How to Make $465 an Hour on AirBnB - Rethink the Rat Race (2024)

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By the end of the week, we will be three months into our 6-month AirBnb experiment. We are trying to find out how much money we can make with a rental on AirBnb instead of long term renting. We’ve previously covered what you should consider when converting a long term rental into an AirBnb. Today, however, we are going to be focusing specifically on the money you can make with AirBnb.

How Much Money Can You Make on Airbnb?

Buying the Condo

When we decided to get into rental properties, we started out by looking for a place that we could move into. The goal was to save money by getting the hell out of our expensive condo a few minutes up the road. Additionally, we were planning to transition the new place into a rental property after a year. We’ve written about buying our condo before so I won’t bore you with the intricate details. However, what I will say is that we bought a 1 bed 1 bath condo in a good area for $43,500.

While living there, we spent a couple of weekends doing some to make the place look and feel much nicer. This also gave us an opportunity to know the ins and outs of the property. In other words, we were essentially our first tenants. If something bothered us for example, we knew it would likely bother our future renters so we went ahead and addressed any quirks the place had.

Renting the Condo

After a little over a year of living there, we moved into our house hack and rented out the condo. We found some great tenants who were still in college. They both had decent jobs and, by all appearances, had their life together. Essentially, nothing like I was back in college. Most importantly, we were renting the condo to them for $700 a month.

So, how much money were we making before our transition to AirBnb? Here’s a math breakdown that a 7-year-old could handle:

$170 ain’t bad for an hour or two of work per month. The work was essentially fielding maintenance requests, contacting any contractors to resolve those requests, pecking away on an excel sheet to calculate the income, cutting checks to the HOA, etc.

The mortgage includes principal, interest, taxes, and insurance. Additionally, this breakdown includes 10% for vacancies and also 5% for maintenance & repairs. We typically account for 10% on maintenance, however, since this is a condo and all exterior maintenance, roofing, landscaping, etc. are all covered by the HOA we set aside a little less.

Also, it’s important to note one line item that might be missing on most investors breakdown: management.We manage all our long term rentals ourselves, however, this isn’t something I recommend for everyone. As a result, we pocket that 10% that would normally go to a property manager.

Making Money on AirBnb

Now that we’ve established that there was a decent amount of cash-flow as a long term rental. Nothing that’s going to blow anyone’s socks off, but good, consistent income from a quality rental. Can a clean, minimalist, chic AirBnb make more money? Especially when the additional costs are factored in?

Costs Because of AirBnb

Furnishing

We certainly weren’t planning to furnish an AirBnb. We were looking to move abroad and offload a bunch of sh*t, however. Consequently, we were practically giving things away at our yard sale. Luckily, we did have some stuff leftover that we used in the AirBnb. Even though there were things left, we did spend around $600 getting the AirBnb outfitted. This included a couch, a coffee table, bed frame, decorations, towels, linens, lamps, and random little knick-knacks.

Utilities & Management

Outside of furnishing the place, the new monthly costs that we’ve incurred are utilities and property management. For instance, we cover 100mb speed internet, water, electric, and trash for the AirBnb. Additionally, the management is something new to us as we self manage all our other units. However, the management is great. We are practically 100% passive with this property because we don’t communicate with guests, schedule cleanings, or anything. The only ‘work’ we do related to this property is calculating the income on a monthly spreadsheet.

Vacancies

In September we had 4 nights of vacancy, in October we had 0 nights vacant, and finally, in November we had 2 nights vacant. This works out to a 6% vacancy rate. Additionally, we are booked without a free night vacant until mid-February. This tells me that we can easily raise the nightly rate because otherwise, we would have at least a few nights vacant.

Think of it this way, would you rather have 100% occupancy at $55 a night or 95% occupancy at $65 per night? Math that sh*t up.

• $55/night for 30 nights = $1650
• $65/night for 28.5 nights = $1852.50

Income from AirBnb

Here’s where the real fun part begins. How much money can you actually make from AirBnb? First, a graph of our income vs expenses.

As you can see, the income is increasing every month, while the expenses are remaining mostly stagnant. This is because we are still finding our sweet spot with pricing. For instance, we still feel that we can increase the price a little more once we get a good number of positive reviews under our belt. Here’s a breakdown of what we have going on with our income and we have a line by line breakdown of the expenses.

Income & Expenses Breakdown

For the sake of keeping the comparisons similar, we’ve kept the maintenance and vacancy the same as with a long term tenant. However, when we were calculating the potential numbers, we planned for a 20-25% vacancy rate. We and our wallets, are happy to inform you that we’ve had a substantially lower vacancy rate that we will cover in the costs section.

During the first month, we were charging $49 per night. On top of that, the first three bookings got a 10% discount. Coincidentally, the same guy booked it for three separate stays to get the maximum discount. Respect the hustle. After the first month booked up pretty quickly, we bumped the price up to $55 per night. The bookings haven’t slowed down though, so we are due for another slight bump in price.

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In Conclusion

So, to answer the question, how much money can you make on AirBnb? You can make enough money to support a small cocaine habit. Enough money to pay for Netflix, Disney+, Hulu, Amazon Prime, ESPN+, HBOgo, & a dozen other useless streaming services without batting an eye. Enough for a pretty lavish vacation, although if you’re paying to travel you’re doing it wrong. You can make so much money per month that you won’t even be tempted by your high school friend’s half-assed MLM pitch.

We absolutely love having an AirBnb. It gives us the flexibility to come home and stay there anytime without displacing a long term tenant. While we haven’t done this yet, it’s good to know that we can. Also, to know that we have all the necessary items to live already within the house is comforting.

On top of the flexibility that AirBnb offers, we also make significantly more money off of it than we did on our long term rental. With the property manager, we spend an average of less than an hour a month managing this property. Over the last three months, that works out to an hourly rate of $465.47. How could you make $465.47 an hour?

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