Why is AirBnb A Good Source of Passive Income?
Airbnb is an online platform that allows people to rent out their homes or properties to travelers who are looking for a place to stay. Hosts can list their homes or properties on the AirBnb platform, set their own prices and availability, and connect with travelers who are interested in booking their space. Airbnb takes a commission from each booking made through the platform.
Making Passive Income through Airbnb is a great way to supplement your income for several reasons:
- Flexibility: With Airbnb, hosts have the flexibility to set their own prices and availability, which means that they can earn more money during peak travel times and adjust their prices during slower periods. Once a listing is created and set up on the platform, hosts can sit back and wait for guests to book their space.
- Low time commitment: Once a guest checks in, hosts can have minimal interaction with them, allowing them to focus on other activities or work. Unlike traditional rental properties where landlords are often responsible for maintenance and repairs, Airbnb hosts are not responsible for regular maintenance or upkeep of the property.
- High earning potential: Airbnb can offer higher earning potential than traditional long-term rentals, as hosts can charge a premium for short-term rentals during peak seasons or events.
- Additional income streams: In addition to renting out their home or apartment, hosts can also earn income by offering experiences or managing other properties for other hosts.
AirBnB is also safer than other forms of Passive Income.
When compared with generating other forms of Passive Income such as from Dividends or from Long Term Rentals, AirBnB income can be less risky for several reasons:
- Short-term rentals: Airbnb rentals are typically short-term, which means that hosts have more control over who stays in their space and for how long. This reduces the risk of long-term tenants causing damage or not paying rent.
- Security deposits: Airbnb allows hosts to require a security deposit from guests, which can help cover any damages or losses that may occur during their stay.
- Guest reviews: Airbnb's review system allows hosts to see reviews of guests from previous hosts. This can help hosts make informed decisions about who they allow to stay in their space and reduce the risk of damage or other issues.
- Insurance: Airbnb offers Host Protection Insurance and Host Guarantee programs that provide protection for hosts in the event of damage or other issues caused by guests.
- Flexibility: Airbnb allows hosts to set their own prices and availability, which means that they can adjust their rental strategy as needed to reduce risk and maximize income.
FAQs About Generating Passive Income Through AirBnb
Depending on the area you live the start up costs for an AirBnb can be very different. However on an average basis, based on a B city location, the prices are as follows:
If you own the House - $2K-$3K to refurbish the house and additional $2K for furniture and essentials
If you Rent the House and want to Sublease - $1500 for rental payment + $2K-$3K to refurbish the house and additional $2K for furniture and essentials
If you want to buy to Reinvest - $300K-$500K for house investment and additional $10K for furniture and essentials.
Listing your property on Airbnb is free. The only commission AirBnb takes is 3% hence its very affordable to get started. There are 2 ways to start AirBnb with little money
- Own the property and use minimum money to buy second hand or cheap furniture.
- Rent the property and use Rental Arbitrage (discussed later) to sublet and make money with little investment.
The best location to invest in an Airbnb can vary depending on several factors, including your budget, the type of property you're interested in, and the local demand for short-term rentals. However, here are some general tips for finding a good location:
Tourist destinations: Areas that are popular with tourists can be a great place to invest in an Airbnb. These areas often have a high demand for short-term rentals and can generate significant income for hosts.
Urban areas: Urban areas with a high population density can also be a good location for an Airbnb. Cities with a thriving tourism industry, like New York City or Los Angeles, are popular destinations for Airbnb guests.
Proximity to attractions: Properties located near popular attractions like museums, parks, or cultural landmarks can be in high demand among travelers.
Transportation hubs: Properties located near airports, train stations, or bus terminals can be popular with travelers who need a convenient place to stay before or after their travels.
Business districts: Business travelers often prefer Airbnb listings that are located near conference centers, convention centers, or other business districts.
Best cities for AirBnb:
Spacewise states the below cities to be amongst the best for AirBnb investment:
- Austin, TX
- Boston, MA
- Breckenridge, CO
- Chicago, IL
- Denver, CO
- Honolulu, HI
- Las Vegas, NV
- Miami, FL
- Myrtle Beach, SC
- Nashville, TN
- New Orleans, LA
- Orlando, FL
- Phoenix, AZ
- Portland, OR
- San Francisco, CA
- Virginia Beach, VA
- Washington, DC
The amount of money you can make through one Airbnb property can vary depending on several factors such as the location, demand, seasonality, size and quality of the property, and the host's pricing strategy.
