If you’ve read our Fat Stacks blog you’ll know we are Airbnb owners. We have been Airbnb hosting 4 properties for a couple of years now making Airbnb profit. Fat stacks of passive Airbnb income people! Listing your investment property or home on Airbnb or other short-term rental websites is not a small decision. But Airbnb income can be much greater than other passive income from property (yes, Airbnb really can be passive. Stay tuned to our Fat Stacks blog to discover how). So how do you know before you list whether Airbnb will be profitable for you? In this blog, we’ll share some answers.
3 things you must do before making Airbnb profit
Doing the right lead work will tell you whether you can make Airbnb profit before you put your hard-earned cash into the deal. Who wouldn’t want to know, before spending a few or even hundreds of thousands of bucks, that their investment will earn a good return?
Not every property makes a good Airbnb house or short term rental. You need the right property in the right location and market. Here are 3 things you must do before you can list your property online and make Airbnb profit.
1. Examine your property condition and amenities – will they be competitive with other Airbnb rentals?
At a minimum your property needs a renovated or modern bathroom and kitchen, fresh paint and no old carpet. Is it clean top to bottom? Like professionally cleaned…? Space and light are also highly valued. Do you have these? Not all properties on Airbnb are flash or brand new. But to make money with an older property requires an awesome outlook, a prime location or super cool uniqueness. Like a rustic treehouse.
Amenities matter to guests and to Airbnb. The more you have, the better you will rank in the Airbnb algorithm and the more bookings you’ll get. We’re talking things like aircon, heating, outdoor areas, work spaces, security, car parking, washer dryers, and the all-essential lightning speed WiFi. So, jump onto Airbnb at this point, open a listing in your area and click on the amenities list. Check off the ones you can offer. If it’s not a long list you have, this is money you’ll need to spend to make your place competitive.
2. Airbnb research – get onto the Airbnb app!
Given you’re already searching on Airbnb, it’s time to check out the local listings. By local, I mean local area. You’re looking in your suburb for properties that are similar to yours. A similar number of bedrooms and bathrooms, size, condition, location (by street), and amenity. Can you find properties like yours listed in your suburb?
If not, then your risk in being the first is greater. Jump on down to part 3 for next steps.
If so, then it’s time to get into the detail. On the Airbnb app, do a search to stay in your suburb but don’t put in any stay dates. Instead, click ‘I’m flexible’.
Open each listing near you and look up the booking calendar for each one. What level of bookings do they have? You can’t look at past months, but you can look at the current month and into the future and this is what you’re looking for.
- If you’re in the first week of the month look at that month’s bookings. Are there at least 15 days out of 30 booked?
- If you’re in the last week of the month, look at the next month’s bookings too. Are there 8-10 days booked for that next month?
This will give you an indicator of demand for stays in your area in properties like yours. From our experience, this level of occupancy for that time of the month will lead to more bookings and Airbnb profits by the end of the month for any well-run Airbnb. If you can’t see evidence of bookings at this level, then you may have to get deeper into the data. It’s sounds scary but it’s totally not. Next, we’ll tell you how.
3. Airbnb market research – done for you
There’s a great website called AirDNA that has unpaid and paid market data on Airbnb listings all over the world. It also covers VRBO, which is a popular booking platform for holiday destinations in particular.
We’d suggest you start with the AirDNA Airbnb Rentalizer. It’s free and will tell you what property like yours could make on Airbnb, based on other similar properties in the area. Put in your address, bedrooms, bathrooms, carparks and bobs-your-uncle! Remember, the figures are gross not net. We’ll explain what reasonable Airbnb profit margins you can expect in a future post.
The Rentalizer is a great tool and exactly where we started. But it’s very high level and just enough to get you to the next step but not enough to base your investment decisions on. AirDNA also have paid monthly subscriptions to a service called Market Minder for those that need more detail before jumping in to Airbnb hosting.
We used Market Minder before we took the plunge and highly recommend it. You can subscribe monthly to suburb reports that give actual earnings, number of listings, types of amenities and listing links for other Airbnb accommodation in your area. You can also see actual occupancy data, forward demand estimates and recommended nightly pricing data, which is critical to your ROI calculations. Here’s a link to subscribe to Market Minder.
The beautiful thing is you can turn your subscription on and off as you need it. So it still works if you’re on a budget because you can jump back in once a quarter to get market updates for a small one-off fee. Huzzah!
We used Market Minder to work out our Airbnb strategy and to determine our budget to set up each Airbnb. It gave us peace of mind on our ROI and stopped us from over capitalising on set up. If you want to know exactly how we applied the Market Minder data to our decision making about whether to invest in Airbnb or not, take a look at our Airbnb profit calculator. Also, pop back in a few weeks to check out our upcoming blog on profitable Airbnb business models and setting up an Airbnb business.
If you’ve done your due diligence, the numbers look good and you want to join us as Airbnb hosts, here is a link to the platform where you can start to create your listing. You can easily kick things off and it saves your work as you go.
The final word
These aren’t the only things to consider before jumping into Airbnb hosting. But if you’re buying an investment property or already have one, with a little due diligence like this you might be surprised at what it could earn you in pretty passive income. I know we were and haven’t looked back.
(Oh, and if you wanted to check out our Airbnbs or even book with us in Toowoomba, QLD just click the link in the footer 🙂 )