How Much Will You Make On An Airbnb Listing

Q: I’m thinking about listing my property on Airbnb. How can I tell how much money I will make? Kathy, New Brunswick, NJ

A: Before you even consider hosting your property on Airbnb or any other platform, you should investigate and thoroughly understand the laws in your local areas that may limit or restrict short term rentals. That said, it’s a good idea to try to forecast your expected return when you rent any property. For short term Airbnb rentals, you can estimate the revenue your property can generate based on the performance of short-term rental comps in your local market. One metric to evaluate Airbnb demand is Airbnb occupancy rate, which is the ratio or percentage of booked nights over the total number of nights the short term rental is available for booking. To figure out how much money you will net, you also then have to adjust for the Airbnb cleaning fee. As with most things real estate related, future occupancy rates will depend on supply and demand at the time you host. The limitation of trying to forecast future occupancy rates using past occupancy rates is that future supply and demand are not things that you can reasonably expect to accurately predict. Whether you are renting short term to guests on a platform like Airbnb or VRBO or renting as a traditional landlord to tenants, you are always competing with all the other property owners offering a similar or comparable space in your local area. Major population areas and tourist destinations can become oversaturated with short term rentals (STRs) which would likely lower the money you’d make on your short term rental, however, your ROI can also increase if demand for short term rentals increases relative to market supply in the area where your Airbnb listing is located. Thanks for your question, Kathy.

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