How much money can be made from Airbnb?
Discussion
Bit of a can of worms, trying to figure out how much I need to plough into property to make 200k pa profit.
Reason that got me thinking was that I recently stayed in a £4m property for a weekend. The cost was somewhere around £3k. I'd have liked to have discussed business specifics with the owner, but it wasn't appropriate at the time.
What are your experiences?
Reason that got me thinking was that I recently stayed in a £4m property for a weekend. The cost was somewhere around £3k. I'd have liked to have discussed business specifics with the owner, but it wasn't appropriate at the time.
What are your experiences?
Definitely money in it somewhere. Currently staying in a 2 up 2 down house, bought for £125k last year, very light refurb. Letting for £90 per night. Booked for 12 days in August if Air BnB is to be believed.
I think getting enough occupancy is the challenge though.
I know nothing as an owner, just a user of Air BnBs.
I think getting enough occupancy is the challenge though.
I know nothing as an owner, just a user of Air BnBs.
I can make 15% pa on the S&P500. If profits from airbnb is less than that, then it's just not worth bothering with.
The property above would need to generate around £20k for it to be worthwhile. A 50% occupancy rate brings that to £18.75k. But how much of that is net profit?
Even at 100% occupancy, it would generate just under £33k.
My £125k @ 15% pa would generate £20k in the first year, and just over £23k in the second year due to compounding interest (yes, I know rates fluctuate).
But after 5 years it would generate £36.5k in interest, and after 10 years it will be almost £77k.
After 10 years with 100% occupancy rate, the total from your investment in property would be £330k. (not taking into account expenses and property value appreciation).
The total accrued from the S&P would be £555k.
Realistically, you're not going to get a 100% occupancy rate. But I don't know what the actual figure would be.
Which begs the question... assuming my maths is correct, why does anyone bother investing in property if greater gains are available in the S&P?
The property above would need to generate around £20k for it to be worthwhile. A 50% occupancy rate brings that to £18.75k. But how much of that is net profit?
Even at 100% occupancy, it would generate just under £33k.
My £125k @ 15% pa would generate £20k in the first year, and just over £23k in the second year due to compounding interest (yes, I know rates fluctuate).
But after 5 years it would generate £36.5k in interest, and after 10 years it will be almost £77k.
After 10 years with 100% occupancy rate, the total from your investment in property would be £330k. (not taking into account expenses and property value appreciation).
The total accrued from the S&P would be £555k.
Realistically, you're not going to get a 100% occupancy rate. But I don't know what the actual figure would be.
Which begs the question... assuming my maths is correct, why does anyone bother investing in property if greater gains are available in the S&P?
Edited by fasimew on Saturday 27th July 22:42
There is certainly money to be made in Airbnb type stuff if you choose wisely.
Friends have a cottage in Anglesey. They get a good return in terms of short term rental income, they have had capital appreciation and they get to use it.
I wouldn't do it, but they understand it and have an income producing asset they can enjoy as a couple and with friends.
Friends have a cottage in Anglesey. They get a good return in terms of short term rental income, they have had capital appreciation and they get to use it.
I wouldn't do it, but they understand it and have an income producing asset they can enjoy as a couple and with friends.
I know quite a few AirBnB owners and managing agents. Mainly around Liverpool and can see most are making more than BTL. Especially as they aim at contractors working on Anfield and Bramley Moor (Everton) stadiums. I`m on a lot of FB groups and the odd post comes up where the owner has secured a 6,12 or even 18mth contract and they`re huge.
However, I had one about 5yrs ago which we added to our portfolio, and found that if there`s any guest issues, it needs sorting there and then, no matter the time, as you don`t want a bad review or have to pay compensation.
You need to look at it as a job and not a passive investment. Especially if you want to run a few of them.
There`s loads of people offering and doing a rent to rent on BTL props, if they are the right size and in the right area. Eg near city centre landlord wants £1000mth rent for a large 3 bed house. The ABnB managing agents rents it, and refurbs the place, changing the front room into another bedroom and hires it out for up to 7 guests. Saves on the houses purchase and the LL gets guaranteed rent. Win/Win...until there`s not enough bookings to cover the rent!
However, I had one about 5yrs ago which we added to our portfolio, and found that if there`s any guest issues, it needs sorting there and then, no matter the time, as you don`t want a bad review or have to pay compensation.
You need to look at it as a job and not a passive investment. Especially if you want to run a few of them.
There`s loads of people offering and doing a rent to rent on BTL props, if they are the right size and in the right area. Eg near city centre landlord wants £1000mth rent for a large 3 bed house. The ABnB managing agents rents it, and refurbs the place, changing the front room into another bedroom and hires it out for up to 7 guests. Saves on the houses purchase and the LL gets guaranteed rent. Win/Win...until there`s not enough bookings to cover the rent!
fasimew said:
Bit of a can of worms, trying to figure out how much I need to plough into property to make 200k pa profit.
Reason that got me thinking was that I recently stayed in a £4m property for a weekend. The cost was somewhere around £3k. I'd have liked to have discussed business specifics with the owner, but it wasn't appropriate at the time.
What are your experiences?
