If you’re an Airbnb property owner, you most likely have been noodling on different ways to increase your Airbnb revenue.
Table of Contents
- How Much Can You Make on Airbnb?
- Manage Your Expectations
- Predicting Annual Airbnb Revenue
- The 4 Strategies to Boost Your Airbnb Revenue This Year
- Wrapping It Up
No investor goes into business just to break even, especially those in the rental property business. An Airbnb owner would want their Airbnb earnings to be as reasonably high as possible.
Keyword: reasonably.
Just because Airbnb affords hosts and owners the flexibility to adjust their rates doesn’t mean they should take advantage of it. But I’m getting ahead of myself.
We’ll talk about how to increase one’s Airbnb revenue—reasonably—and why investors should care about it.
How Much Can You Make on Airbnb?
First things first: we need to discuss what the current Airbnb income potential is. This will let us know if our income goal is still reasonable given today’s inflation rates.
Airbnb revenue depends on the location. Some vacation rental properties earn more than others, especially if they’re in hot rental markets.
The housing market predictions all point to increased mortgage rates and property prices. Consequently, they also point to rental rate increases for both long-term and short-term rentals. These things will affect how one’s Airbnb estimated revenue is calculated.
Several other things, like rental comps and seasonality, also need to be factored into the process of calculating one’s Airbnb revenue estimate. For this reason, it is best to use an online Airbnb revenue calculator from a real estate website like Mashvisor.
Top 10 Cities With the Best Monthly Airbnb Rental Income
That being said, given the different considerations involved in computing Airbnb income, we have taken a look at some of the highest revenue Airbnb locations. We used Mashvisor’s latest Airbnb data to show how much one can expect (give or take) in the following markets:
1. Malibu CA
- Median Property Price: $3,176,726
- Average Price per Square Foot: $1,635
- Days on Market: 72
- Monthly Airbnb Rental Income: $13,078
- Airbnb Cash on Cash Return: 2.82%
- Airbnb Cap Rate: 2.83%
- Airbnb Daily Rate: $1,137
- Airbnb Occupancy Rate: 49%
- Walk Score: 21
Malibu has the highest monthly Airbnb rental income, according to Mashvisor’s latest data. However, it also comes with a high price tag.
2. Napa CA
- Median Property Price: $1,528,824
- Average Price per Square Foot: $743
- Days on Market: 96
- Monthly Airbnb Rental Income: $11,672
- Airbnb Cash on Cash Return: 5.20%
- Airbnb Cap Rate: 5.23%
- Airbnb Daily Rate: $398
- Airbnb Occupancy Rate: 66%
- Walk Score: 37
3. Kailua HI
- Median Property Price: $1,896,591
- Average Price per Square Foot: $827
- Days on Market: 63
- Monthly Airbnb Rental Income: $11,556
- Airbnb Cash on Cash Return: 5.79%
- Airbnb Cap Rate: 5.83%
- Airbnb Daily Rate: $307
- Airbnb Occupancy Rate: 66%
- Walk Score: 53
4. Paradise Valley AZ
- Median Property Price: $2,635,600
- Average Price per Square Foot: $702
- Days on Market: 84
- Monthly Airbnb Rental Income: $11,467
- Airbnb Cash on Cash Return: 2.73%
- Airbnb Cap Rate: 2.74%
- Airbnb Daily Rate: $909
- Airbnb Occupancy Rate: 48%
- Walk Score: 14
5. Sonoma CA
- Median Property Price: $2,117,601
- Average Price per Square Foot: $803
- Days on Market: 27
- Monthly Airbnb Rental Income: $10,106
- Airbnb Cash on Cash Return: 3.41%
- Airbnb Cap Rate: 3.44%
- Airbnb Daily Rate: $398
- Airbnb Occupancy Rate: 68%
- Walk Score: 46
6. Kapaa HI
- Median Property Price: $2,062,467
- Average Price per Square Foot: $1,069
- Days on Market: 121
- Monthly Airbnb Rental Income: $9,105
- Airbnb Cash on Cash Return: 2.90%
- Airbnb Cap Rate: 2.92%
- Airbnb Daily Rate: $289
- Airbnb Occupancy Rate: 66%
- Walk Score: 7
7. Haiku HI
- Median Property Price: $1,927,167
- Average Price per Square Foot: $1,392
