Is Airbnb Profitable?

The question “Is Airbnb profitable?” has been asked every year, especially after the pandemic and economic downturn we’ve been experiencing.

Real estate investors acknowledge how lucrative Airbnb profits were—and somewhat still are. They are still considering either getting into it for the first time or expanding their rental property business.

In line with this, we hope to answer a few questions like, “Is Airbnb profitable for hosts” and, “How profitable is Airbnb?” Read on to find out more.

The good news for existing Airbnb hosts and new investors thinking of getting into short term rentals is that this year promises to be a great one for this strategy. Travel and tourism are back on track to growth post-COVID-19 years, resulting in an increased demand for vacation rentals in multiple US markets.

Table of Contents

1. Is Airbnb Still Profitable?
2. How to Determine Airbnb’s Profitability
3. Where Is Airbnb Profitable?: Mashvisor’s Airbnb Data by City

In this article, we will look at exactly how profitable Airbnb investment properties will be. Of course, just like with any other real estate investing strategy, it’s not good to overgeneralize. The fact that short term rentals will bring a good ROI on average does not mean that every single one of them will make for a good deal.

Thus, we’ll look at what aspiring investors can do to determine the profitability of a property before buying it and how they can push its performance. We’ll also show you the most profitable US cities for this rental strategy based on a few factors. All the data for the ranking has been gathered, analyzed, and calculated by Mashvisor and reflects the state of the Airbnb market in May 2023.

Is Airbnb Still Profitable?

Yes, Airbnb is still profitable. Indeed, nationwide real estate data collected and analyzed by Mashvisor shows that this is the more profitable of the two rental strategies this year. Our Data Team compared thousands of US markets with active short and long term rental listings to compare their performance.

In May 2023, an average Airbnb property in the US market generated a cash on cash return of 3.62%, compared to 3.41% for an average long term rental. The respective values for the average cap rates are 3.61% and 3.45%, with Airbnb clearly being the winner once again. In terms of rental income, a typical short term rental brings $2,548 per month, whereas a typical long term rental brings $2,261 per month.

Some other important Airbnb data analytics numbers worth considering are the average daily rate of $188 and the average occupancy rate of nearly 52%. The conclusion from all these data points is that Airbnb properties can generate excellent returns on investment this year and actually perform better than their long term counterparts.

Moreover, when looking at these numbers, a future host should keep in mind that they are just averages across all US markets. At the same time, certain markets are much better suited for this strategy than others and result in significantly higher profits. Some individual properties are also a better fit than others, resulting in double-digit ROI figures.

So, as long as you conduct the required analysis, use the correct data, and benefit from available tools, you can make a very profitable Airbnb investment.

How Profitable Is Airbnb?

As highlighted above, the average ROI on a short term rental property in the US market is 3.57% in terms of cash on cash return and 3.63% in terms of cap rate. Both these numbers sound rather low, but the reason is that they are simply average figures that reflect the performance of the entire US Airbnb market.

But as we all know, real estate investing – including vacation rental investing – is highly regional, so specific markets can considerably outperform these averages. How profitable your short term rental will be depends on multiple factors such as the location, the property type, the property size, the amenities, your hosting style, and your Airbnb pricing strategy.

There are two main positive factors that are driving the profitability of short term rental: the end of crazy spikes in property prices and the end of the global pandemic.

Airbnb Hosting After the Pandemic

On May 5th, 2023, the WHO declared the end of the Covid-19 global health emergency, a week after the related public health emergency in the US expired. This effectively puts an end to the pandemic, which means that all remaining travel and tourism restrictions are lifted, and people are completely free to travel and visit places once again.

Importantly, many are eager to make up for the opportunities they missed during the Coronavirus crisis. What this means from the perspective of hosts is that there will be even more demand for vacation rentals than in the last few years, pushing up the Airbnb occupancy rate. And occupancy, together with daily rate, is the main determinant of rental income and ROI in this industry.

