Airbnb has become one of the most popular platforms for short-term rentals and offers investors a lucrative opportunity to earn high profits if done right.

Though there have been many stories of Airbnb owners earning thousands and thousands of dollars in Airbnb rental income, that is only half the story. While your main concern may be purchasing the property itself, there are many Airbnb costs to owner that you should factor in during your investment property analysis. 

Before purchasing your Airbnb investment property, you should be prepared to tackle all other fees that you will acquire once you start your operations. From taxes to Airbnb host fees, there are a number of Airbnb costs to owner that will eat into your bottom line leaving you with a negative cash flow or return on investment if you do not account for them beforehand.

Keep reading to find out how to calculate the Airbnb costs to owner and other rental expenses on your Airbnb Investment.

Airbnb Costs to Owner You Should Know Before Buying A Property

When one plans to invest in Airbnb, the first question is, “how much can you make on Airbnb?” Though the initial considerations include the sale price of the property and the potential nightly rent, there is a lot more to take into account. While this is something to consider, this computation and analysis is only the first step.

From buying the property to renting out, there are a ton of Airbnb costs to owner that include Airbnb fees and government fees that you will have to pay out of your Airbnb profit and earnings. Here are some things you should consider when calculating your possible net Airbnb income:

1. Airbnb Service Fee

Listing your property on the Airbnb site is a surefire way to make people aware of your rental. However, while they can boost the occupancy rate of your property, you will have to pay Airbnb fees for using their website. So how much does Airbnb take?

Roughly speaking, Airbnb will take 3% of revenue from each of its hosts. This means that if you rent out your property for 14 days at a rate of $20 a night, you will earn $271.6 rather than a flat $280 after deducting the service fee on Airbnb. While 3% Airbnb costs to owner may not seem like a lot, it will add up and should be taken into consideration when you are calculating your rental rate, cash flow, and return on investment.

2. Insurance

Another Airbnb cost that is often overlooked is insurance for real estate investors. If you are renting out a room in your primary residence, you will need to call your insurance company to inform them about your home-sharing arrangement.

While most insurance companies will allow the extension of the homeowners’ current insurance plan to cover your Airbnb guests, this is usually only applicable to short-term, one-time events. If you plan to regularly rent out a room in your primary residence on Airbnb, most companies will require you to add specific endorsements to your insurance plan to cover your rental arrangement. 

On the other hand, if you have multiple rentals and Airbnb properties across the state or country, your insurance company may require a business policy to be added to your insurance plan. This can raise your monthly Airbnb costs by up to 25% solely on insurance alone.

Though Airbnb does provide some insurance to Airbnb hosts in the event of guest injury or property damage, you will still need to make arrangements with your insurance company to ensure complete coverage against any possible incident. 

3. Homeowner Association Dues (HOA Dues)

HOA dues can vary depending on the property type, neighborhood, or state. These dues are meant to cover fees associated with common area maintenance like patios, elevators, lobbies, common pools, and other bills like common water consumption or garbage disposal fees. Regardless of which short-term rental site you list your property on, you will need to pay HOA dues for being the owner of the property.

On average, HOA dues can range anywhere from $100 to $1,000 dollars, which can make it one of the more expensive Airbnb costs to owner in the long run.

4. Taxes

In addition to HOA dues, you will need to pay taxes based on your property type, rental period, and location accordingly. While taxes may vary depending on multiple factors, in general, if you rent your property out for a maximum of 14 days a year, you may be exempted from paying rental income tax. However, if you plan to rent out your property regularly, you will need to calculate your taxes depending on your tax bracket.

Additionally, if Airbnb is your primary source of income, you may need to account for self-employment taxes, which can amount to more than 15% of your Airbnb income.

5. Repairs and Maintenance Costs

Before listing your Airbnb property, you will have to cover the necessary repair expenses as well as furnishings for your guests. While this may seem like a one-time Airbnb cost, the expenses towards your property’s upkeep do not stop there. With each guest, you will need to pay cleaning fees, electricity, and water bills. On top of that, you will also have to cover the monthly internet bills, cable, or streaming services if you decide to offer them in your listing. 

While it is not exactly required to have a cleaning service or offer wifi and streaming services, these things could make or break your property’s reputation amongst Airbnb guests. Having reviews that rave about your property’s cleanliness and amenities could be worth the initial costs as they could also boost your occupancy rate and your overall Airbnb cash flow. 

Is Airbnb Actually Profitable?

So with all of these Airbnb costs to owner, are Airbnb rental properties actually a good investment? There is no hard and fast answer to how profitable your Airbnb investment will be; but if done, right you will see a significant profit from your property. Despite all of the underlying costs of Airbnb rentals, investors and hosts continue to report positive Airbnb cash on cash returns, with the average host earning almost $1000 in profit each month.

The important thing is that you conduct a comprehensive investment property analysis to account for all costs related to running an Airbnb. Then you can adjust your daily rate accordingly to cover these expenses while also making a profit. 

