Airbnb has, no doubt, become such a game-changer in the tourism and hospitality industry. It has given not just tourists and travelers cheaper accommodation alternatives to pricier hotels but has also allowed regular homeowners and landlords to make money on Airbnb.
Being a popular – not to mention practical – accommodation of choice for a lot of travelers, for potential investors, it has also raised the question, “Is Airbnb hosting profitable?”.
Because of Airbnb’s popularity, it has grown into a massive global phenomenon that has generated billions of dollars worldwide. According to the Airbnb statistics 2022 from The Zebra, there are 5.6 million active listings on the platform, with 4 million hosts in total. There are at least 150 million users on Airbnb, with millennials accounting for about 60% of the overall user base.
Given its substantial revenue and valuation, many real estate investors have jumped on the bandwagon, buying properties to register with the vacation rental platform. And while profitability will generally depend on what a particular market has to offer, the question on the minds of those who are considering getting into the short-term rental property business is this: Is Airbnb hosting profitable?
If you are one of those folks who are asking the same thing, you might want to check out the rest of this article.
How Profitable Is Airbnb Hosting in the US Real Estate Market?
Is Airbnb hosting profitable? How profitable is it? How long will it take for me to get my money back? Is it truly worth investing in?
These and several other similar questions run in people’s minds regarding Airbnb investments. They understand that there is great Airbnb demand locally and internationally. Otherwise, it would not have become the global powerhouse it is today.
However, while investors recognize its money-making potential, they also want to approach the matter with extreme caution because of the huge money involved. We’re not just talking about thousands or even tens of thousands of dollars for investments. We’re talking about six to seven digits here. It only makes sense to ask the question, “Is Airbnb profitable?” before making any final investment decision.
Is Airbnb Hosting Profitable?
As an investor, it is crucial to conduct extensive research and analysis to ensure that the hard-earned money you put in will not be wasted. You would want to ensure that your investment goals are met. No investor goes into business just to break even.
One of the main goals of investing is to make a decent profit off of it. That being said, is Airbnb hosting profitable today, especially with the global health crisis we’re dealing with?
It is true that the pandemic has affected and upended our lives and income. The interruptions and disruptions caused by COVID have greatly impacted the hospitality industry, especially at its onset. 2020 saw probably one of the worst, if not the worst, performances from Airbnb as a global brand.
However, as the months passed and travel restrictions eased, tourism began to slowly recover from the pandemic’s effects, and short-term rental properties started reopening. And although the company suffered more than 30% pandemic-induced loss in 2020, things started picking up in 2021, which allowed the company and Airbnb hosts to recover and regain their lost momentum.
Before the pandemic, the average monthly income hosts make was $924 on one property. Not bad for a side gig. However, other investors buy or lease several properties that bring in bigger numbers for them. The income and return on investment depend on location, of course. Not all markets are created equal.
For instance, when it comes to Airbnb rental income, nine out of the 15 highest monthly rental incomes all come from California, the lowest being $10,88 (Sonoma CA) and the highest at $15,224 (Santa Ynez CA). You need to know which cities are best for Airbnb investments according to your goals and financial situation.
Those are outstanding numbers as far as monthly rental income goes; however, there’s more to Airbnb profitability than just the monthly income. Several factors come into play to help investors answer the question of is Airbnb hosting profitable or not?
How Does One Determine How Profitable Airbnb Rentals Are?
To determine a property’s profitability – or in this case, how good the Airbnb return on investment is – one needs to look at several characteristics of a certain market.
Here are some of the factors that help answer the question, “Is Airbnb hosting profitable in the US market today?”
- Median Property Price. This is the middle price point of every property listed publicly in a specific market. This tells prospective investors that half of the houses in a market are sold at higher prices while the other half sold for lower prices. Most investors prefer looking at median property prices over average house prices as they are far more accurate when determining a property’s affordability.
- Average Price per Square Foot. This number tells us how much a certain property costs based on the average price by square foot.
- Days on Market (DOM). A DOM with a lower average number generally indicates a more robust market, which is more beneficial to sellers. On the other hand, a DOM with a higher average is a sign that a market is weaker which means buyers are likely to get better deals.
- Number of Airbnb Rental Listings. This shows the number of active Airbnb listings in a specific market.