Another positive factor enhancing the profitability of vacation rentals this year is recent trends in real estate prices. This is also very much related to the Covid-19 pandemic. At the beginning of the global health crisis, US home values started skyrocketing, which continued well into 2021 but began to slow down in 2022. Currently, the year-on-year appreciation in property values is 3.3%, as reported by Zillow.

The market is neutralizing, and while it’s too early to talk about a buyer’s market, at least we are done with the hot seller’s market we lived through over the last couple of years. With real estate values slowly moderating, it’s easier and more affordable even for beginner investors to enter the market.

Furthermore, as properties are no longer so overpriced, this has a positive effect on their ROI since the home value factors in all metrics of return.

Consequently, all in all, this year promises to offer good opportunities to savvy investors.

How to Determine Airbnb’s Profitability

Answering the question “Is Airbnb profitable?” has to be done at the property level to be entirely accurate. Looking at the national level tells us that short term rentals have the potential to be an excellent strategy this year, but that doesn’t mean that every property will generate high income and ROI.

Finding the Most Profitable Investment Properties

To know if your specific rental will be profitable, you need to consider the market where it is located and the property itself.

Here we’ll look at the steps you need to take to determine the profitability of a vacation rental and how Mashvisor’s tools can help you along the way.

Airbnb Market Analysis

Not all locations are ideal for short term rentals. Each market has different pros and cons when it comes to real estate investing, and this holds for both the city and the neighborhood.

When analyzing the potential of an Airbnb market, you have to look at things like the number of visitors, attractions, infrastructure, safety, and rental regulations. But you also have to consider reliable short term rental data like property prices, rental income, and return on investment.

If you’re a beginner looking for the best areas for vacation rental investments, you can use the Mashvisor Market Finder to search for cities and neighborhoods that match your criteria and expectations. All you need to do is to enter your criteria to get a list of the best-fitting markets across the US.

Then, you can visit the Mashvisor neighborhood analysis pages to zoom in on a more detailed analysis of the areas that catch your eye. You will find all the data points you need to determine the profitability of Airbnb investments in the neighborhood.

In this way, you will be one step closer to knowing how profitable your property will be if rented out on a short term basis, according to its location.

To start finding and analyzing the best Airbnb markets across the US, sign up for a 7-day free trial of Mashvisor, followed by a 15% discount.

Airbnb Investment Property Analysis

If you already know the market where you want to invest and have a property in mind, you need to look at the potential of this property to generate good ROI. It will depend not only on the rental location but also on its type, size, features, amenities, and competition.

Hosts can use the Mashvisor Airbnb Calculator to analyze the profitability potential of any residential property in the US based on its street address, number of bedrooms, and number of bathrooms. Entering these three simple values will give them access to the forecast occupancy rate, daily rate, and rental income.

The estimated numbers are based on the performance of active Airbnb rentals in the area similar to the property you’re analyzing. In real estate, these are known as rental comps, and using rental comps is the most accurate way to perform rental property analysis. It’s important to know that all the data used by the Mashvisor Airbnb Calculator comes directly from the Airbnb platform.

Meanwhile, if you don’t have a property in mind, you can use the Mashvisor Property Finder to locate profitable opportunities within your budget. Then, you can access detailed investment property analysis for each property that grabs your attention. This analysis includes price, income, expenses, cash flow, cash on cash return, cap rate, and occupancy rate.

Once again, the analysis provided by the Mashvisor short term rental calculator reflects actual listings in the neighborhood. It also comes with long term rental analysis to confirm if this specific property is more profitable when renting out on a short term or long term basis.

Airbnb Pricing Analysis: Rental Comps

The last major component you need to incorporate into determining the profitability of an Airbnb investment is pricing. How to price your property is crucial for enhancing its ROI. Competitive daily rates make the Airbnb algorithm rank your listing higher in search results. It also makes guests choose your rental over competitors. It means more bookings and more income.

Nevertheless, if the rate is too low, you are leaving money on the table. In addition, your nightly rate should not be flat but constantly adjusted to highlight changes in local supply and demand.

