Airbnb Expenses to Keep in Mind if You’re Going to Be a Host
You can only make good Airbnb investing decisions if you understand your expenses. So how much does it cost to start an Airbnb, keep it running, and make a good profit?
Thinking about hosting with Airbnb? For many people, it’s a great way to earn some money on the side while connecting with travelers from all around the world. And if you do everything right, you can build a successful business that becomes a source of your full-time income.
Starting an Airbnb requires investment. But you can only make sound investing decisions if you understand your Airbnb expenses because they’re directly tied to how profitable your short-term rental business is.
So how much does it cost to start an Airbnb, keep it running, and ensure you can make money from it? Keep reading to find out. With a clear understanding of your Airbnb host expenses, you’ll be able to make better business decisions and set a pricing strategy that makes sense for you and your listing.
How Much Does It Cost to Start an Airbnb?
It depends. The cost to start an Airbnb business will likely vary in different areas, and you’ll need to take plenty of things into consideration. Will you be managing the rental property yourself, or will you need a co-host? Is there a year-round demand for your rental space? What type of travelers do you want to target, and what do they require from their accommodation?
For example, starting a glamping business on Airbnb is an option that requires a little upfront work and low investment. If you own a house, you can simply purchase a tent, set it up in your backyard, and rent it to travelers who want to stay in unique accommodations where they can enjoy nature. Then, your Airbnb startup costs can be approximately $3,000.
But if you want to rent out your house or apartment, you’ll need to consider the upfront costs of redecorating and furnishing your home to make it perfect for your potential guests. You should create a cozy atmosphere and make your space look unique, as you’ll be competing with many other Airbnb hosts. That means you’ll have to spend about $1,500 for each bedroom and an additional $2,000 to $3,000 for the rest of the house and common areas.
When preparing your property for short-term rental, you need to strike a balance between durability and creating a cozy atmosphere. Our free guide offers practical advice.
What About the Other Airbnb Startup Costs?
You’ll need money for basic amenities such as soap, toilet paper, shampoo, and other equipment to ensure your guests feel comfortable during their stay. We also recommend investing in
Extra towels (the more you have, the less frequently you’ll need to do laundry)
Installing WiFi
A SmartTV
Tea, coffee, snacks, salt, pepper, and condiments
Smart lock to make it easy for guests to access your place and offer them self-check-in
You may also consider providing additional amenities, such as a fully stocked kitchen, air conditioning, and a laptop-friendly workspace, as well as other features that make sense for your market. The majority of travelers say amenities are a top priority for a great trip. Guests often filter their search results to find desirable amenities. We compiled a complete hosting startup checklist—don’t forget to download your copy.
Thoughtfully outfitting your rental space and adding popular amenities to your listing can help you attract more travelers and get many booking requests. However, it's essential to respond to all inquiries as promptly as possible if you want to secure more bookings and receive great reviews.
Airbnb hosts make their money off of their reputation and guest reviews. That means communication with guests is essential. Responding to your guests’ messages can be a challenge, so many successful hosts automate this process with tools like Hospitable.
With Hospitable, you can ensure seamless communication with your guests through automated messages and save a significant amount of time. You can also take advantage of AI tools in your Inbox to draft and correct detailed responses to guest messages, upload your guidebooks to the Knowledge Hub to help our AI write better messages, and even opt for a fully automated AI Inbox.
High-quality photos that showcase the positive features of your rental property are another crucial aspect of setting your Airbnb business up for success. Therefore, you’ll need to hire a professional Airbnb photographer to help your listing stand out and increase its chances of being booked. On average, you can expect to spend between $100 and $200 per session.
When you’re renting your place to strangers, it’s essential to protect your property from accidents. Airbnb’s AirCover for Hosts provides up to $3 million to cover damage to your property and belongings caused by guests staying at your rental, but it’s not a formal Airbnb insurance. This program has exclusions and limitations, making it challenging to submit claims.
You should contact your insurance company to determine what is covered and whether you require additional coverage. You should probably purchase short-term rental insurance if you don’t want to pay from your own pocket when you have a bill for some expensive accidental damage. Such insurance is more costly than regular homeowner’s insurance.
How Much Does It Cost to List on Airbnb?
You can list your property on Airbnb for free, but a service fee helps the platform run smoothly. This fee covers Airbnb’s overhead expenses, such as the website and 24/7 customer support. It is charged when a booking is confirmed, and it’s the only fee that hosts need to pay.
So, how much does a service on Airbnb cost to the owner of a listed rental property? For a split fee, most hosts pay a flat service fee of 3% of the booking subtotal, but Airbnb Luxe hosts pay more. For the host-only fee, property owners can expect to pay around 14-16% of the booking amount, although hosts with Super Strict cancellation policies may pay more.
