Did you know there are over seven million property listings on Airbnb? With that many listings, people have to be making a profit.
If you are an Airbnb host, it can be easy to overlook how much you are spending each month to manage your Airbnb listing. However, once you start tracking your costs and earnings, you may be surprised by how much money is going into your account.
Airbnb management costs can come from several places, and you need to factor them all into your budget to make money and not lose it. Before you dive in, here are some of the costs that you need to consider.
A Break Down of Service Fees
Airbnb will charge you what they call a host fee. It is 3% of the subtotal. To get the subtotal you’ll add up all the guest fees. This will include the nightly rate, the cleaning fee, and any additional charge.
You will see the charge after guests check out. The good thing is Airbnb does not charge a processing fee for payments. Guests pay a 14% service fee on the subtotal.
Airbnb doesn’t charge you for listing your property on their site. You will only be charged if someone books a stay.
While owning an Airbnb can make you a lot of money it also costs a lot to get started and keep it running.
You must be aware of the fees and prices. Creating a business plan and budget is crucial. You’ll need to know who you are marketing to and how much you can charge.
Photography and Marketing
To book renters you’ll need to advertise your property. This means professional photos, staging, and marketing on multiple platforms.
If you don’t have any experience with photography or advertising you’ll probably have to hire someone. The good thing is it’s only a one-time fee for a photographer and photos.
When you are setting up your short-term rental property you need to purchase kitchen utensils and toiletries for the bathrooms. You’ll have to have the entire house or apartment furnished, which can be expensive if you are starting from scratch. If any appliances break you’ll need to have those fixed and maybe even do a paint touch-up around the property.
Insurance and Lisences
It is important that you are aware of the federal and local laws in your area surrounding short-term rentals. Insurance may be different for your rental than your primary residence.
It could cost you more so be sure to set money aside for it. If someone gets hurt or your renters destroy your property you want to be sure you are protected.
If you don’t live near your rental, you will need a cleaning service. Or if you have friends or family in the area that are willing to help they might accept a smaller fee. If you live close by and plan to do the cleaning yourself keep in mind you’ll have to buy supplies.
Just like any property you own, your Airbnb will need maintenance. You’ll need to consider light bulb changes and AC filter replacements. If your property has a yard weekly or bi-weekly lawn care will need to be added to your budget.
Another one of the Airbnb expenses to be mindful of is unexpected repairs. Sometimes things break without warning and you’ll need to be ready to fix them.
The dreaded taxes. Not only will you have to pay your property taxes but you’ll also need to pay income taxes. Start setting money aside from the beginning so you won’t be blindside come tax season.
If you are planning on making renting out your property a business you may want to reach out to a lawyer who has experience in real estate. Hiring a lawyer comes with fees and you’ll also have expenses if you choose to set up an LLC.
Vacancies and Off-Season
Keep in time there will be off-season depending on where your Airbnb is located. If your property is in Tampa, Florida hurricane season will more than likely affect your profits. You’ll need to budget for those times that you won’t be bringing in as much money.
Details of Airbnb Management
You may look at the list of tasks above and be overwhelmed. There are many things to consider and keep track of. An Airbnb management service will take care of all those items and more.
Many management companies will have different options to choose from. There may be a partial package or a more expensive one. If want to take care of certain services yourself to make it cheaper, that may be an option as well.
Before hiring a management company look at everything they offer and compare it to other companies around to make sure you get the best rates with the best quality team.
Property Manager Pros and Cons
There are a few pros and cons that you need to be aware of before you decide if a management company is right for you. Hiring a manager will save you a lot of time and stress.
It will allow you time to focus on other projects and expand your real estate portfolio. It will also decrease your vacancy rates and increase customer communication and relations.
The downside is the cost. If you are just starting it could be expensive.
Increasing Your Profit
There are a few ways you can increase your profits. Finding pet-friendly lodging can be difficult. Families and guests with animals have limited options so if your property is the only one in the area that allows pets, you’ll attract more renters.
Adding amenities can also increase your profit. Adding a pool, a hot tub, or a ping pong table will be more appealing to vacationers. If you are marketing toward people who travel for work, consider offering premium wifi.
Many places have a minimum number of nights guests can stay. This is something you’ll need to talk to your management team about.
Having guests stay for only one night might not be worth the money it cost to clean it. On the other hand, many people don’t offer one-night stays so it might make your property more desirable for travelers passing through. Your experienced property manager will have more insight and will advise the best course for you to take.
How Much Profit
It is important to research and know how much you can make before you start the process of renting out your property. If the cost to manage it is more than the profits it won’t be a good investment.
The average host makes $924 a month. How much you make depends on how much charge.
How much you can charge is based on a few different factors. Where your property is located, what services you provide, and how often you rent out your real estate all affect your profit.
Choosing the Right Management Team
The first step in choosing the right Airbnb management company is creating a list of things you need and don’t need. Maybe you have your own cleaning service or a 24-hour maintenance company that you trust. You’ll be able to take that off the list and narrow down your non-negotiables before contacting a management provider.
Once you know the services you need you can start contacting property managers. You’ll want to read reviews and ask if they have any references you can reach out to.
You’ll want to be sure they have experience with other properties similar to yours as well. Inquire about their fees too so you can compare them with other companies.
No Property, No Problem
If you don’t own your property yet but want to make some extra money there may be a way. If you lease a house and have a spare bedroom consider renting out the bedroom.
Before doing this you’ll need to confirm and get approval from your landlord, be sure to have written documentation to protect yourself. You probably won’t make enough to quit your day job but a little extra cash might be helpful towards your rent.
If you haven’t yet given Airbnb a try, now is the time, especially if you have a vacation home sitting empty. But managing an Airbnb, much like regular management, requires expertise.
As you can tell from our article there are a lot of things to consider, it can be time-consuming and stressful to own and manage your short-term rental property. Click here if you’re ready to consult with our Airbnb management team about your rental property and we will answer all your questions.