- Days on Market: 34
- Monthly Airbnb Rental Income: $9,021
- Airbnb Cash on Cash Return: 3.67%
- Airbnb Cap Rate: 3.70%
- Airbnb Daily Rate: $279
- Airbnb Occupancy Rate: 77%
- Walk Score: 40
8. Haleiwa HI
- Median Property Price: $2,178,385
- Average Price per Square Foot: $1,112
- Days on Market: 58
- Monthly Airbnb Rental Income: $8,940
- Airbnb Cash on Cash Return: 2.88%
- Airbnb Cap Rate: 2.90%
- Airbnb Daily Rate: $287
- Airbnb Occupancy Rate: 67%
- Walk Score: 66
9. Beverly Hills CA
- Median Property Price: $2,648,606
- Average Price per Square Foot: $1,132
- Days on Market: 69
- Monthly Airbnb Rental Income: $8,795
- Airbnb Cash on Cash Return: 1.52%
- Airbnb Cap Rate: 1.53%
- Airbnb Daily Rate: $276
- Airbnb Occupancy Rate: 61%
- Walk Score: 89
10. Villa Park CA
- Median Property Price: $2,070,381
- Average Price per Square Foot: $594
- Days on Market: 66
- Monthly Airbnb Rental Income: $8,786
- Airbnb Cash on Cash Return: 2.26%
- Airbnb Cap Rate: 2.27%
- Airbnb Daily Rate: $252
- Airbnb Occupancy Rate: 68%
- Walk Score: 64
Manage Your Expectations
If you notice, each one of the cities listed above all has seven-digit median property prices. Although they do have very high monthly Airbnb revenues, they also come with very high price tags.
Those in the market for rental income properties for sale should consider the cash on cash return. This will serve them well instead of just looking at the monthly income. While the amount of Airbnb rental income will determine your Airbnb annual revenue, the cash on cash return will tell you how profitable it is. This is because the cash on cash return formula factors in the amount of cash spent to buy a property.
In most cases, smart Airbnb property investors consider cash on cash return as one of their metrics in determining whether a property is worth investing in. But not all places that have high rental income have high cash on cash return rates and vice versa. This is why you should always look at relevant market data in coming up with your Airbnb estimate.
That said, to come up with an accurate Airbnb revenue growth projection, you must consider the current market conditions. Perform due diligence and see how your chosen market is performing where Airbnb rentals are concerned.
For instance, all the cities listed above have pretty decent cash on cash returns of 2.00% and above. Well, except for Beverly Hills, which is below the 2.00% mark. For those who can afford real estate in those places, these are good locations to invest in. Especially considering how much they make in a month.
However, not everyone has access to that amount of money or can afford to pay mortgages for properties that are expensive. The best way to determine whether a location is a good spot for vacation rentals is to check out real estate comps and determine what the cash on cash return is like.
Warning: Do Not Abuse the System
Now it is important to note that not all places with high cash on cash returns will get you tens of thousands of dollars in monthly Airbnb income. At the very least, higher cash on cash returns will guarantee a good return on your initial cash investment. And that’s always a good thing. It may take you a little while to gain enough momentum to generate wealth, but that’s okay.
Airbnb hosts have the flexibility to adjust their rates as they see fit. With the proper rate adjustments, one can make the most out of their vacation rental properties. The key is to not abuse this privilege.
Rates adjustments are a benefit given to Airbnb hosts to allow them to maximize their rentals’ income-generating potential. Investors and hosts can increase rates to recoup any renovation or repair costs. They can also take advantage of peak seasons when Airbnb demand shoots through the roof. However, they should also know when to lower their rates, especially during dry seasons when they need to attract guests.