To determine the pricing of your property and how it will affect its profit, you need to look at rental comps. The Mashvisor Dynamic Pricing tool can help with this. You can link your Airbnb listings directly to your Mashvisor account to see what daily rates make the most sense for your property based on comps in the area.

And that’s not all. You can set up full automation so that the Mashvisor tool adjusts your nightly pricing each day your property is available for rent. Using AI-driven technology, Mashvisor ensures that the dynamic pricing strategy maximizes the rental income and profitability of your short term rental.

This sets us apart from other similar tools that emphasize occupancy instead. But maximum occupancy doesn’t mean maximum profit if the nightly price is too low.

Where Is Airbnb Profitable?: Mashvisor’s Airbnb Data by City

The most important question next to “Is Airbnb profitable?” is, “Where do I buy the right investment property for Airbnb hosting?” Investors mainly look at three metrics to determine Airbnb profitability: cash on cash return, monthly rental income, and daily rate. Using Mashvisor’s nationwide data from May 2023, we have ranked the best short term rental markets in these three categories.

We focused on cities with affordable property prices (below $1,000,000) and strong demand (occupancy rate above 50%). However, some of them might have varying Airbnb laws, so you should check them out before investing in any particular market. You can visit the Mashvisor short term rental regulations page to get started.

Top 10 Airbnb Locations With the Highest Cash on Cash Return

Cash on cash return is a way to measure your rate of return by calculating the cash income you earned on the cash you invested in a property. Thus, it’s an important metric when looking for the most profitable investment opportunities.

1. Northlake IL

• Median Property Price: $296,160
• Average Price per Square Foot: $233
• Days on Market: 128
• Number of Airbnb Listings: 120
• Monthly Airbnb Rental Income: $4,269
• Airbnb Cash on Cash Return: 9.08%
• Airbnb Cap Rate: 9.25%
• Airbnb Daily Rate: $171
• Airbnb Occupancy Rate: 53%
• Walk Score: 33

2. Rileyville VA

• Median Property Price: $328,431
• Average Price per Square Foot: $241
• Days on Market: 34
• Number of Airbnb Listings: 111
• Monthly Airbnb Rental Income: $4,034
• Airbnb Cash on Cash Return: 8.64%
• Airbnb Cap Rate: 8.78%
• Airbnb Daily Rate: $219
• Airbnb Occupancy Rate: 60%
• Walk Score: 10

3. Harvey LA

• Median Property Price: $316,717
• Average Price per Square Foot: $145
• Days on Market: 77
• Number of Airbnb Listings: 1,639
• Monthly Airbnb Rental Income: $3,997
• Airbnb Cash on Cash Return: 8.47%
• Airbnb Cap Rate: 8.62%
• Airbnb Daily Rate: $207
• Airbnb Occupancy Rate: 54%
• Walk Score: 52

4. Melvindale MI

• Median Property Price: $147,000
• Average Price per Square Foot: $255
• Days on Market: 88
• Number of Airbnb Listings: 114
• Monthly Airbnb Rental Income: $2,031
• Airbnb Cash on Cash Return: 7.66%
• Airbnb Cap Rate: 7.94%
• Airbnb Daily Rate: $123
• Airbnb Occupancy Rate: 51%
• Walk Score: 64

5. Darby PA

• Median Property Price: $189,270
• Average Price per Square Foot: $145
• Days on Market: 70
• Number of Airbnb Listings: 585
• Monthly Airbnb Rental Income: $2,472
• Airbnb Cash on Cash Return: 7.62%
• Airbnb Cap Rate: 7.83%
• Airbnb Daily Rate: $140
• Airbnb Occupancy Rate: 55%
• Walk Score: 87

6. Marrero LA

• Median Property Price: $339,750
• Average Price per Square Foot: $169
• Days on Market: 66
• Number of Airbnb Listings: 1,313
• Monthly Airbnb Rental Income: $3,722
• Airbnb Cash on Cash Return: 7.55%
• Airbnb Cap Rate: 7.68%
• Airbnb Daily Rate: $215
• Airbnb Occupancy Rate: 53%
• Walk Score: 66