- Daily Airbnb Rental Income. This is a specific market’s current daily Airbnb rental income average.
- Airbnb Occupancy Rate. This ratio shows a property’s monthly booking potential rate. A property that gets more bookings has higher occupancy rates.
- Monthly Airbnb Rental Income. This is the average monthly Airbnb rental income in a specific neighborhood or market. This gives investors an idea of the earning potential of a property listed on Airbnb. This is determined with the use of rental comps.
- Airbnb Cash on Cash Return Rate. This is the annual earning potential of an Airbnb rental property relative to the investor’s initial personal expense. It is one of the most important numbers that show investors what the potential Airbnb profit is in a year.
- Walk Score. This number determines a location’s walkability or how accessible its surrounding facilities and amenities are on foot. The higher the walk score, the fewer locals and tourists depend on automobiles.
To help find an answer to the question of is Airbnb hosting profitable, you need to first gather the abovementioned information and analyze the numbers generated by a specific location.
Doing this will allow those who are seriously interested in Airbnb investments to move forward with the property acquisition process or to keep looking for other properties that line up with their investment goals and financial capabilities.
Mashvisor is an online real estate marketplace platform that gives its users access to the most accurate and updated information—such as a specific neighborhood’s Airbnb cap rate, Airbnb fees, and other Airbnb statistics—on almost every market from the east coast to the west.
It not only helps investors locate the most profitable neighborhoods and hottest markets, but it also gives them the necessary tools to calculate how much the rental expenses will be and the service fee on Airbnb so they can come up with reasonable Airbnb host fees and rental rates, among other things.
Mashvisor’s Airbnb profitability calculator lets investors do that which, in turn, leads them to finding the right Airbnb homes for sale. Both beginner and experienced investors will surely benefit from using the Airbnb profit calculator on the site.
To find out more about Mashvisor’s real estate investment tools and products, click here.
20 Most Profitable Airbnb Locations in the US Housing Market
When considering the best Airbnb locations, the variables previously mentioned were used to come up with the following lists of what makes for a good Airbnb income property. They help investors come up with the answer to the question, “Is Airbnb hosting profitable?”
The following markets identified in the following lists have median property prices below $1,000,000. Staying below the million-dollar-median mark gives potential investors better options to get on board.
Top 10 Most Profitable Airbnb Locations Based on Both Rental Income and Cash on Cash Return
Based on Mashvisor’s latest Airbnb data, the following locations offer investors the best positive cash flow from investing in an Airbnb property based on both the monthly Airbnb rental income and cash on cash return rates:
1. Groton, New London, CT
- Median Property Price: $632,283
- Average Price per Square Foot: $285
- Days on Market: 654
- Airbnb Rental Listings: 100
- Airbnb Daily Rate: $307
- Airbnb Occupancy Rate: 59%
- Airbnb Rental Income: $5,991
- Airbnb Cash on Cash Return: 7.12%
- Walk Score: 57
2. New Paltz, Ulster County, NY
- Median Property Price: $693,920
- Average Price per Square Foot: $259
- Days on Market: 61
- Airbnb Rental Listings: 138
- Airbnb Daily Rate: $314
- Airbnb Occupancy Rate: 56.75%
- Airbnb Rental Income: $7,503
- Airbnb Cash on Cash Return: 6.52%
- Walk Score: 74
3. Bar Harbor, Hancock, ME
- Median Property Price: $724,286
- Average Price per Square Foot: $234
- Days on Market: 115
- Airbnb Rental Listings: 215
- Airbnb Daily Rate: $247
- Airbnb Occupancy Rate: 78%