How To Calculate Airbnb Costs To Owner

How To Calculate Airbnb Costs To Owner
The Mashvisor Airbnb Investment Calculator estimates the expenses you may encounter when setting up and running your Airbnb rental.

Now that you know the different expenses that go with an Airbnb investment, you are ready to conduct your real estate and investment property analysis. While you can do extensive research and manual calculations, any seasoned real estate and Airbnb investor will tell you to use an Airbnb profitability calculator. Not only are these calculators more convenient, but they are oftentimes more accurate as they eliminate possible human error. 

Mashvisor’s Airbnb calculator is one of the best ROI calculators for Airbnb investments currently available in the market. Not only does it automatically include the different Airbnb costs to owner like HOA and property taxes, but it can also show you a breakdown of Airbnb rental Income, monthly expenses, Airbnb cash flow, Airbnb cash on cash return, Airbnb cap rate, and Airbnb occupancy rate to give you a good estimate of your possible gross and net income. 

Using the average costs and expenses of the housing market in the area, you will be able to see a comprehensive investment property analysis right off the bat.

However, while the estimates are a good place to start, it is suggested that you conduct some research and take note of your own possible personal expenses when it comes to managing the property. You can add new types of expenses and include them in Mashvisors’s Airbnb calculator to get a more tailored and accurate projection of profitability before buying your Airbnb property. 

Best Locations for Your Airbnb Rental Investments

Now that you know what you need to include in your calculation before buying an Airbnb investment property, you can scout cities and neighborhoods for your Airbnb investment. Based on Mashvisor’s data, these are some of the best places in the United States for Airbnb property investments based on cash on cash returns this 2022:

1. Creve Coeur, IL

  • Median Property Price: $119,944
  • Average Price per Square Foot: $78
  • Days on Market: 60
  • Airbnb Rental Income: $2,297
  • Airbnb Cash on Cash Return: 9.11%
  • Airbnb Daily Rate: $103
  • Airbnb Occupancy Rate: 47%
  • Walk Score: 38

2. Salem, AL

  • Median Property Price:$364,933
  • Average Price per Square Foot: $151
  • Days on Market: 61
  • Airbnb Rental Income: $4,901
  • Airbnb Cash on Cash Return: 9.56%
  • Airbnb Daily Rate: $212
  • Airbnb Occupancy Rate: 56%
  • Walk Score: 6

3. Milan, IL

  • Median Property Price: $113,838
  • Average Price per Square Foot: $97
  • Days on Market: 75
  • Airbnb Rental Income: $1,732
  • Airbnb Cash on Cash Return: 9.63%
  • Airbnb Daily Rate: $87
  • Airbnb Occupancy Rate: 66%
  • Walk Score: 50

4. Winslow, AZ

  • Median Property Price: $ $204,250
  • Average Price per Square Foot: $129
  • Airbnb Rental Income: $2,134
  • Airbnb Cash on Cash Return: 9.97%
  • Airbnb Daily Rate: $111
  • Airbnb Occupancy Rate: 54%
  • Walk Score: 55

5. Bel Aire, KD

  • Median Property Price: $343,043
  • Days on Market: 43
  • Average Price per Square Foot: $156
  • Airbnb Rental Income: $3,953
  • Airbnb Cash on Cash Return: 8.80%
  • Airbnb Daily Rate: $196
  • Airbnb Occupancy Rate: 75%
  • Walk Score: 12

6.  Jennings, LA

  • Median Property Price: $232,883
  • Days on Market: 67
  • Average Price per Square Foot: $116
  • Airbnb Rental Income: $3,363
  • Airbnb Cash on Cash Return: 8.86%
  • Airbnb Daily Rate: $79
  • Airbnb Occupancy Rate: 54%
  • Walk Score: 63

7. Springfield, LA

  • Median Property Price: $325,016
  • Days on Market: 103
  • Average Price per Square Foot: $170
  • Airbnb Rental Income: $3,327
  • Airbnb Cash on Cash Return: 8.86%
  • Airbnb Daily Rate: $213
  • Airbnb Occupancy Rate: 59%
  • Walk Score: 33

8. Owings, MD

  • Median Property Price: $674,590
  • Days on Market: 53
  • Average Price per Square Foot: $300
  • Airbnb Rental Income: $6,895
  • Airbnb Cash on Cash Return: 8.97%
  • Airbnb Daily Rate: $761
  • Airbnb Occupancy Rate: 66%
  • Walk Score: 13

9. Caledonia, MI

  • Median Property Price: $374,712
  • Days on Market: 67
  • Average Price per Square Foot: $193
  • Airbnb Rental Income: $4,848
  • Airbnb Cash on Cash Return: 8.76%
  • Airbnb Daily Rate: $197
  • Airbnb Occupancy Rate: 60%
  • Walk Score: 39

