Determining How Much You Can Make Renting Your Property on Airbnb

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Investing in a rental property is a dream for many Americans because of the long-term benefits it provides. Finding tenants is vital in this process, as you’ll need to earn monthly rental income to make the investment worthwhile.

Homeowners are increasingly making their rentals available to short-term tenants through platforms like Airbnb. The gist is that renters will stay in your home for a few days, a week, a month, or another predetermined amount of time, similar to a hotel room, at which point they leave, and you’re free to rent it out again.

Airbnb can be a lucrative option for homeowners because they can charge premium prices during the high season. How much can you make on Airbnb? This guide looks at all the variables that go into answering that question and examines some of the benefits of listing your property on a short-term rental platform. 

Reasons to List Your Home on Airbnb

Airbnb has over six million listings worldwide, so many people use this service to market their rental properties to short-term tenants. Learning about the benefits of renting your property in this manner can assist you as you decide if it’s right for you. Some of the main reasons to rent your home on Airbnb include the following:

Greater Control

The property never becomes the tenant’s full-time home when you list it on Airbnb, giving you more control over it. You won’t have to worry about evicting long-term tenants who stop paying rent or damage the unit because each renter will only be there for a few days or weeks. You also won’t have to worry about collecting rent because the renter pays through the platform beforehand.

Increased Income

It’s possible to earn significant income by listing on Airbnb. The downside is that you won’t have guaranteed rental income every month like you would with a long-term rental, but a short-term unit in a prime location has the potential to be highly lucrative in Washington, DC.

More Flexibility

Short-term rentals give you more flexibility because you don’t have to rent the property out through the platform continually. It’s possible to block specific dates on Airbnb if you don’t want to welcome guests at that time, making it easier to schedule renovations or allow family members to use the property. You can also block out dates if you’ll be away and won’t have time to deal with renters.

These benefits are worth considering while deciding what to do with your rental property. It’s worth noting that short-term rentals can take significant work and expense to get them set up and ready for your guests, and there is some risk involved in the process.

Seven Factors Influencing How Much You Can Make on Airbnb

Renting on Airbnb might sound straightforward, but there are various expenses you’ll need to factor in when figuring out how much money you can earn. These variables will influence your decision to list on a short-term rental platform. Some factors to keep in mind include the following:

1. Airbnb Fees

Airbnb lets you list your property for free, but you’ll pay a host fee every time you rent the unit. Most hosts pay 3% of the booking subtotal, which includes the nightly rate, cleaning fee, and additional guest fee. You’ll need to factor these fees into the equation when figuring out how much you stand to earn.

2. Mortgage Payments

Your monthly mortgage payments will heavily influence your profitability as an Airbnb host. You’ll need to earn enough to cover these payments to keep your investment on track. The rental property will ideally create monthly cash flow for you, as well.

3. Heating and Electricity

The rental property’s heating and electric bills are sometimes overlooked but can hinder your ability to turn a profit. Short-term guests could be likelier to leave lights on or crank the air conditioning because they don’t have to worry about paying the bill. 

4. Cleaning and Maintenance

Cleaning and maintenance are vital to your success as an Airbnb host. Some property owners handle these jobs themselves, but it can get overwhelming if your property becomes popular because you could be there cleaning every few days. Hiring a property management firm to assist with these jobs eases your workload and saves you significant time, but it also eats into your profits.

5. Insurance Premiums

Airbnb’s AirCover for Hosts offers up to $1 million in liability coverage and $3 million in damage protections. This program isn’t an insurance policy, though, as you’ll have to file a claim with evidence through Airbnb and hope you receive reimbursement for the damage. Many hosts opt for a specialized short-term rental policy for additional protection from the risks, but that will cost you some extra money.

6. Property Location

The location of your Airbnb rental will significantly influence the money you stand to make. Washington, D.C., vacationers typically value short-term rentals downtown or near the U.S. Capitol because they can walk to most of the city’s main attractions. Vacation rentals in those areas will fetch higher rates than houses in the suburbs or less central parts of the city.

7. Property Type

The type of property you’re renting will also influence your income. You can charge more for a whole house with a yard than an apartment, but these full-sized units might also sit empty for extended periods because of their cost. It’ll take some math to determine how many weeks per year you’ll need to rent your home to turn a profit, which can help you choose the right property type to purchase.

There’s no guarantee listing your home on Airbnb is right for you, as various factors influence how much you’ll earn. You’ll also have to determine how passive you want your rental home income to be when deciding the best way to use it.

Property Management Assistance

The main issues with listing your home on Airbnb are the lack of guaranteed income and the cleaning and maintenance the property will likely require. It’s possible to alleviate these problems, however, by seeking long-term tenants and hiring a professional property management firm to handle all the day-to-day work.

Nomadic Real Estate offers property management services in the metro D.C. area. We’ll list your home, vet applicants, deal with onboarding and turnover, and handle all the repairs and maintenance to help ensure your investment pays off. Contact Nomadic Real Estate for more information on hiring a property manager in D.C.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

Owner Portal Reports
  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

Enhanced Rent Roll Report
  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

Unit Comparison Report
  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

Income Statement by Month Report
  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

Owner Portal Documents
  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

Owner Portal Property Statement

You'll also find a month-over-month operating statement:

Month over Month Statement

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

Commincation Dashboard Screenshot
  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Owner Portal New Message Screenshot

Responses will show up in the conversation ticket:

Portal Conversation Response Screenshot
  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Owner Portal Comment

Each conversation will be logged in its entirety:

Portal Conversation Snapshot

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

Owner Ledger Dates
  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

Ledger Property Column
  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

Owner Ledger Description Column
  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

Owner Ledger Amount Column
  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

Owner Ledger Account Balance Column
  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

PW Portal Filters

View a snapshot of income and expenses on your dashboard:

PW Owner Dashboard View

See every transaction in real-time on your ledger:

Owner Portal Ledger View

Statements and forms will be posted to your documents library:

Owner Portal Document Library

View a suite of real-time financial reports:

Portal Reports View

See a running list of all bills, and drill down for more detail:

Owner Portal Bills View

Under Bill Details, you'll find dates/descriptions/amounts and more:

Portal Bill Details

You can also communicate with your Account Manager through the portal:

Owner Portal Communication Tools

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

Net Distribution

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.