Yahoo Finance I Rent Out an Apartment on Airbnb: Here’s How Much Profit I Actually Bring In
Airbnb revolutionized the short-term rental game and the company’s innovations and brand recognition have earned it impressive growth and industry dominance.
According to Statista, paying Airbnb guests booked 448 million nights and experiences through 5 million hosts in 2023 alone. Airbnb’s global revenue approached $10 billion last year and the platform is the third most visited travel and tourism site worldwide, behind only Booking.com and Tripadvisor.
Try This: I Rent Out a Home on Airbnb: Here’s How Much Profit I Actually Bring In
Discover Next: Become a Real Estate Investor for Just $1K Using This Bezos-Backed Startup
Not without controversy, the platform has negatively impacted some markets as outside buyers frenzy-purchased properties in tourist hotspots as absentee investors. Cities like New York strictly regulate Airbnb rentals in favor of long-term stays — and markets like New York skew toward apartment life.
Picturesque vacation homes might come to mind when you think of Airbnb, yet plenty of hosts make money by renting out apartments, both for short-term stays and long-term living — but how much do they earn free and clear?
GOBankingRates asked an entrepreneur, who makes money on the side by renting an apartment on Airbnb, about the profits he clears once he covers all the many associated expenses of being a host and investor.
Learn More: How To Earn $750 a Week in Passive Income
Wealthy people know the best money secrets. Learn how to copy them.
A Seafood Seller Turns an Apartment Into an Income Stream
Matt Bellerose is the founder of the seafood delivery company Lobster Order, which ships fresh fish, live lobsters, meal kits, shellfish, soup and other delicacies straight to the doorsteps of their customers.
But like so many other people concerned with financial security, Bellerose opened an alternate revenue stream to spread out his eggs and fuel his business with fresh capital.
“I’ve supplemented my income by hosting an Airbnb apartment for three years,” he said. “My two-bedroom apartment in Downtown Portland generates an average monthly revenue of $3,200.”
As an entrepreneur and business owner, Bellerose was under no illusions about how much of that revenue he’d have to part with along the way.
“The actual profit is much lower due to various expenses,” he said.
Some Ongoing Costs Are Predictable. Others Sneak Up.
Just like homeowners, property investors who host Airbnb rentals must budget for predictable recurring bills to keep things running smoothly — and Bellerose is no exception.
“Monthly costs include $400 for cleaning services, $150 for supplies — toiletries, coffee, etc. — and $200 for utilities,” Bellerose said. “Additionally, I set aside $300 per month for maintenance and repairs.”
Then, there were expenses that he didn’t see coming.
“One surprising cost was insurance,” Bellerose said. “My regular homeowner’s policy didn’t cover short-term rentals, so I had to purchase additional coverage at $600 annually. Also, local regulations required a short-term rental permit, costing $200 per year.”
Start-Up Costs and CapEx Can Take a Long Time To Recover
To turn the apartment into a reliable revenue stream that could compete in a major Airbnb market, Bellerose had to invest in his investment.
“The upfront costs were significant,” he said. “I invested $15,000 in furnishings and decor to make the apartment attractive to guests.”
Then, of course, there’s the investor and entrepreneur’s version of an emergency fund — capital expenditure or capEx — which is money set aside for unpredictable but inevitable “stuff happens” costs.
“Unexpected expenses have included $2,500 for a new water heater when the old one failed suddenly and $1,800 to replace a damaged sofa after a guest party got out of hand,” Bellerose said.
With Those Kinds of Expenses, What’s Left Over as Profit?
Then, of course, there’s the middleman — Airbnb did not achieve nearly $10 billion in annual revenue by letting hosts use their platform to make money without the platform getting its cut.
“After Airbnb’s 3% host fee, my average monthly profit is around $2,000,” Bellerose said.
However, that doesn’t equate to $24,000 a year because he can count on the ultimate hosts — state and federal treasury departments — to come and collect their non-negotiable share.
“After factoring in all expenses and setting aside money for taxes, I’m left with about $18,000 in annual profit,” he said.
It’s a welcome source of free-flowing gravy, but in the end, less than half of what the property generates is left over for Bellerose.
“While it’s a nice supplemental income, it’s far from the windfall some might expect, given the apartment’s $38,400 annual revenue,” he said.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: I Rent Out an Apartment on Airbnb: Here’s How Much Profit I Actually Bring In