Before you can even increase your revenue, you need to make sure you have the right data for proper analysis. A website like Mashvisor provides its users with the most up-to-date rental market data to use for rental property analysis. Investors can check out what the numbers are to remain competitive in their respective markets.
Any wise investor knows that a successful Airbnb investment is dependent on investment property analysis. This step of the investment process should never be taken lightly.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Predicting Annual Airbnb Revenue
Before we give you some practical tips to improve your Airbnb revenue, we would like to show you how to come up with an Airbnb revenue estimate.
One of the simplest ways to calculate Airbnb income is by simply multiplying your daily rate with your annual Airbnb occupancy rate. For instance, your property has a year-round occupancy rate of 65% and you’re charging a nightly rate of $150. Multiply these two and multiply their product by 365 (days), and you will get an annual Airbnb revenue of $35,587.50.
Annual Airbnb Revenue = Daily Rate * Occupancy Rate * 365
Annual Airbnb Revenue = $150 * 0.65 * 365
Annual Airbnb Revenue = $35,587.50
Again, you can make your life easier by using an online Airbnb calculator.
The 4 Strategies to Boost Your Airbnb Revenue This Year
Whether you already have an existing Airbnb business or are still in the planning phase, you can take the following tips and run with them to improve or maximize your Airbnb revenue.
Rent Out Some More Extra Space
If you already have one or more Airbnb properties and still have extra space to rent out, go for it. It may be your basement, attic, or spare room in your house. If you truly want to improve your revenue this year, this is one way of doing it.
Some ultra-creative investors even have storage spaces and extra closets listed as private storage lockers for rent. They make roughly an additional $30 per month just on extra closet space.
You may have a pool or hot tub that you could rent out or you can convert your garden into a private dog park. So long as you have the space and a little creativity, you can add to your monthly Airbnb income.
Rent Out Your Parking Space, Too
While we’re on the subject of renting out extra space, if you also have a big enough parking area, you might want to use it to your advantage, too. It could be extra space in your garage or driveway or on a separate lot that could accommodate several cars. If you’re not using them, you can easily convert them into rental parking spaces.
This can be used for Airbnb guests with cars (for an additional fee, of course) or for RV owners looking to rent out space to camp in. With the RV industry selling an additional million units each year, the need for RV parking spaces is also growing.
Take Advantage of Larger Yards
Those who have larger backyards and gardens can make some decent money off these spaces by converting them into something else.
For instance, other than the dog park mentioned above, you can also spruce it up to be a site for glamping, which can be rented out on a nightly basis. You may also build an extra guest house or a tiny house. You may choose to have it rented out or move in it yourself and rent out your main property as a vacation rental.
Another option is to use that wide space and grow produce for your guests. For one, it is aesthetically pleasing and can attract more guests. Two, you can offer to serve your guests some fresh produce as part of your menu (if you’re serving food on your property). This can make your guests’ experience a lot more enjoyable. And if you have any excess produce, you can sell them for additional income.
Provide Added Services
If you’re living on-site or nearby, you can also provide additional services to make your guests’ stay a lot more pleasant and enjoyable.
You can offer to cook food for them or take them on guided tours around the area. If you have an extra vehicle, you can also have it rented out by the day. Just make sure your insurance is updated. If you don’t want to risk your car and have a few bikes lying around, you can rent those out instead.
The possibilities are endless as long as you’re creative enough.
Wrapping It Up
Improving your Airbnb revenue does not mean you need to spend millions of dollars to buy expensive properties. All you need is a little creativity and some resourcefulness. A little of these two can go a long way in increasing your monthly Airbnb income.
Of course, you will also have to perform due diligence to make sure that you get the right rental property for your Airbnb business. To do this, you will need to have access to the latest real estate market data and the right investing tools to help get the job done. Fortunately, Mashvisor has both. It covers nearly every real estate market across all 50 states and has several useful investing tools. It has helped countless investors acquire the right properties that align with their investment goals since 2014.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.