How to make money on Airbnb

By Judy J. Beasley Last updated Jan 13, 2023

Opinions expressed by Entrepreneur the contributors are theirs.

Invest in real estate is good for people who want to grow their money. And that is because with real estate investments, you can buy property and use it to earn more. Now, there are many ways to use an acquired property for profit. But maybe the ones that are gaining popularity are short term rentals to Airbnb.

But what is Airbnb?

If you’re an avid vacationer, you’ve probably heard of the app that can connect you with people who will let you stay on their property for a while. This application, called “Air Bed and Breakfastor Airbnb, was started by two industrial designers who moved to San Francisco in 2008.

They couldn’t afford the rent for their apartment during this time, so they decided to earn a bit more by letting people who couldn’t find hotels temporarily rent their accommodation. And long story short, their strategy became a huge success as it expanded to a huge network of 4 million hosts worldwide. And until today, their platform continues to create more opportunities for hosts and real estate investors in general.

Long-term or short-term rental

Real estate investments include real estate rentals, and there are two main ways to earn income from them: Long term rentals and Short term rentals. When I started as a real estate investor in 2012, all of my properties were long term rentals. But in 2017, I transferred them all to short-term projects, mostly through Airbnb.

Why? There are a lot of factors that made me decide to go all-in with Airbnb:

1. You make less money on long-term rentals.

Did you know that when done correctly, you can make an average monthly profit of $2,000 on Airbnb? Of course, many things must be considered to arrive at this number. Moreover, you can earn less or more than this amount each month.

But the thing is, with Airbnb short-term rentals, you can determine your price and no one else has a say. You can’t do that with traditional long-term rentals. With long-term rental, you can only set a fixed amount and increase your rent by 3% to 5% per year.

2. You have greater obligations as a landlord.

There are several things to consider when hosting a long term rental, and one of them is that your tenants can never deep clean or make repairs to your property. The reason is simple: they won’t stay there forever. Ultimately, the onus is always on your shoulders.

Another fact to mention is that you won’t be able to easily evict your tenants. Now the stipulations change from city to city and state to state, but usually after 30 days of stay, your guests acquire certain rights.

Example: in 2020, the government adopted a Eviction moratorium where landlords are not allowed to evict their tenants for non-payment. This has of course been useful for many tenants across the country. But now some landlords still owe thousands of dollars in back rent, and they may never have the chance to sue them again.

3. With Airbnb short-term rentals, you don’t have to work as an employee.

Short term rentals are passive in the wild, which means if you have a property, you can still win even if you’re not there. Add this to Airbnb’s online platform and your market potential expands.

But here’s the thing: you can still get caught up in working around the clock to manage your ad. Fortunately, there is a way to build a system and create a team that runs the business on your behalf. We use this innovative business model with Airbnb, which has since accelerated our cash flow and delivered phenomenal growth.

4. You don’t need to buy properties to get started.

If you know cash flow goals for long-term rentals, you’ve probably heard that the goal is to earn $200 per unit per month. That’s all well and good, but if you’re trying to replace a job that earns you $5,000/month, that income won’t do you much good. You still need to have at least 25 units to get there.

So what you can do instead is buy a few units, give them a nightly rate, and launch them on the platform to start getting reservations and collect your returns faster.

But what if you don’t own any properties and still want to do Airbnb? Well, all you have to do is apply the Arbitration model.

The arbitration model, also called sublet, is where you rent properties to other owners, get their written permission, and then list their property as a short-term rental on Airbnb. Yes, this strategy is perfectly legal and allows you to start a business without buying properties.

Are there other ways to start an Airbnb, even if you don’t own properties?

Yes. Besides subletting, there are two other ways to start an Airbnb business without a lot of capital.

1. Co-hosting

With the co-hosting strategy, you don’t have to buy or own properties because all you have to do is manage and help hosts manage their listings. This method allows you to learn more about the company and earn.

2. Use of OPM (other people’s money)

A balance transfer involves transferring the money available on your credit card to your checking account. You can then use that money to sublet a property and start your own Airbnb business without using any of your money.

Airbnb is a great platform for real estate investors. Its innovative business model will allow you to create positive cash flow, get started even if you don’t own properties yet, and enjoy the time, location, and financial freedom that most people only dream of.