How to Earn Passive Income as an Airbnb Host

If you have thought of a Airbnb Host, America’s current economic woes may give you pause. And that’s understandable. As inflation concerns prompt people to make more frugal choices in their lives, it stands to reason that a luxury like travel could be left behind. But perhaps surprisingly, that doesn’t seem to be the case.

A recent poll by The Vacationer found that inflation or not, 80% of Americans are still planning summer trips this year. How does that compare to last year? At least 35 million more Americans are expected to travel this summer than last. After pandemic lockdowns and everything else people have had to endure in recent years, it doesn’t look like we plan to call vacations a luxury item any time soon.

This is great news for anyone thinking of getting into the vacation rental game. For many, however, their other big concern is how they would take the time to take care of that investment.

But what if you didn’t have to? Let’s consider what it takes to earn passive income as an Airbnb host.

Find a good property manager

If you’re thinking of owning a vacation property, you might cringe at the thought of handling things like renter queries, complaint calls, and keeping track of all the maintenance and repairs your property will need over time. With so many renters moving in and out of your vacation home every month, it really isn’t passive to keep it all moving.

A vacation rental manager can turn your Airbnb investment from a full-time job into the passive investment you’ve most likely been looking for. From organizing cleaning to handling tenant complaints and questions to ensuring maintenance and repairs are done properly, a property manager can keep your vacation property running smoothly, tenant for tenant.

While prices can vary widely, vacation rental owners charge an average of 25% to 30% of the rent. This compares to an average of 10% charged by long term rental property managers. The higher short-term rental rate makes sense given how much more demanding the much higher turnover makes this role.

Is it worth earning passive income as an Airbnb host?

According to short-term data analyzer AirDNA, vacation rental hosts made their highest-ever average annual revenue in 2021 at $56,000. That number is expected to fall by about 5% this year as supply increases and prices fall, but then stabilizes and sees another increase in 2023. And with recent polls suggesting that inflation and high gas prices are unlikely to affect American travel plans, it looks like those projections will withstand some pretty severe economic headwinds.

If you’ve avoided short-term rental investments because it sounds like a lot to take on, you’re not wrong. There are many moving parts that go into keeping a vacation rental afloat and ensuring happy guests and rave reviews. For this reason, an experienced, reputable vacation rental manager can be worth the fees they charge.

When you own or find a property that you think could make a fantastic vacation rental, do the math and see if hosting vacation rentals could be a worthwhile venture, even with a property manager on the payroll. You may find that Airbnb hosting can be a day at the beach after all.

Nell McPherson does not hold any of the shares mentioned. The Motley Fool has a position in and recommends Airbnb, Inc. The Motley Fool has a Disclosure Policy.