- Airbnb Rental Income: $6,132
- Airbnb Cash on Cash Return: 6.37%
- Walk Score: 75
4. Middletown, Newport, RI
- Median Property Price: $675,429
- Average Price per Square Foot: $335
- Days on Market: 83
- Airbnb Rental Listings: 192
- Airbnb Daily Rate: $441
- Airbnb Occupancy Rate: 59%
- Airbnb Rental Income: $6,186
- Airbnb Cash on Cash Return: 6.14%
- Walk Score: 50
5. Saugerties, Ulster County, NY
- Median Property Price: $636,585
- Average Price per Square Foot: $456
- Days on Market: 162
- Airbnb Rental Listings: 217
- Airbnb Daily Rate: $311
- Airbnb Occupancy Rate: 68%
- Airbnb Rental Income: $5.346
- Airbnb Cash on Cash Return: 6.05%
- Walk Score: 80
6. Annapolis, Anne Arundel, MD
- Median Property Price: $776,229
- Average Price per Square Foot: $365
- Days on Market: 109
- Airbnb Rental Listings: 244
- Airbnb Daily Rate: $327
- Airbnb Occupancy Rate: 67%
- Airbnb Rental Income: $6,559
- Airbnb Cash on Cash Return: 5.94%
- Walk Score: 83
7. Atascadero, San Luis Obispo, CA
- Median Property Price: $746,327
- Average Price per Square Foot: $463
- Days on Market: 63
- Airbnb Rental Listings: 113
- Airbnb Daily Rate: $292
- Airbnb Occupancy Rate: 65%
- Airbnb Rental Income: $6,010
- Airbnb Cash on Cash Return: 5.72%
- Walk Score: 68
8. Murrieta, Riverside, CA
- Median Property Price: $779,939
- Average Price per Square Foot: $572
- Days on Market: 62
- Airbnb Rental Listings: 106
- Airbnb Daily Rate: $431
- Airbnb Occupancy Rate: 59.6%
- Airbnb Rental Income: $6,202
- Airbnb Cash on Cash Return: 5.47%
- Walk Score: 99
9. Oakhurst, Monmouth, NJ
- Median Property Price: $912,821
- Average Price per Square Foot: $422
- Days on Market: 134
- Airbnb Rental Listings: 127
- Airbnb Daily Rate: $412
- Airbnb Occupancy Rate: 55%
- Airbnb Rental Income: $7,602
- Airbnb Cash on Cash Return: 5.20%
- Walk Score: 17
10. Sonoma, Sonoma, CA
- Median Property Price: $1,246,159
- Average Price per Square Foot: $515
- Days on Market: 56
- Airbnb Rental Listings: 229
- Airbnb Daily Rate: $464
- Airbnb Occupancy Rate: 62%
- Airbnb Rental Income: $10,889
- Airbnb Cash on Cash Return: 5.08%
- Walk Score: 47
Sonoma County in California ranks among the most profitable locations for Airbnb hosting based on cash on cash return and rental income.
5 of the Best Airbnb Locations Based on Cash on Cash Return
When it comes to Airbnb, investors are aware that a rental property’s cash on cash return rate is one of the most crucial stats in determining Airbnb profits. Based on this stat, here are five of the best cities to buy rental properties that have median property prices below the million-dollar-median mark:
1. Fairbanks, Fairbanks North Star, AK
- Median Property Price: $288,168
- Average Price per Square Foot: $174
- Days on Market: 114
- Airbnb Rental Listings: 227
- Airbnb Daily Rate: $137
- Airbnb Occupancy Rate: 71%
- Airbnb Rental Income: $3,484
- Airbnb Cash on Cash Return: 7.78%
- Walk Score: 22
2. Gaylord, Otsego, MI
- Median Property Price: $317,522
- Average Price per Square Foot: $153
- Days on Market: 63
- Airbnb Rental Listings: 117
- Airbnb Daily Rate: $232
- Airbnb Occupancy Rate: 53%
- Airbnb Rental Income: $3,588
- Airbnb Cash on Cash Return: 7.39%
- Walk Score: 81
3. Geneva, Ashtabula, OH
- Median Property Price: $181,596
- Average Price per Square Foot: $134
- Days on Market: 269
- Airbnb Rental Listings: 117
- Airbnb Daily Rate: $228
- Airbnb Occupancy Rate: 48%
- Airbnb Rental Income: $2,533
- Airbnb Cash on Cash Return: 7.38%
- Walk Score: 66
4. Mountain View, Stone, AR
- Median Property Price: $267,239
- Average Price per Square Foot: $180
- Days on Market: 73
- Airbnb Rental Listings: 100
- Airbnb Daily Rate: $151
- Airbnb Occupancy Rate: 64%
- Airbnb Rental Income: $2,852
- Airbnb Cash on Cash Return: 7.37%
- Walk Score: 39
5. Tobyhanna, Monroe, PA
- Median Property Price: $280,057
- Average Price per Square Foot: $167.34
- Days on Market: 42
- Airbnb Rental Listings: 264