7. Broadview IL

• Median Property Price: $231,478
• Average Price per Square Foot: $176
• Days on Market: 48
• Number of Airbnb Listings: 286
• Monthly Airbnb Rental Income: $2,931
• Airbnb Cash on Cash Return: 7.40%
• Airbnb Cap Rate: 7.58%
• Airbnb Daily Rate: $168
• Airbnb Occupancy Rate: 57%
• Walk Score: 77

8. Bar Harbor ME

• Median Property Price: $629,058
• Average Price per Square Foot: $363
• Days on Market: 97
• Number of Airbnb Listings: 297
• Monthly Airbnb Rental Income: $6,167
• Airbnb Cash on Cash Return: 7.40%
• Airbnb Cap Rate: 7.47%
• Airbnb Daily Rate: $321
• Airbnb Occupancy Rate: 65%
• Walk Score: 77

9. Columbia MO

• Median Property Price: $300,851
• Average Price per Square Foot: $131
• Days on Market: 103
• Number of Airbnb Listings: 263
• Monthly Airbnb Rental Income: $2,663
• Airbnb Cash on Cash Return: 7.09%
• Airbnb Cap Rate: 7.26%
• Airbnb Daily Rate: $161
• Airbnb Occupancy Rate: 57%
• Walk Score: 30

10. East Lansdowne PA

• Median Property Price: $250,557
• Average Price per Square Foot: $156
• Days on Market: 163
• Number of Airbnb Listings: 613
• Monthly Airbnb Rental Income: $2,244
• Airbnb Cash on Cash Return: 6.81%
• Airbnb Cap Rate: 7.01%
• Airbnb Daily Rate: $139
• Airbnb Occupancy Rate: 54%
• Walk Score: 65

Top 10 Airbnb Locations With the Highest Monthly Rental Income

How much money you’ll make per month is another factor to consider when looking for lucrative vacation rental deals. That’s why we’ve also ranked the best markets for short term rental income.

1. Newbury Park CA

• Median Property Price: $943,620
• Average Price per Square Foot: $497
• Days on Market: 40
• Number of Airbnb Listings: 110
• Monthly Airbnb Rental Income: $6,414
• Airbnb Cash on Cash Return: 4.31%
• Airbnb Cap Rate: 4.34%
• Airbnb Daily Rate: $261
• Airbnb Occupancy Rate: 59%
• Walk Score: 37

2. Bar Harbor ME

• Median Property Price: $629,058
• Average Price per Square Foot: $363
• Days on Market: 97
• Number of Airbnb Listings: 297
• Monthly Airbnb Rental Income: $6,167
• Airbnb Cash on Cash Return: 7.40%
• Airbnb Cap Rate: 7.47%
• Airbnb Daily Rate: $321
• Airbnb Occupancy Rate: 65%
• Walk Score: 77

3. Plymouth Meeting PA

• Median Property Price: $865,657
• Average Price per Square Foot: $644
• Days on Market: 108
• Number of Airbnb Listings: 105
• Monthly Airbnb Rental Income: $6,100
• Airbnb Cash on Cash Return: 4.19%
• Airbnb Cap Rate: 4.22%
• Airbnb Daily Rate: $135
• Airbnb Occupancy Rate: 56%
• Walk Score: 29

4. Manzanita OR

• Median Property Price: $828,600
• Average Price per Square Foot: $488
• Days on Market: 71
• Number of Airbnb Listings: 124
• Monthly Airbnb Rental Income: $5,745
• Airbnb Cash on Cash Return: 4.60%
• Airbnb Cap Rate: 4.63%
• Airbnb Daily Rate: $306
• Airbnb Occupancy Rate: 53%
• Walk Score: 59

