Senior Loan Officer
Brian Decker
Published on December 30, 2021


How To Buy a Profitable Vacation Rental?

Is the Airbnb Property Profitable?

Are you eager to find out the answer to the question: is the airbnb property profitable? Read on to learn everything that you need to know on the subject.

If you have been following along with my guide to investing in short-term rentals like Airbnb, you know this is something I am incredibly passionate about. I’ve learned that Airbnb provides massive returns vs. long-term rentals.

However, when venturing into investing in short-term rentals, it’s important to know that owning an Airbnb is not fully passive.

This is because you aren’t just buying a home; you are starting a business with each short-term rental. I don’t say that to scare anyone away, rather, our team works hard to equip all of our clients with the resources they need to become successful Airbnb owners and investors.

The most important step to start is doing the research upfront.

My previous articles walk you through the first three steps in my four-step process in depth to begin your research.

In this article, we will discuss the final and fourth step: how to determine if your Airbnb property is profitable and how much you can plan to make every month.

No matter how many rentals you get or where the property is located, you need to look at the numbers. Don’t rely on your intuition.

In order to find out whether renting an Airbnb property is worth it, you need to find out exactly how much you’re making from that property.

How Much Your Airbnb Property Should Make

By using a website like, you can look at the city that your Airbnb is in and figure out the amount of money that your property should make.

I also want to remind you that our team pulls custom AirDNA reports in the market they’re looking to invest for our clients that are pre-approved with Modern Lending because we feel so strongly about this aspect of the research.

AirDNA helps inform the average daily rate for Airbnbs in any given market, along with projected annual revenue based on occupancy rate.

After clicking on “invest” and “rentalizer,” you can search the exact property that you’re analyzing by typing in the address. It can tell you the historical occupancy rates for that property.

We recommend that you use the 50th percentile if you’re renting out a standard property. However, if you’re putting in extra money to create a trendier property, you should use the 75th percentile to estimate your earnings.

This means your property will perform better than 75% of similar properties in the market. At Modern Lending, we help our clients that obtain a home loan through us with a detailed playbook on how to accomplish this.

The goal is to make as much money from each property as possible. This website gives you a basic idea of what you can expect from consistent rentals for the entire year.

To do this yourself, you should look at similar properties in the area. This can also give you a great idea of what you can expect for the rent on your property.

We provide our clients with this report once they have been pre-approved with Modern Lending to buy their next vacation rental.

You want to make sure that you’re offering your property for a fair price. However, that doesn’t mean that you should make your property the cheapest in the area. You should place a rent price that’s fair for you and the renter.

Don’t set the rent price until you’ve surveyed the area and have a better understanding of your costs. These can help you determine the right price for the rent.

What Expenses You’ll Have for an Airbnb Property

BiggerPockets is a website that can help you determine the specific financial information that you need to calculate how much you’re making on your property.

We use our internal formulas to give oversight to help create an estimated income statement for vacation rentals. In the United States, we offer financing in California, Tennessee, Idaho, Arizona, and Florida. This is also a resource we offer to anyone who uses Modern Lending to finance their vacation rental.

By taking repair costs, monthly mortgage costs, utility costs, and more into account, BiggerPockets can determine how much you’re making from the property and how that compares to the costs that the property incurs.

This website also considers vacancy times. Your property isn’t likely to be full every single day of the year. Accounting for these vacancy periods can help you get a better idea of what the actual cost of the property is.

After you input all of the numbers, BiggerPockets will give you a complete look at your finances for the Airbnb property. You’ll get to see your potential rental income, monthly expense breakdown, and more.

To be safe, you should look at the worst-case scenario, especially if you’re just starting out. If you plan for the worst-case scenario, you may be pleasantly surprised by greater income at the end of the year.

If you’re unsure what numbers to put down, start with your current property. The property that you live in may be able to tell you a lot about the property that you’re going to rent out.

If the properties are nothing alike, you can do a simple search online to find out the average costs of utilities, insurance, and more in the area that your Airbnb is in currently. These numbers won’t be exact, but they’ll be good enough for the purposes of this financial exercise.

And, you can always change the numbers later when you find out what the actual costs for some of these things are.

Your Potential Profit From Renting an Airbnb Property

The potential profit that you can make from renting out your Airbnb property comes from subtracting your expenses from the amount that you’re making. By using a website like BiggerPockets, you can look at your expense reports with your projected numbers.

If you’re trying to plan out what kind of profits you can get, you should project a few finances about your property ahead of time:

  • Monthly mortgage payment
  • Taxes you’ll owe on the home
  • Insurance for the home
  • Fixed and variable expenses
  • Potential vacancy costs
  • Maintenance costs
  • Utility costs
  • Management fees

Even if you have to estimate these numbers using your current home, you should go ahead and get an idea of what your costs will be. Without a financial map to go off of, you won’t understand how much you’re actually getting from the property.

If you take all of these expenses and subtract them from the income that you’re making (or should make) on the property, you’ll get an estimated profit for the property that you’re looking at.

Following Up

Once you’ve calculated the potential profit of an Airbnb property, you should follow up on those numbers. You need to make sure that you’re actually making the amount that you calculated.

And, if you’re not, you should make sure that you’re making enough to cover your expenses.

If you’re making more, that’s great! Cash flow is the ultimate goal.

But, if you aren’t making as much as you predicted, find out why. Determining what’s stopping your profit can help you turn the property around so that you can make more in the future.

Is the Airbnb Property Profitable?

The final question you need to ask yourself is “is the Airbnb property profitable?” Are you making the money that you need to make or are you drowning?

Hopefully, you’ll find out that your Airbnb property is more than profitable to suit your financial needs.

To get more help with Airbnb and your other investments, don’t be afraid to reach out to our team at Modern Lending. Get started on your Airbnb journey today with a home mortgage loan from Modern Lending who understands rental properties inside and out.

Our rental experts can help you map out the best financial plan for your situation. Follow me on Instagram and Facebook @thebriandecker for more expert tips on how to create your own cash flow with Airbnb rentals.

Senior Loan Officer
Brian Decker Senior Loan Officer
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