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How To Make Money With Airbnb – What You Need To Know

If you’ve made travel plans in the last few years and were looking into places to say besides hotels, then chances are you’ve come across Airbnb.  

Ever since it launched, Airbnb has exploded in popularity.  It’s been reported that they have approximately 150 million users covering more than 65,000 cities with 1.9 million listings available at any given time.  

But here’s the thing – they don’t actually own any properties!  To generate revenue, Airbnb relies on people just like you, who are willing to put up their place for rent as an Airbnb host.  When done correctly, that could mean a great opportunity for passive income!

In this post, we’ll explore exactly how to make money with Airbnb as a host, what expenses you should expect to pay, and how you can maximize your returns.

1br airbnb property

What Is Airbnb?

Airbnb is an online peer-to-peer, short-term rental service that connects travelers and hosts.  Originally called “Airbed & Breakfast”, the company is now worth more than Hyatt Hotels with a valuation of about $18 billion.

Most travelers who use Airbnb are looking for less expensive and sometimes more personable touches than the scripted, standard offerings you’ll find from a traditional hotel chain.  That means if you don’t use your residence all of the time, own additional properties, or just simply have a spare bedroom that no one ever uses, then you’ve got the potential to earn some extra money!

sofa set in an airbnb place

How Do You Make Money With Airbnb? 

Hosting Fees

To make money through Airbnb, you have to become what’s called a “host”.  This simply means that you have a room or property that you would like to offer people to rent.

It’s up to you what you want to charge.  However, unless you’re savvy to the latest travel deals and comps in your area, you can rely on Airbnb’s Smart Pricing tool which automatically adjusts your price based on local demand.


Just like hotels and vacation rentals, you can also set additional fees upfront for things like:

  • Late check-in
  • Pets
  • House cleaning
  • Parking
  • Extra guests
  • Etc.  

If you have other unique amenities or want to provide other services, you can do that too.  For example, if you live near a lake and have a paddle-boat, you could list this as an extra charge for guests to use.

Since this is your personal property, it’s also a good idea to require an up-front security deposit.  As long as its refundable, most people will have no problem paying it.


One of the nice things about Airbnb is that you never handle any money directly with the travelers.  All transactions take place through their platform, so you never have to get your hands dirty.

According to Airbnb’s site, payment is released about 24 hours after the guest’s scheduled check-in.  If you’re a new host, they may also have a few additional holding periods just so they can ensure that everything goes smoothly.

earning money on airbnb

What Are Your Airbnb Expenses? 

Airbnb Fees

Just like most other peer-to-peer platforms, there’s really nothing up-front to pay until a deal is made.  Airbnb doesn’t charge any fees to list your property or force you into some kind of hidden paid membership arrangement.  

Once someone does book with you, Airbnb will charge you a modest 3-5 percent hosting fee.  That’s pretty competitive when you compare it to Homeaway who charges 5 percent and who charges 15-20 percent.  Its also well worth the money considering they handle all of the advertising and facilitate all of the financial transactions.

expenses in airbnb


As part of their service, Airbnb covers every booking with $1 million USD in property damage protection and another $1 million USD in insurance against accidents.

While that’s a nice benefit, it should not be taken as a substitute for your own homeowner’s or renter’s insurance or protection against theft or personal liability.  Check with your insurance provider to see what they can offer to make sure you’ve got 100 percent coverage.  They may just recommend that you get an umbrella policy.

Income Taxes

Anytime you earn any income, the IRS is going to want to know about it.  Therefore, be sure to keep detailed, written records of all your transactions with Airbnb. 

Generally, extra income is reported to the IRS using form 1099.  You might also be able to deduct your cleaning fees and insurance as business expenses which would reduce your taxable income.  Talk with a tax professional to make sure you’ve got all of your bases coved.

How Do You Increase Airbnb Revenue?

Create An Irresistible Listing 

Airbnb advertises to millions of travelers every single day.  If you want your listing to stand out among the rest, then you’re going to need to put some effort into it.

Start by writing an enticing headline.  This is the first thing potential guests will see as their browsing other listings in your area.  In addition, write an alluring but honest description of the property.  Follow this up with lots of great, bright photos showing a clean and inviting space.

Set The Right Price

While you can rely on Airbnb to help you determine what price you should set, it wouldn’t be a bad idea for you to do a little market research yourself.  Try looking through other sites similar to Airbnb and see what spaces such as yours are being offered at.

You might decide that you’d like to take a more competitive approach than what Airbnb suggests and offer a slightly lower price.  Though you might not make as much money per night, this strategy could help to increase your occupancy rate.

Additionally, if you know of special events coming to your area (like a sporting event, concert, or popular convention) and you believe you could set the bar higher, then don’t be afraid to set custom prices for these premium times.

Set Expectations

The last thing you want is to pay for things that your guests either damaged or weren’t aware they shouldn’t do (like throwing a huge party).  Be transparent about your expectations and set clear written house rules. 

Go The Extra Mile For Positive Ratings

Nothing helps boost your listing and drive more sales your way like the credibility of 5-star reviews.  

To get those, you’re going to need to earn them.  Start by being friendly and responsive to each of your guests.  Always make sure the space is totally clean and go one step above by leaving personal touches for your guests.  This could be something as simple as local restaurant recommendations or a list of events going on that week.

Other Important Considerations


Before listing your place on Airbnb, you’ll first want to make sure that it’s okay for you to do so.  For example, if you live in a neighborhood with a homeowners’ association, then you might be required by their bylaws to get their written authorization.  

If you rent your space, then you’ll want to get the blessing of your landlord first since legally they are responsible for everything that happens on the property.


If your local area generally charges taxes for short-term rentals (such as a transient occupancy tax), then this is something you’ll want to be aware of up-front.  Otherwise, it can eat into your profits.  You should check with your local government to be sure.

Just like a hotel, you can usually pass this expense on to your guests.  This can be done on Airbnb as an additional item under Special Offers.  


Kevin is an ambitious entrepreneur that is obsessed with all things related to finance. From a young age, Kevin has always been involved with side hustles ranging from online selling to freelance work. Over the years, Kevin graduated from side hustles and started launching multiple online and offline businesses. Kevin is a serial entrepreneur who loves starting new businesses and exploring all things related to business and finance. He is constantly looking for new ways to save money, invest money, and create income streams.

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