me with extra income each month.
The startup costs will depend on whether you are renovating part of your home first or purchasing a rental property. If you want to keep startup costs low, then start by using part of your own home to rent.
And, if you decide to pay for property management instead of doing it yourself, your profits will be lower.
How much money can you make From Airbnb?
How much money you can make with an Airbnb property depends on a lot of factors, but as I mentioned mine frequently pulls in $8,500 a month!
That is for a home that is exclusively rented on Airbnb. You might be wondering how much passive income you can make for renting out just part of your home on Airbnb.
I also owned a home for that had a private master suite with its own entrance. I rented that and pulled in between $2.000-$2,500 in passive income on Airbnb per month!
According to data, the average Airbnb hosts make at least $9,000 a year.
You can easily set yourself up to live in your home for free by starting an Airbnb business either through making part of your house and Airbnb property or buying a new one.
This is the side-hustle of all side-hustles! Because outside of the first year of set-up, the work involved for me is pretty minimal. This means it is passive income.
As an Airbnb host, I have to keep track of the bookings, provide the cleaning lady with a schedule of when it needs to be cleaned, and message the guests when they have questions.
But even the messaging is super easy, I am using a third party service called Your Porter App to automate my emails and messages to guests.
So without having to do anything, my guests receive the check in instructions the day before arrival automatically.
And, if you want to do nothing with your listing you can always hire a property management company to take care of it all!
How do I Start My Own Airbnb?
You might be wondering how to rent your home and make money on Airbnb.
A house and your listing online! It’s that simple. If you haven’t signed up yet, use this link and you will make an extra $25 with your first booking.
Now, there are some things in the successful Airbnb business checklist below that I suggest you do to prepare. And to maximize your Airbnb passive income earnings.
Here are a few tips that you should follow before you list your Airbnb property.
How to Start an Airbnb Checklist:
Follow this checklist to get started with Airbnb and create your own passive income side hustle.
1. Check your local laws
When thinking about how to start making passive money with an Airbnb business, it is important to first understand your local city permitting rules.
Before you set up an Airbnb listing, and especially before you purchase any new property for the purpose of turning it into an Airbnb Rental, check your local laws on the rules for operating a “short term rental” property.
I live in Nashville, which has been through a lot of permit rules and changes related to vacation rentals. Ordinances that have been passed now limit what residential zoning allows short term rentals.
The last thing you want to do, is purchase an investment home and then discover after-the-fact that short term rentals are not allowed in the neighborhood.
You may need a city permit to turn your home or any part of it into a short term rental. We are required to obtain a permit here, and if you are caught with an Airbnb listing without a permit, you will be shutdown and your listing removed!
So take the time and do the preparation work to make sure your legal ducks are lined up! There is too much potential money on the line to take any risks that could get you banned.
In addition to permitting rules, you may be required to pay certain local and state taxes. We pay a hotel tax in Nashville to the city each month.
And, if you are making more than a certain amount per year, which hopefully you are, you may need a business license. In Nashville, if you make more than $25,000 per year with your listing, you must register and purchase a business license.
As with any business, you need to pay local sales tax and use tax on your bookings. And vacation rentals require a different type of home owner’s insurance.
Not paying the required taxes again, could cause you to lose your listing completely. Or get caught with overdue penalties and fees.
I heard of a case her in Nashville of someone who was renting their converted garage space on Airbnb without a permit.
Not only did the city catch her, they were able to have Airbnb provide all the dates of her past bookings. Based on that, she was required to pay a $14,000 fine!
So, make sure before you start your own Airbnb business that you are abiding by all the local and state laws and paying local taxes.
And if you aren’t setting up locally to the US, but overseas instead you still have to think about taxes when setting up your Airbnb business. There are actually some people who retire to live in other countries and use Airbnb for income.
Retiring to another country as an Airbnb owner is an excellent idea, just make sure you understand your tax obligations or expected taxes when retiring abroad.
2. Decide on a Property
At this point you will either be using your own home for Airbnb or if you have the money, purchasing a rental property to use as a vacation rental.
If you have the money to invest, I suggest the latter. Having a house that is dedicated to booking will only increase your earnings.
Another great option though is creating a separate, private rentable space in your own home. If you can create for instance a finished basement apartment this will be ideal since guests won’t be in your actual living space.
And, you will earn more with dedicated rental space like that.
If you are going to purchase a home, consider doing some research first on the best city or location to purchase one. Vacation rentals are more profitable in certain areas.
Airdna is a good resource for market and property research. You can discover the earnings of actual short term rentals in specific areas.
3. Style your space
If you want to make money on Airbnb you need to make sure your space is stylish. It is extremely important that you have good decor if you want to make money turning your home or extra rooms into a short term rental.
