Is Airbnb Profitable?

Is Airbnb Profitable?

Senior Loan Officer
Brian Decker
Published on October 14, 2022

Is Airbnb Profitable?

Airbnb rentals are top-rated among travelers looking for a more authentic vacation experience filled with immersive experiences. Owning one of these rental properties is a great way to earn some passive income, but let's dive into the details of how to ensure your Airbnb is profitable.

Pros and Cons of Airbnb

As with any investment, it's important to take a look at the pros and cons to consider whether it is worth the risk carefully. Here are some pros of owning an Airbnb property:

  • Airbnb properties can be more lucrative than renting to a long-term tenant, depending on your property, location, and how you list it.
  • Airbnbs attract a diverse array of tenants. This can provide less risk than a long-term tenant because a long-term tenant might miss payments or just get up and vanish in the middle of the night. This would take an immediate hit to your income. With an Airbnb, you constantly have a rotating supply of tenants, so if one cancels, it is a smaller percentage of your expected income for the month.

Here are some likely cons of owning an Airbnb property:

  • Airbnbs cost a lot of money to get off the ground and to maintain. As a host, you'll have to cover electricity, cable, wifi, and regular cleaning and maintenance. 
  • Airbnbs can provide you with an irregular income, which can be hard to manage if you are using this as one of your main streams of income.

Still Profitable in 2022?

Every year, people re-evaluate the possible return on investments that Airbnb could offer, as the housing market fluctuates from year to year. Let's dive into how profitable Airbnb is in 2022. 

In 2020, the profitability of Airbnb rental properties dropped but they have since made a comeback. The profit margin has been on a steady path of recovery since the pandemic. 

Determining Profitability 

Aside from uncontrollable predicaments, there are aspects of Airbnb that you can control to determine the profitability of a certain property. 

Dive into a neighborhood analysis of the property to see what your potential earnings could be in relation to the value of relative properties. Not all locations are ideal for Airbnbs, so this is important to analyze. Airbnb's profitability is dependent on the seasonability of the property, or how well it can be booked year-round.

Consult with a Professional

When in doubt about whether or not an Airbnb property may be profitable, it is always a good idea to consult with professionals who specialize in Airbnbs or short-term rental properties. Reach out to a knowledgeable loan officer at Modern Lending today to figure out how to decipher the logistics of owning an Airbnb and start your own Airbnb business today!

Senior Loan Officer
Brian Decker Senior Loan Officer
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