A couple of bad reviews (which you have zero control over and cannot respond to if they are clued up on the time limitations) will pretty much kill your bookings and income.Reason that got me thinking was that I recently stayed in a £4m property for a weekend. The cost was somewhere around £3k. I'd have liked to have discussed business specifics with the owner, but it wasn't appropriate at the time.
What are your experiences?
I get the impression that the market got flooded during Covid restrictions?
A few places near me let out spare rooms, or built "summerhouses" in the back garden.
Plenty of strange cars parked on driveways during the summer of 2021 and 2022. Less last year. Nothing at all so far this year.
A few places near me let out spare rooms, or built "summerhouses" in the back garden.
Plenty of strange cars parked on driveways during the summer of 2021 and 2022. Less last year. Nothing at all so far this year.
My brother has a really lovely place in Devon - a little distance from the sea. It's the end of a three-way divided barn conversion with plenty of beds and lots of outdoor eating space. He has an impeccable review-record and used to fill-it so often he'd struggle to find occasions when he could go there himself. This year, although it is paying for itself (mortgage) the calendar is not full like it used to be. Obviously the property itself is appreciating so as long as the rentals pay for the mortgage and the changeover costs (which have gone up a lot recently) then he'll come out of it a winner.
I used to run a handful of conventional rentals but I wouldn't do that anymore. Whilst AirBnB isn't a money tree, it's probably the safest bet if you want to get into that sort of thing.
I used to run a handful of conventional rentals but I wouldn't do that anymore. Whilst AirBnB isn't a money tree, it's probably the safest bet if you want to get into that sort of thing.
fasimew said:
I can make 15% pa on the S&P500.
No, you can't. The average annualised return is a little over 10%. But leaving that aside, at least you don't have to run about changing the sheets and cleaning the toilets! Yes, a lot of money can be made out of Airbnb - and it's made by Airbnb, not their hosts.
Edinburgh City Council introduced short term let licences and apparently when they did there was an influx of apartments going on the market for sale. Might be BS but if there is any truth to it then if a few forms and £500-£1000 licence fee isn't worth the hassle then maybe not as lucrative as people think.
A friend of a friend of a friend has a cottage, nice and rural and makes a good amount from it but it's inherited so no mortgage. He used to deal with the bookings and running if it himself but that almost becomes a full-time job. Now uses a local letting agency but as they control the calendar, he now has to ask permission to use his own property. Obviously they get a percentage of the sale so want it leased out as much as possible.
Also, working in hotels, don't underestimate how entitled customers are. And they will also lift anything that isn't bolted down!
A friend of a friend of a friend has a cottage, nice and rural and makes a good amount from it but it's inherited so no mortgage. He used to deal with the bookings and running if it himself but that almost becomes a full-time job. Now uses a local letting agency but as they control the calendar, he now has to ask permission to use his own property. Obviously they get a percentage of the sale so want it leased out as much as possible.
Also, working in hotels, don't underestimate how entitled customers are. And they will also lift anything that isn't bolted down!
We've a holiday let, it's a bit of a niche property. We've owned it for a couple of years now, the first year it did considerably better than it will do this year in terms of profit as the mortgage was a lot lower before the interest rate rises.
That being said, we still do ok out of it, but it is very much more just as a bit of a wage top up, gives us a couple of holidays a year etc.
March-October it's busy, then November-February it does really tail off as we're in a seaside town, we alter the rate on it regularly dependent upon occupied we are.
As i said, it washes it's own face, pays the asset off & we make a bit out of it. We make more money holiday letting than we would do if we had a tennant in, but there is always the uncertainty of no bookings, thankfully to date, we've only had 1 bad guest (ironically on Xmas eve).
We managed to claim all of our costs back from ABB on that though.
We've met lots of interesting people from all around the globe from renting it out.
That being said, we still do ok out of it, but it is very much more just as a bit of a wage top up, gives us a couple of holidays a year etc.
March-October it's busy, then November-February it does really tail off as we're in a seaside town, we alter the rate on it regularly dependent upon occupied we are.
As i said, it washes it's own face, pays the asset off & we make a bit out of it. We make more money holiday letting than we would do if we had a tennant in, but there is always the uncertainty of no bookings, thankfully to date, we've only had 1 bad guest (ironically on Xmas eve).
We managed to claim all of our costs back from ABB on that though.
We've met lots of interesting people from all around the globe from renting it out.
Airbnb is simply 'serviced apartments', you are simply to mimic hotels with all sort of services. So where there is huge demand but low supply, and if you are familiar with the area it might make sense.
I have rented my flat in overseas (summer location) for two years through airbnb a few years ago. It definitely was not worth it, the amount of requests you receive from the guests were overwhelming. I think the trouble really, people think it is a hotel but they also want to negotiate as much as possible. I closed the airbnb side and started to rent it annually, which means I have less communication and demands. Returns are absolutely low, but this is again location specific, it is on sale at the moment, If I can sell it, will invest in a small property here in UK for student rentals.
I have rented my flat in overseas (summer location) for two years through airbnb a few years ago. It definitely was not worth it, the amount of requests you receive from the guests were overwhelming. I think the trouble really, people think it is a hotel but they also want to negotiate as much as possible. I closed the airbnb side and started to rent it annually, which means I have less communication and demands. Returns are absolutely low, but this is again location specific, it is on sale at the moment, If I can sell it, will invest in a small property here in UK for student rentals.
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