5. Atlantic Beach NY

• Median Property Price: $767,443
• Average Price per Square Foot: $343
• Days on Market: 254
• Number of Airbnb Listings: 165
• Monthly Airbnb Rental Income: $5,716
• Airbnb Cash on Cash Return: 4.96%
• Airbnb Cap Rate: 5.00%
• Airbnb Daily Rate: $246
• Airbnb Occupancy Rate: 52%
• Walk Score: 44

6. Juneau AK

• Median Property Price: $565,840
• Average Price per Square Foot: $453
• Days on Market: 40
• Number of Airbnb Listings: 204
• Monthly Airbnb Rental Income: $5,599
• Airbnb Cash on Cash Return: 5.73%
• Airbnb Cap Rate: 5.77%
• Airbnb Daily Rate: $208
• Airbnb Occupancy Rate: 59%
• Walk Score: 84

7. Charlottesville VA

• Median Property Price: $746,997
• Average Price per Square Foot: $345
• Days on Market: 129
• Number of Airbnb Listings: 559
• Monthly Airbnb Rental Income: $5,521
• Airbnb Cash on Cash Return: 5.31%
• Airbnb Cap Rate: 5.36%
• Airbnb Daily Rate: $246
• Airbnb Occupancy Rate: 59%
• Walk Score: 57

8. Asbury Park NJ

• Median Property Price: $913,050
• Average Price per Square Foot: $532
• Days on Market: 89
• Number of Airbnb Listings: 108
• Monthly Airbnb Rental Income: $5,514
• Airbnb Cash on Cash Return: 3.26%
• Airbnb Cap Rate: 3.29%
• Airbnb Daily Rate: $366
• Airbnb Occupancy Rate: 54%
• Walk Score: 91

9. Hood River OR

• Median Property Price: $804,147
• Average Price per Square Foot: $431
• Days on Market: 54
• Number of Airbnb Listings: 165
• Monthly Airbnb Rental Income: $5,373
• Airbnb Cash on Cash Return: 4.65%
• Airbnb Cap Rate: 4.69%
• Airbnb Daily Rate: $270
• Airbnb Occupancy Rate: 54%
• Walk Score: 83

10. Bainbridge Island WA

• Median Property Price: $893,514
• Average Price per Square Foot: $550
• Days on Market: 188
• Number of Airbnb Listings: 155
• Monthly Airbnb Rental Income: $5,339
• Airbnb Cash on Cash Return: 3.24%
• Airbnb Cap Rate: 3.26%
• Airbnb Daily Rate: $249
• Airbnb Occupancy Rate: 56%
• Walk Score: 10

Top 10 Airbnb Locations With the Highest Daily Rates

One of the factors behind the profitability of Airbnb is the nightly pricing. In case you don’t want to rent out your property all the time, this number will show you how much money you will make when you have it available for renting and manage to get a booking.

1. Mooresville NC

• Median Property Price: $815,016
• Average Price per Square Foot: $618
• Days on Market: 117
• Number of Airbnb Listings: 190
• Monthly Airbnb Rental Income: $5,157
• Airbnb Cash on Cash Return: 5.22%
• Airbnb Cap Rate: 5.28%
• Airbnb Daily Rate: $423
• Airbnb Occupancy Rate: 50%
• Walk Score: 67

2. Asbury Park NJ

• Median Property Price: $913,050
• Average Price per Square Foot: $532
• Days on Market: 89
• Number of Airbnb Listings: 108
• Monthly Airbnb Rental Income: $5,514
• Airbnb Cash on Cash Return: 3.26%
• Airbnb Cap Rate: 3.29%
• Airbnb Daily Rate: $366
• Airbnb Occupancy Rate: 54%
• Walk Score: 91

3. Spring Lake Heights NJ

• Median Property Price: $971,408
• Average Price per Square Foot: $478
• Days on Market: 105
• Number of Airbnb Listings: 386
• Monthly Airbnb Rental Income: $4,876
• Airbnb Cash on Cash Return: 2.37%
• Airbnb Cap Rate: 2.38%
• Airbnb Daily Rate: $360
• Airbnb Occupancy Rate: 50%
• Walk Score: 33