Airbnb Property Management Cost
You should also be realistic about your ongoing time commitment because time is money. Managing short-term rentals is a time-consuming process that requires hosts to wear many hats. You will need to perform various tasks on a day-to-day basis. Some of these routine tasks are essential for keeping your business up and running, while others are crucial for driving business growth. They are:
Communication with guests
Arranging cleaning and maintenance
Handling check-ins and checkouts
Managing reviews
Adjusting prices
Updating your listing
Restocking supplies, etc.
If you have a daytime job or other responsibilities, it can be stressful to handle everything, so you may want to consider hiring a property manager to oversee your rental property. However, it is essential to note that the services of an experienced property manager can be pretty costly. The commission will depend on your property’s type, location, and other factors, and you can end up paying 20-40% of each booking to a local manager.
But you can save on Airbnb property management costs if you choose to manage your business yourself and automate almost all your routine tasks using software like Hospitable. Our STR super app will help you with guest messaging, assigning tasks to your team, and managing listings on multiple platforms.
Hospitable users can also take advantage of our built-in Dynamic Pricing, which automatically adjusts prices based on real-time market conditions to maximize revenue generation for your properties. The best thing is that Hospitable’s Dynamic Pricing is included on Host, Professional, and Mogul plans, at no additional cost.
Airbnb Costs to Owner You Should Know
There are also some ongoing Airbnb expenses related to maintaining your property. You’ll need to spend money on regularly restocking amenities in your rental and periodically updating towels and linens. This is a relatively small expense; you can keep the costs down by buying everything in bulk. Other expenses include professional cleaning services, repairs and maintenance, utilities, and subscriptions, among others.
Some of these expenses (like subscriptions and TV) are fixed, and you can expect them no matter the amount of work you perform during the month. Other costs are variable and subject to change from month to month, making them a bit more challenging to predict. Understanding these expenses is critical for managing your expectations about the profitability of your Airbnb.
Keeping your rental space clean is vital to your business, so you may opt to pay professional cleaners to clean your house and make up beds after every check-out. That can save you time and energy. A cleaning service can be the best option if you’re planning to do full-time rentals. This way, you can ensure a faster turnaround time between guests. Cleaning fees may vary across different areas.
Utilities such as electricity, gas, water, trash, and sewer will make up a significant portion of your monthly expenses, and you’ll need to pay bills for each guest. And don’t forget to include subscriptions for Wi-Fi, cable, and Netflix, if you decide to offer them in your listing.
As a host, you need to ensure a comfortable environment for your guests during their stay. Consider installing smart thermostats to automate temperature control at your Airbnb property. This way, you’ll also be able to minimize energy consumption, save money on utility bills, and reduce your Airbnb expenses. Moreover, you can connect your smart thermostats to Hospitable, and our system will automatically adjust your thermostat settings based on your guests’ reservation status. Check out our help article to see a list of all the thermostats we can connect to via a direct integration.
It’s common for items in any short-term rental to become worn down, break, and require repair over time. You may also need to deal with more intentional damage to your property. So you’ll have upkeep costs. Be aware that approximately 10% to 15% of every booking will go towards ongoing maintenance or some repairs.
Track Your Airbnb Expenses Efficiently
Running an Airbnb is a business, so you need to keep track of your expenses and income to ensure the smooth operation and prepare for tax season. The good news is that many of the expenses related to operating a vacation rental property can be deducted from your taxable income, lowering the amount of taxes you owe.
Keeping accurate records can help you report correctly and maximize tax deductions. Luckily, there are software tools that allow you to automate your bookkeeping and accounting, so you should definitely consider using them to streamline your financial management.
Hospitable has integrations with several vacation rental accounting software tools that can help you ensure accurate financial reporting and make preparing for tax season easier. Watch this video to get a better idea of how Airbnb accounting integrations work and check out our help article for more details.
Final Words
Airbnb is a well-known vacation rental platform that puts your rental space in front of a broad global audience. Renting out your property can be an excellent money-making strategy if you view your rental as a business and invest your time and money accordingly.
You should also be smart about your investment and keep track of all your Airbnb expenses, as many of them are tax-deductible. You may be able to get most of them back when tax season arrives.
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Table of contents
How Much Does It Cost to Start an Airbnb?
What About the Other Airbnb Startup Costs?
How Much Does It Cost to List on Airbnb?
Airbnb Property Management Cost
Airbnb Costs to Owner You Should Know
Track Your Airbnb Expenses Efficiently