This is actually a fun part. You can get creative. I suggest visiting the airbnb site and checking out the competition. Find some short term rentals that you love how they look and try to match that style.
You don’t have to spend a lot of money to improve your decor either. Hit up some garage sales! Sometimes the campy Airbnb’s with a retro style or unusual furnishings can be super popular.
Just choose a style and stick with it. Whether it is artistic or retro or modern and chic, having a style to your vacation rental will help you pull in bookings.
4. Book a professional photographer
This is a must-do. First of all, real estate photographers are not that expensive. I was able to get awesome, professional photos of my whole Airbnb house for just $125.
And the investment is 100% worth it. Make that 150%! Good, professional photos are going to be the number one thing that draws people in and makes them want to book your place.
You just can’t go without the photos, and trust me you will make that money back and then some.
This is a very important step in creating a successful Airbnb business. Details like how your listing looks will help you make money on Airbnb.
5. List Your Property
Now you need to make your listing live and rentable! Use this link and set up your Airbnb owner’s account and your listing.
The Airbnb website will walk you through the steps of creating your listing description, setting your location and uploading your photos.
You will want to specify your house rules as well. Like no pets, no parties, check in and check out times etc. Set up your check in instructions as well and determine what you will charge for cleaning services. This is all easy to do on the Airbnb app or website.
It is also important to create a standard message that you send to guests before every check in. Something that welcomes them and also gives them any information or instructions they might need.
You will of course pay Airbnb fees every time you get a booking but you will make a lot of rental income this way.
After your listing is live: Tips for a Successful Airbnb Business
After you’ve followed the steps above and your listing is live there are a few things to still to do. Staying on top of your Airbnb business will help grow your revenue.
These are all tips that have affected how I make money on Airbnb so these are tested and true!
Here are a few tips and tricks I’ve learned from my Airbnb business that can help boost bookings and revenue:
respond quickly to airbnb guests and inquiries
One of the most important things vacation rental owners can do is always respond right away to any messages from potential guests.
Not only doesn’t it make people more inclined to book with you when you are responsive, it can also help your performance on the site. Airbnb keeps track of something called your “response rate.”
The more quickly you respond, the better your score which can affect your position in search results. You need to be an involved Airbnb host. Airbnb hosts with high response rates get to rank higher in search.
Make sure you download the app and have it set so that you can receive notifications on your phone as soon as you receive a message or an Airbnb booking request.
That way you can respond as soon as the messages come through, rather than waiting an hour or so until you happen to see an email message.
If you don’t want to do any work at all, you can also hire a property management company to run things.
Cross List your Airbnb Short term rental
To increase the bookings you receive you should list your Airbnb rental on more than one short term rental site.
VRBO.com is another site from which I get a ton of bookings. VRBO stands for vacation rental by owner and they actually own more than one website, such as homeaway.com where they will show your listing to potential renters.
It is very important to sync your booking calendar between Airbnb and VRBO however. That way if it books on one site for specific dates, it will then be blocked from accepting bookings on the other site.
I have learned the hard way that double bookings can happen and be very painful to fix! You may have to pay cancellation fees and lose your search ranking as a penalty.
In one case, I didn’t realize I had double booked the house until a week out from the booking.
In order to make the situation right, I had to help find a new place for the guests and provide some money to cover the additional expense of the only bookings left with availability.
I also have a listing on TripAdvisor. Another site where you can list your house is Booking.com, but I’ve heard they are bad about creating double bookings on their side. You should consider listing on other platforms to increase your possible bookings.
Maintain good reviews and scores on airbnb and vrbo
Airbnb and VRBO listings live and die by the reviews. Every guest that stays at your short term rental, no matter what website they book through, gets the chance to leave you a review.
When new potential guests search for properties, the first thing they are going to look at are the reviews. They aren’t going to want to stay at a property that has low stars and a low ranking. Or bad reviews.
So keeping your current guests happy is crucial! And there are a few ways to do that. As mentioned above, always responding quickly to both your prospective and confirmed guests will help.
Not only does it contribute to them leaving a positive review, but many sites like Airbnb will keep track of how quickly you respond and “score” you appropriately. This score can affect how high you appear in search results, so keep that score high in order to help gain more bookings.
Whether you do the cleaning yourself or hire someone, make sure your property is sparkling clean each time a new guest checks in. You know how you want a hotel to look when you check in, your Airbnb property should be just the same.
How clean it is will give your guests their first impression. Plus, when it comes time to review the property, you can be sure they will rate the cleaning.
In addition, having a great cleaning crew means less work for you, which means passive income!
Make sure you are doing everything you can on each site you are listed on to get good reviews and more potential guests for your Airbnb property.
