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I’m struggling with calculating how to ensure that my property is going to make enough money to cover my costs and make some profit before I list it on Airbnb. I currently rent it out on a long term basis and am not sure if it will make the same amount of money or more on Airbnb….
There’s lots of airbnb management companies out there who will just send a basic figure; for example, you can charge £170 per night and you’ll get 80% occupancy. I am never satisfied with that kind of a response because the base price will vary depending on the month and the amount of people staying in the property.
In order to ensure that my property is going to make enough money before I list it I need to work out an estimate of how much income the property will make over the year, in order to do this I feel I need to calculate the base price for different periods in the year; for example the price will be very different in Jan than it will be in Aug, plus I need to calculate how much I will be charging if different people will be staying at my place as my property can sleep between 1 to 8 people, on top of this I need to figure out how often 8 people will stay vs how often 6 people will stay vs how often 5 people will stay etc, as the price will change each time.
I hope that makes sense?
I do not mind paying a company or an individual to work out an accurate estimate of how much I could make per year for my property if they show me a process of how they did it.
The first thing to do is to work out your costs. Remember to include everything. (Laundry, wear & tear, utilities, cleaning costs, your time answering enquiries/questions.)
Add to that the costs of any legal requirements such as insurance, licences and TOT. Also any other costs of owning your home such as mortgage payments, property taxes. HOA fees etc. Add contingency amounts for wear and tear that you’ll get from having guests such as plumbing costs, repairs, broken windows, replacing linens/towels,
Once you know exactly how much it costs you to maintain the property for one year then you’ll know how much you need to make to break even. (I would add about $5000 per year for contingencies that you have’t thought of.)
Divide the total amount by the number of days you are available to host. For example, some people will say 365 days a year, others will say 200 because of other commitments.
Then extensively research what other hosts in your area are charging for similar properties. If you reckon that you need to make $100 a night from your listing and others are charging $50 then it’s not going to work.
To the valuable advice provided by Jaquo, in addition to researching what the nearby competition is charging, you need to check their calendars and see the volume of days rented per month and the months which are most/least profitable.
