It’s time to update you on my Airbnb experiment. As you may remember, at the beginning of the year, I dedicated a 2-bd 1-ba apartment to this experiment to publicly compare my method of how to make money on Airbnb to traditional landlording.
Well, we’re eight months into the experiment and I’m beating the “traditional landlord” baseline.
I would have earned $6,800 if I had rented this unit at the $850 market rate for eight months ($6,800 = $850 x 8). And as the table below shows, I’ve earned $7,715 operating as a short term rental.
This means I’m $915 more profitable operating this short term rental.
$7,715 – $6,800 = $915
And my family can really use an extra $915; that’s real money to us. How about you?
Even though I paid myself for the extra management time and reinvested a total of $359 …
“I’ve earned 9 months of rent in only 8 months.”
How To Make Money on Airbnb:
Reinvesting Profits and Raising Rates
A fellow Airbnb Landlord grabbed me by the shoulders and shook me (well sort of). He wasn’t shy about suggesting that I upgrade my furnishings if I really wanted to make money on Airbnb. And I agreed; I’m not in testing phase anymore.
So I spent $200 on IKEA desks and TV stand and spent $45 on a stylish shower curtain. In August, I invested $50 to have new photos taken; I want to show off the upgrades in my online listings.
But with upgrades comes price increases – right! I raised my prices from $79 to $89 per night. I’m guessing I’ll be able to earn back my investment in six months or so.
My next investment will be to add some wall art. Artwork goes a long way in helping people pick your place over someone else’s. It’s an essential tip for making money with airbnb. My goal was to decorate after I upgraded safety and usability issues – so it’s now time for the fun stuff.
“Beautiful artwork helps you get bookings. Safety and functionality help you get 5-star reviews.”
I got good reviews even before upgrading the unit. People said they were surprised that the unit was so nice and so affordable. What I heard was that my prices were too low.
I was aiming for $1,450 per month. I was mentally stuck referencing the $850 monthly market rate instead of comparing my two-bedroom unit to a comparable hotel suite.
I’m now charging $1,850 per month without complaint. That’s a lot better than my $850 per month baseline!
My local Government Services Administration long-term housing rate should have been my guide. For Sacramento, California that rate is:
$112 per night x 30 days per month x 0.55 = $1,848 per month
That’s spot on from my experience. So, although I’m beating my baseline, I could have made a lot more money on Airbnb if I would have raise my prices sooner. Live and learn right?!
Want to Make More Money with Your Rental?
Are you ready to use the internet to keep your short term rental booked? If so you could easily earn a net income that’s 130% more than a traditional landlord within 12 months. Pick up my course on how to make money with Airbnb to get started. I’ll guide you though the whole process and get you banking more money (without learning curve headaches) in no time.
If you found this page on how to make money with airbnb interesting then take a look at some of my other articles that focus on increasing rental profits through airbnb:
- The Overwhelming Benefits of Long Term Airbnb Rentals
- My Airbnb Landlord Experiement
- Corporate Housing Rentals
- Tips on how to remodel a rental property