According to a study by Earnest, the average Airbnb host earns around $924 per month. However, this number can vary significantly depending on where the property is located. For example, hosts in San Francisco can earn an average of $924 per month, while hosts in Miami can earn an average of $2,020 per month.
To estimate the potential earnings for your Airbnb property, you can research the prices of similar properties in your area, consider the seasonal demand, and adjust your pricing strategy accordingly. Additionally, you may want to factor in any additional costs such as cleaning fees, taxes, and maintenance expenses.
Some potential benefits of using Airbnb instead of long-term rental include:
- Higher rental income: Airbnb rentals can typically generate higher rental income than long-term rentals because hosts can charge more per night.
- Flexibility: Airbnb rentals offer more flexibility in terms of booking dates, length of stay, and cancellation policies, allowing hosts to adjust their rental strategy as needed.
- Lower Vacancy Rates: Airbnb rentals can have lower vacancy rates because of the high demand for short-term rentals, especially in popular tourist destinations.
- Personal use: Hosts can use their Airbnb property for personal use when it's not being rented out, which is not possible with long-term rentals.
- More control: Airbnb hosts have more control over their rental property than long-term rental landlords, as they can choose who stays in their property and when, and can set their own house rules
The most common risks associated with the Airbnb business include:
- Legal and regulatory risks: The laws and regulations surrounding short-term rentals vary by location and can be complex. Hosts may face fines or legal action if they violate local laws, such as zoning regulations or short-term rental permit requirements.
- Liability risks: Hosts may be liable for accidents, injuries, or damages that occur on their property, which can result in costly lawsuits or insurance claims.
- Property damage: Guests may cause damage to the property or steal items, which can be expensive to repair or replace.
- Reputation risk: Negative reviews or incidents can damage a host's reputation and lead to a decrease in bookings.
- Cancellation risk: As a guest, there is a risk of last-minute cancellations by hosts, which can be especially problematic if traveling to a new location.
The current Airbnb host service fee structure is as follows:
- For most hosts, Airbnb charges a service fee of 3% of the reservation subtotal.
- For some hosts with a Super Strict cancellation policy, Airbnb charges a service fee of 5%.
How to get Started with AirBnb?
AirBnb can be a great source of Passive Income provided you know the insights of this business model. Before you end up investing in a property and getting your finances locked, its always recommended to learn the insights of the business first to minimize financial loss and legal issues. The best way to get started is by learning from the experience of others. There are AirBnb entrepreneurs who have created a living doing short term rentals through AirBnb. These people have multiple properties spread across various states and hence they carry a depth of knowledge that you can leverage to your advantage. Many of these entrepreneurs share their knowledge through AirBnb courses that provide an in-depth analysis of how they conduct business, how they tackle legal issues and how they keep growing between demographies.
What are the benefits of AirBnb Courses ?
Airbnb courses can be a helpful resource for learning how to generate passive income through renting out your property on Airbnb. These courses can teach you the strategies and tactics for optimizing your Airbnb listing, managing your bookings, and providing an exceptional guest experience.
By learning these skills, you can potentially increase your earnings and turn your property into a source of passive income. Generating passive income through Airbnb requires ongoing effort and attention to maintain your listing and ensure that guests are satisfied with their experience. Airbnb courses can be a useful tool for navigate through these issues and ensure your side venture turns into a serious business venture that is generating positive cashflow throughout the year.