4. Wall NJ

• Median Property Price: $794,956
• Average Price per Square Foot: $425
• Days on Market: 66
• Number of Airbnb Listings: 447
• Monthly Airbnb Rental Income: $4,801
• Airbnb Cash on Cash Return: 3.72%
• Airbnb Cap Rate: 3.75%
• Airbnb Daily Rate: $351
• Airbnb Occupancy Rate: 50%
• Walk Score: 13

5. Lake Como NJ

• Median Property Price: $983,899
• Average Price per Square Foot: $647
• Days on Market: 72
• Number of Airbnb Listings: 451
• Monthly Airbnb Rental Income: $5,005
• Airbnb Cash on Cash Return: 3.53%
• Airbnb Cap Rate: 3.56%
• Airbnb Daily Rate: $347
• Airbnb Occupancy Rate: 50%
• Walk Score: 78

6. Neptune NJ

• Median Property Price: $515,483
• Average Price per Square Foot: $336
• Days on Market: 103
• Number of Airbnb Listings: 411
• Monthly Airbnb Rental Income: $5,112
• Airbnb Cash on Cash Return: 5.94%
• Airbnb Cap Rate: 6.00%
• Airbnb Daily Rate: $338
• Airbnb Occupancy Rate: 51%
• Walk Score: 63

7. Ocean Isle Beach NC

• Median Property Price: $661,259
• Average Price per Square Foot: $353
• Days on Market: 78
• Number of Airbnb Listings: 231
• Monthly Airbnb Rental Income: $3,807
• Airbnb Cash on Cash Return: 3.08%
• Airbnb Cap Rate: 3.11%
• Airbnb Daily Rate: $330
• Airbnb Occupancy Rate: 51%
• Walk Score: 7

8. Charleston SC

• Median Property Price: $935,378
• Average Price per Square Foot: $819
• Days on Market: 80
• Number of Airbnb Listings: 1,297
• Monthly Airbnb Rental Income: $4,182
• Airbnb Cash on Cash Return: 3.71%
• Airbnb Cap Rate: 3.75%
• Airbnb Daily Rate: $329
• Airbnb Occupancy Rate: 54%
• Walk Score: 40

9. Penn Yan NY

• Median Property Price: $755,549
• Average Price per Square Foot: $466
• Days on Market: 18
• Number of Airbnb Listings: 116
• Monthly Airbnb Rental Income: $4,272
• Airbnb Cash on Cash Return: 5.31%
• Airbnb Cap Rate: 5.40%
• Airbnb Daily Rate: $324
• Airbnb Occupancy Rate: 54%
• Walk Score: 77

10. Bar Harbor ME

• Median Property Price: $629,058
• Average Price per Square Foot: $363
• Days on Market: 97
• Number of Airbnb Listings: 297
• Monthly Airbnb Rental Income: $6,167
• Airbnb Cash on Cash Return: 7.40%
• Airbnb Cap Rate: 7.47%
• Airbnb Daily Rate: $321
• Airbnb Occupancy Rate: 65%
• Walk Score: 77

According to the data above, Asbury Park NJ and Bar Harbor ME are the best locations to invest in Airbnb for sale. Asbury Park NJ is in two top ten lists, while Bar Harbor ME is in all three. Is Airbnb profitable for investors? In these two locations, it most definitely is!

If you take a closer look at all the different markets listed, you will notice that each of them is performing very well in all three categories. They’re all very affordable and have great potential to generate positive cash flow for investors. It is why it’s important for investors to always perform real estate due diligence since each location has something different to offer.

The Verdict

So, is Airbnb profitable?

Yes, an Airbnb property can help you make a lot of money this year if you choose the right market, buy the best property, and set up the optimal pricing strategy. While this sounds like a lot of work, the tools available on the Mashvisor platform can help you with each of these steps, boosting your results with the help of AI and machine learning.

To learn more about how Mashvisor can help you find the most profitable Airbnb investment opportunities across the US market, sign up for a 7-day free trial now, followed by 15% off for life.