- Airbnb Daily Rate: $296
- Airbnb Occupancy Rate: 51%
- Airbnb Rental Income: $3,448
- Airbnb Cash on Cash Return: 7.29%
- Walk Score: 25
5 Top Airbnb Locations Based on Monthly Rental Income
The following five markets are those that generate the most rental income for Airbnb property owners and hosts:
1. Temecula, Riverside, CA
- Median Property Price: $734,128
- Average Price per Square Foot: $354
- Days on Market: 57
- Airbnb Rental Listings: 290
- Airbnb Daily Rate: $446
- Airbnb Occupancy Rate: 64%
- Airbnb Rental Income: $7,118
- Airbnb Cash on Cash Return: 6.88%
- Walk Score: 28
2. New Paltz, Ulster County, NY
- Median Property Price: $693,920
- Average Price per Square Foot: $259
- Days on Market: 61
- Airbnb Rental Listings: 138
- Airbnb Daily Rate: $314
- Airbnb Occupancy Rate: 57%
- Airbnb Rental Income: $7,503
- Airbnb Cash on Cash Return: 6.52%
- Walk Score: 74
3. Annapolis, Anne Arundel, MD
- Median Property Price: $776,229
- Average Price per Square Foot: $365
- Days on Market: 109
- Airbnb Rental Listings: 244
- Airbnb Daily Rate: $327
- Airbnb Occupancy Rate: 67%
- Airbnb Rental Income: $6,559
- Airbnb Cash on Cash Return: 5.94%
- Walk Score: 83
4. Oakhurst, Monmouth, NJ
- Median Property Price: $912,821
- Average Price per Square Foot: $422
- Days on Market: 134
- Airbnb Rental Listings: 127
- Airbnb Daily Rate: $412
- Airbnb Occupancy Rate: 55%
- Airbnb Rental Income: $7,602
- Airbnb Cash on Cash Return: 5.20%
- Walk Score: 17
5. Woodstock, Ulster County, NY
- Median Property Price: $999,125
- Average Price per Square Foot: $398
- Days on Market: 71
- Airbnb Rental Listings: 248
- Airbnb Daily Rate: $365
- Airbnb Occupancy Rate: 59%
- Airbnb Rental Income: $6,851
- Airbnb Cash on Cash Return: 4.26%
- Walk Score: 46
Can You Be an Airbnb Host Without Owning a Rental Property?
Given the numbers above, it is pretty obvious that Airbnb hosting can be quite lucrative, given the right strategy and location. One more question that comes to mind other than, “Is Airbnb hosting profitable?” is “Can a person become an Airbnb host without buying or owning a property?“
Yes, it is possible. A lot of people are actually doing it. Just because you’re in no position to buy a property at present doesn’t mean you cannot become an Airbnb host. One way to become one is through rental arbitrage, which involves renting a property and then listing it on Airbnb (or other short-rental platforms).
However, the downside to this type of approach is it limits what you can do as a host. Tenants still have to abide by the rules set by the property owner in the rental contract, not to mention the local Airbnb regulations in your location.
Before going down this route, make sure to still do your research and weigh the pros and cons of it all. While owning a property and having it rented out as an Airbnb home is still the best way to go, you can still be a host without owning a property under certain limitations.
If the trade-off works for you, it won’t hurt to give it a try. As long as it helps you achieve your economic goals without breaking the law or breaching any contracts, you’ll be alright.
The Verdict: Is Airbnb Hosting Worth It?
The answer to “Is Airbnb hosting profitable?” boils down to your goals and capabilities. By factoring in all the important variables, such as market data, resources, and time, you will have the answer to that question.
If in all your research and analysis you find out that investing in a rental property and having it listed on Airbnb is worth all the money, time, and energy you’re willing to put into it, then by all means give it a go. The success of your Airbnb rental property will ultimately depend on you.
Mashvisor provides state of the art real estate investment tools to help you make wise investment decisions and walk you through your investment journey. Please sign up here to start analysing the investment opportunities in both short trem and long term rental industry.