5 Best AirBnb Courses for Beginners
#1 - Mastering Airbnb
Overall Rating:
Beginner Friendly
Detail Oriented
Regular Updates
Price
Course Overview:
Created by Evan Kimbrell, founder of Sprintkick, this is one of the most comprehensive and awarded AirBnb courses in the market. The course walks you through step-by-step how you can get your spare room or space renting for up to $5,000 / month, or your entire space for up to $10,000 / month. It gives you everything you need to know before starting the process so you can hit the ground running
What you'll learn:
- Turn your spare room into a rental income of up to $250 / night
- Turn your entire place into a rental income of up to $600 / night
- Price your listing in a way that gets bookings without reviews
- Scope out your competition to identify your listing's market potential
- Identify and add amenities to dramatically increase the value of your listing
- Take Airbnb quality photos without a professional photo team
- Choose the thumbnail that creates the most interest
- Tips for using free software to enhance your listing's photos
- Learn how to get featured by AirBNB
- How to show up on the first page of AirBNB search
- Write listing descriptions that grab bookings
- Write the perfect attention-grabbing title for your space
- Correctly set cleaning fees and minimum night restrictions
- Figure out the right long-term cleaning arrangement
- Use house rules and extra people fees to your advantage
- Maximize income with other sources like VRBO and Roomorama
- Have your Airbnb run itself while you travel abroad without an internet connection
- Prevent burnout by choosing and limiting guest interaction
- Learn fun (and cheap) ways to guarantee 5-star reviews
- Identify the moving parts of your listing and reduce incident rates by 80%
- Integrate useful (and free) Airbnb tools for extra help and automation
- Correctly use your reviews to prevent 90% of bad reviews
- Use the "augmentable amenities" strategy to grab bookings you would otherwise lose
- Manage your homesharing taxes and comply with IRS guidelines
- Learn how to meet great people and have fun with your guests
Course Price: - $94.99
However using the link below you can get an 80% discount off the course and get it for only $18.99
#2 - Airbnb Entrepreneur : Become the Best Listing in Town!
Overall Rating:
Beginner Friendly
Detail Oriented
Regular Updates
Price
Course Overview:
This course is created by Paul Nekh, a social entrepreneur, who has several listings on Airbnb and all of them are the most profitable in their cities, meaning that they attract guests first, before my competitors, and therefore generate the most money. This course will show you how to be a Productive and Efficient Airbnb Host and how to Become the Best Renting Option in your Area.
What you'll learn:
- Kick-start renting on Airbnb in the most efficient way
- Optimize Airbnb business using the best practices
- Avoid critical mistakes which can be detrimental for Airbnb renting
- Become the best Airbnb renting option in town
- Make the most money out of the local Airbnb market
- Automate Airbnb renting to generate passive income
Course Price: - $94.99
However using the link below you can get an 79% discount off the course and get it for only $19.99
#3 - Airbnb Made Simple: Make Easy Residual Income This Year
Overall Rating:
Beginner Friendly
Detail Oriented
Regular Updates
Price
Course Overview:
Quickly learn how to turn your extra space into cash. Now is the perfect time to get started on Airbnb, the largest short-term rental platform with millions of guests looking for their perfect short or long-term stay. This course is a one-stop shop to making money fast on Airbnb with a minimal commitment of your time and money. It teaches you the secrets, shortcuts, and selling strategies to list your space on Airbnb and become a top seller in your area, potentially generating thousands of extra dollars per month!
What you'll learn:
- Create incredible airbnb listings that book more stays and make more money
- Choose the right amenities and furnishings to increase revenue
- Set up a winning pricing strategy that will beat the competition
- Get and stay at the top of the airbnb search results for your zip code
- Take an airbnb business from concept to launch in record time
- Run a successful airbnb business and get 5-star reviews after every stay
Course Price: - $44.99
However using the link below you can get an 62% discount off the course and get it for only $16.99
#4 - Vacation Rental, AirBNB Management - from Beginner to Pro!
Overall Rating:
Beginner Friendly
Detail Oriented
Regular Updates
Price
Course Overview:
Micah Berg is the founder and “Servant-in-Chief” of RealJoy Vacations in Destin, FL. He has extensive experience in short-term and long-term rentals as well as real estate sales. Micah also founded and is the CEO of Vacation Rental University which aims to educate the vacation rental and short-term rental space to a high level of competency. His course teaches how to professionally manage Vacation Rentals and Short Term rentals (AirBNBs, VRBOs) as done by industry experts with years of experience.
What you'll learn:
- Operate multiple vacation rental properties at a professional level.
- Avoid costly mistakes getting started in vacation rentals or on AirBNB
- Generate profits very quickly
- Understand how to build on the principles taught here to scale into a larger business.
Course Price: - $99.99
However using the link below you can get an 80% discount off the course and get it for only $19.99
#5 -How to Create an Empire on Airbnb without Owning a Home
Overall Rating:
Beginner Friendly
Detail Oriented
Regular Updates
Price
Course Overview:
Created by serial entrepreneur David Vu, this course offers the exact strategies and techniques that he used to scale his income from nothing to $100,000 per year with just one property.
What you'll learn:
- Understand the core concepts of creating a Business on Airbnb
- Learn exact formulas and techniques to increasing profit
- Create systems for self sustainability
- How to turn a property and rent within 48 hours
- Earn money from your new skills
- How to effectively build a team/Outsource certain tasks
