Because each investment is unique, there’s no quick answer to this question. But in high-demand areas, the nightly cost of an Airbnb can lead to higher profits.
For instance, let’s say you want to rent out a one-bedroom apartment in Los Angeles. As of February 2024, the average monthly cost of that apartment is $2,078, meaning you could make roughly $25,000 if your tenant signs a 12-month lease. But short-term bookings are able to charge more per night, which means you could make more.
According to the Los Angeles Times, the average daily rate for an Airbnb in Los Angeles was $244 in 2023, with the average rental occupied more than 40% of the time. This means you could make over $35,000 off of your Airbnb – a pretty significant $10,000 more than you would through traditional renting. Airbnb also charges renters a maintenance fee, which means you may save on necessary repairs.
Still, when considering the potential for a higher profit through Airbnb, you must also consider the key differences between these types of rental properties and how those differences will impact your wallet.
Unique Expenses Of An Airbnb Investment
Managing an Airbnb involves several unique expenses you should consider, including:
- Furnishing and decorating the property
- Maintenance
- Utilities
- Amenities such as streaming services and Wi-Fi
- Potentially different, more expensive home insurance