Stay pro-active with pricing on your airbnb home
First of all don’t undercharge! I made that mistake in my first year. I realized later, that I could get a lot more per night that I charged in the beginning. So basically I lost a lot of money by not pricing my Airbnb listing appropriately.
But on the converse, you also want to lower your prices when appropriate in order to stay fully booked. I would much rather get a lower price for the house during the week, but get an actual booking then it sit vacant.
Several lower priced nights together means a few hundred extra dollars in your pocket each month. You will also need to make sure you charge the guests for cleaning services and remember that you will pay Airbnb fees for each booking.
Just try to make sure you are pro-active in ensuring your Airbnb short term rental property is consistently booked!
How Much Does it Cost to STart an Airbnb Business?
The costs of starting an Airbnb business will depend on your situation. If you already own a home you will be using, your costs might only be for decorating and photography. Which could be minimial!
If you need new furniture to style your space, that could be an up front cost.
If however, you need to finish out a basement apartment in your current home to create a rental space, your costs could be $40,000 or more just for that.
And, if your plan is to purchase a new property to start an Airbnb business, then your start up costs would include the down payment on the home, furnishing the home, styling the space and hiring a photographer.
Sit down and figure out the costs before you get started!
Why You SHould STart an Airbnb Business
As I mentioned, I’ve been doing this for years! It is an amazing way to earn extra cash on the side, or a full time income.
You can take advantage of sites like VRBO and Airbnb that will basically bring the customers to you. Why not leverage the home you have to start making money! Hosting an Airbnb is very easy as well.
Frequently Asked Questions (FAQ)
Is Owning an Airbnb Profitable?
Yes! I have done this with more than one house and can personally attest that Airbnb is an excellent way to earn good money.
You can earn a LOT of money. And, once you have things set up, you don’t have to do a lot of work to keep the passive Airbnb income flowing in.
How Much do Airbnb Owners Make?
Well it depends. On whether you are renting your your entire home or just a room in it. Or maybe a finished downstairs basement apartment. On average, Airbnb hosts in the US make more than $9,000 a year but that is on the low end.
In addition, it depends on how many nights a month you are willing and able to rent out your home.
As I mentioned, in my personal experience I made anywhere from $5,500 (in slow months) to $8,500 from the property that was an exclusive, every night rental.
And, for the private suite I rented in my own home I made $2,000-$2,500 a month.
According to the official statistics, the average host in the US made $44,235 in earnings on AirBnb in 2021.
What is Airbnb Arbitrage?
Airbnb arbitrage is where you use other people’s properties through a sub-lease or rental agreement to then use them to rent on Airbnb or VRBO.
You basically rent the home on a long-term rental, and then you turn around and rent it yourself as a short term rental.
You can learn more about Airbnb arbitrage here.
How do I start an Airbnb business with no money?
If you already own a property then you won’t need much money to start an Airbnb business. You could even take your own photos if you have no money to spend. (not recommended though unless you are a pro!)
However, if you want to be successful, you will need an updated, stylish space. So, you may need an initial investment to get there. If you have no money, consider finding ways to save some to invest in an Airbnb business.
How Much are Airbnb Taxes?
Local and sales tax varies depending on what state you live in. You will need to look up the sales tax for your area.
In most cases now, booking sites will calculate and collect those taxes from the guest on your behalf. The highest sales tax in the country is just under 10%.
You will also need to pay income tax on your earnings as well. You may need an accountant to help you sort the taxes on your small business operation. Airbnb will send you a form 1099-K on earnings if you make more than $600 during a year.
Keep in mind there is a lot you can deduct however, which is why an accountant is helpful! Here are some things you can deduct on your taxes for running an Airbnb business:
- Cleaning fees
- Airbnb fees
- Repairs made to the property
- Property insurance
- Supplies for the property
Final thoughts on Starting an Airbnb business
If you follow all these tips and tricks, you can have your own successful Airbnb side hustle!
With that extra income the options are endless. You can use it to pay down debt, buy another home, invest to make more, or start a new side hustle. You know the saying, “It takes money to make money.”
I used the income from my Airbnb side hustle to buy a second house! And guess what I did with that house? I lived in it but rented out part of it on Airbnb to make passive income each month.
It paid for my entire mortgage!
Once you can show two years of tax returns with Airbnb buiness income on it, it will officially be counted as income for you that can help you get a loan to purchase a new home!
Getting a loan for a house is all about your debt-income ratio so when you can show additional income from your Airbnb business, then you can potentially purchase again.
And start a second passive income generating Airbnb rental!
However you use the income, I can tell you you should start your own Airbnb business right away! Start your own Airbnb listing today.