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How to Make Money With Airbnb: 5 Tips to Help You Earn Extra Income

Here's what you can do to earn extra income on Airbnb.


[Updated: Feb 04, 2021] Dec 24, 2019 by Tara Mastroeni
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If your approach for real estate investing involves putting your rental property on Airbnb (NASDAQ: ABNB) instead of setting up a long-term rental arrangement, you've probably wondered what you can do to make the most money. While the company doesn't offer definitive figures on how much you can earn, there are things you can do to set yourself up for success. To that end, here are five tips to help you earn extra money on the Airbnb platform.

Create an eye-catching listing

When you're first starting out with Airbnb, the quality of your listing is the most powerful tool you have to get a potential guest to book your short-term rental over other options on the market. With that in mind, it's up to you to make sure the listing for your Airbnb property stands out from the crowd. Here are a few tips to help you make your Airbnb listing as eye-catching as possible:

  • Come up with a captivating headline. A captivating headline is what will help entice the Airbnb user to click on your listing. Be sure to include as many amenities or positive features in it as possible. For example, instead of simply saying, "Come rent out my spare room," you could say, "Private room with a bath en suite offers walkable access to the city center."
  • Take great photos. The photos you include in your Airbnb listing are really what will convince most people to book with you. To that end, it may be worth asking a professional photographer to take photos as part of your initial Airbnb investment.
  • Write a detailed property description. Your property description is where you make note of any amenities or other benefits that can't be shown in photos. For instance, if you're willing to offer airport drop-off or pickup, you would note that here. But your property description is also where you'll list any features of the property that might be a turn-off to guests. If your vacation rental is located in a busy downtown area, you want to say so. While some may be turned off by the noise, others may like the prime location.
  • Be honest. In addition to mentioning any potentially negative aspects of the property, it's also important to be transparent about any fees you charge and any expectations you have for a prospective guest. It's better to be upfront about these things so guests are aware of them before booking. Otherwise, you run the risk of setting yourself up for a bad review later on.

Become a Superhost

Notably, the Airbnb algorithm gives increased visibility to those hosts it designates as Superhosts. Although the company does not offer statistics on how much more Superhosts earn, on average, one can assume that Superhosts tend to earn more rental income simply because they're seen more often whenever an Airbnb traveler is booking their stay.

With that in mind, here are a few tips on how to become a Superhost:

  • Maximize your bookings: Airbnb Superhosts book at least 10 stays per calendar year or 3 reservations totalling at least 100 nights and have a cancellation rate of under 1%.
  • Communicate often and early: Superhosts are expected to maintain a 90% response rate, which means they respond to 90% of all messages received within 24 hours. To make communication easier, we suggest downloading the Airbnb app so you can talk to a prospective guest even while you're on the go.
  • Get glowing reviews: Airbnb also weighs guest reviews in their ranking process, so your aim should be to get as many five-star reviews as possible.

Account for your operating costs

Like any rental property, your Airbnb business will come with certain operating costs. As a real estate investor, you should make sure to account for these costs and fees when you're calculating for cash flow. While every Airbnb property will be different, in general, you can plan to need to cover the following costs:

  • Host fee: Airbnb charges most hosts a 3% host fee for payment processing.
  • Cleaning fee: If you use a cleaning service to help clean your Airbnb rental, those fees should be included in your operating costs as well.
  • Turn fee: Turnover fees can include costs for basic amenities like soap or toilet paper.
  • Maintenance fee: You'll have to be prepared to cover costs for regular upkeep of the rental unit as well as the cost for repairing any damage caused by a guest.
  • Regulatory licensing fee: Some municipalities require you to have a business license to operate your Airbnb business on an ongoing basis. Those licenses usually come with a fee attached.
  • Insurances: Airbnb offers its U.S. hosts up to $1 million in insurance for property damage and $1 million in liability insurance coverage. However, it's important to note that the liability insurance is secondary to your existing homeowners and rental property insurance policies.
  • Taxes: You'll be responsible for paying taxes on any rental income you earn through Airbnb and will receive a 1099 at the end of each year. However, in some cases, you may be required to pay state and local taxes, like an occupancy tax, on the money you earn as well.

Be aware of Airbnb's payment guarantees

Guests pay through the Airbnb platform, so Airbnb is in charge of releasing your payment for their stay. The website touts that, as long as there are no issues with the booking, you can get paid within one business day of the guest's check-in date. However, they also note that if you choose to be paid by a third-party service like PayPal (NASDAQ: PYPL) or by check, the process could take longer.

That said, Airbnb does offer a few payment guarantees to its customers. You'll want to be aware of them so you'll have a good idea when your payment might be at risk. For instance, Airbnb requires you to issue a refund to your guests if you violate their hospitality standards. This could mean canceling at the last minute, forgetting to leave a key, or otherwise being unavailable when your guests arrive.

Additionally, guests have up to 24 hours after the start of their booking to make note of any problems with their stay that could warrant a refund. In the event that you don't communicate with your guests about these issues, you could be forced to issue them a partial refund for their stay.

Lastly, you want to check in with your local municipality before you start renting out your spare bedroom. While Airbnb can be a great way to generate passive income, many local towns and cities have ordinances in place that regulate or limit short-term rentals. Often, the fees for violating these ordinances can be very steep, so it's important to make sure you're aware of your limitations before you get started.

In addition, if you're not the property owner, it's essential to check in with your landlord before you start an Airbnb business. There's a good chance they may not allow you to rent out your extra space to prospective guests. They would be taking on all the liability while you got to keep the income.

The bottom line

In the end, earning extra income on Airbnb boils down to being honest about your offerings and making sure your guests have the best online and in-person experience possible. However, you'll also want to take the time to familiarize yourself with Airbnb's policies. Once you're aware of your rights and responsibilities, you can do everything in your power to make sure that any Airbnb profit you earn stays in your pocket.

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taramast has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends PayPal Holdings and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool has a disclosure policy.