10. Cuba, MO

  • Median Property Price: $150,314
  • Days on Market: 100
  • Average Price per Square Foot: $132
  • Airbnb Rental Income: $2,864
  • Airbnb Cash on Cash Return: 8.97%
  • Airbnb Daily Rate: $263
  • Airbnb Occupancy Rate: 37%
  • Walk Score: 64

11. Plymouth, NH

  • Median Property Price: $260,125
  • Days on Market: 200
  • Average Price per Square Foot: $177
  • Airbnb Rental Income: $4,020
  • Airbnb Cash on Cash Return: 9.19%
  • Airbnb Daily Rate: $189
  • Airbnb Occupancy Rate: 67%
  • Walk Score: 77

12. Black River, NY

  • Median Property Price: $240,971
  • Days on Market: 107
  • Average Price per Square Foot: $128
  • Airbnb Rental Income: $2,314
  • Airbnb Cash on Cash Return: 8.98%
  • Airbnb Daily Rate: $92
  • Airbnb Occupancy Rate: 63%
  • Walk Score: 0

13. Florida, NY

  • Median Property Price: $354,116
  • Days on Market: 78
  • Average Price per Square Foot: $251
  • Airbnb Rental Income: $5,519
  • Airbnb Cash on Cash Return: 8.97%
  • Airbnb Daily Rate: $613
  • Airbnb Occupancy Rate: 49%
  • Walk Score: 46

14. Feasterville-Trevose, PA

  • Median Property Price: $436,657
  • Days on Market: 22
  • Average Price per Square Foot: $229
  • Airbnb Rental Income: $5,221
  • Airbnb Cash on Cash Return: 9.20%
  • Airbnb Daily Rate: $107
  • Airbnb Occupancy Rate: 76%
  • Walk Score: 64

15. Huntingdon Valley, PA

  • Median Property Price: $428,580
  • Days on Market: 67
  • Average Price per Square Foot: $223
  • Airbnb Rental Income: $9,740
  • Airbnb Cash on Cash Return: 9.61%
  • Airbnb Daily Rate: $107
  • Airbnb Occupancy Rate: 76%
  • Walk Score: 5

16. Meadville, PA

  • Median Property Price: $191,965
  • Days on Market: 60
  • Average Price per Square Foot: $115
  • Airbnb Rental Income: $1,875
  • Airbnb Cash on Cash Return: 9.06%
  • Airbnb Daily Rate: $153
  • Airbnb Occupancy Rate: 68%
  • Walk Score: 82

17. Watauga, TX

  • Median Property Price: $268,039
  • Days on Market: 56
  • Average Price per Square Foot: $188
  • Airbnb Rental Income: $3,834
  • Airbnb Cash on Cash Return: 8.81%
  • Airbnb Daily Rate: $186
  • Airbnb Occupancy Rate: 59%
  • Walk Score: 32

18. Vinton, VA

  • Median Property Price: $223,780
  • Days on Market: 40
  • Average Price per Square Foot: $119
  • Airbnb Rental Income:$3,231
  • Airbnb Cash on Cash Return: 9.44%
  • Airbnb Daily Rate: $124
  • Airbnb Occupancy Rate: 71%
  • Walk Score: 68

19. Parkersburg, WV

  • Median Property Price: $279,686
  • Days on Market: 120
  • Average Price per Square Foot: $115
  • Airbnb Rental Income: $2,738
  • Airbnb Cash on Cash Return: 9.33%
  • Airbnb Daily Rate: $90
  • Airbnb Occupancy Rate: 58%
  • Walk Score: 65

20. Westover, WV

  • Median Property Price: $182,580
  • Average Price per Square Foot: $146
  • Airbnb Rental Income: $2,792
  • Airbnb Cash on Cash Return: 9.35%
  • Airbnb Daily Rate: $133
  • Airbnb Occupancy Rate: 60%
  • Walk Score: 24

The Bottom Line

As you can see, using an Airbnb calculator is needed by any real estate investor looking for their first or next Airbnb rental property. There are multiple Airbnb costs to owner that are often overlooked when conducting an investment property analysis. While purchasing the property and renting it out is the main concern of most, hosts and investors need to look into the possible costs they will acquire when running an Airbnb.

Regardless if you are on your first or 5th Airbnb investment property, Mashvisor’s Airbnb calculator can be a vital tool in estimating your possible returns and deciding which property is worth investing in. With an estimate of costs and profits, you will be able to make the right Airbnb investment purchase based on accurate and reliable data, setting you up for success. All that’s left is to be an accommodating and welcoming Airbnb host, and you’re sure to see huge cash on cash returns on your property.

Sign up for Mashvisor now and get 15% off.




Source link

Turn leads into sales with free email marketing tools (en)

Join Us

Subscribe Us

Related Post

What is Crypto? | INN

Cryptocurrencies and blockchain technology are making headlines as the digital revolution continues to reshape diverse industries, such as finance, gaming and insurance. Bitstamp’s 2022 Crypto

Read More »