How Much Does an Airbnb Start-Up Cost? (2024 Guide)

Highlights

• The cost to start up an Airbnb typically ranges from $3,900 to $30,000, with a national average cost of $6,000.
• The exact cost to start an Airbnb depends on factors such as the size and type of the home, the amount of host fees, mortgage and property tax payments, short-term rental insurance premiums, utility bills, maintenance costs, and cleaning fees.
• Becoming an Airbnb host has numerous benefits, including a source of passive income, potential tax advantages, investment diversification, and flexibility.
• Hosts can reduce their Airbnb start-up costs by initially renting a room in their home, keeping their furniture budget low, shopping around for insurance, and keeping on top of regular maintenance.

Ready to become an Airbnb host? See how much you can earn on Airbnb.

For those who are new to hosting through a vacation rental site, starting an Airbnb business can seem like a great form of passive income. Hosts don’t need to go to the property every day, the vast majority of the work can be managed online or through cleaning and maintenance services, and in some cases the properties can practically rent themselves. The best Airbnb rentals are simple and straightforward, but part of what makes those listings easy to book and manage is a solid start-up plan and careful planning before listing. Airbnb host costs when starting up vary widely—between $3,900 and $30,000 on average—but that range includes everything from buying new hand towels to hiring a cleaning service or performing major renovations to the property. Understanding the various supplies, products, fees, and services that are necessary to begin renting out a property on Airbnb will make it easier for a host to construct an accurate budget and get off to a good start. Making an Airbnb start-up checklist to keep track of regulations to check, expenses to consider, and pitfalls to watch for will make the process smoother for the host as well.

Key Cost Factors

Those wondering how to become an Airbnb host need to know that the first requirement is having a home that other people might be willing to pay to rent. Airbnb supports all kinds of rentals, including shared-home and whole-home rentals. But creating a successful rental property involves furnishings, amenities, services, and other elements that make the space attractive to renters and easy to manage. There’s a lot more expense involved than many people realize when becoming an Airbnb host.

Ready to become an Airbnb host? See how much you can earn on Airbnb.

Home Size and Type

The size of the property affects almost everything else about the Airbnb cost and profits. Larger homes can house more guests and be priced higher. However, they also incur higher charges for furnishing, cleaning, and repairs, and they cost more in taxes and insurance. Beyond the size of the home, the type of property can also affect the cost and the rate the host can charge for it. Airbnb facilitates rentals of all kinds of homes, including mansions, cabins, off-the-grid spaces, container homes, and tiny homes. Unsurprisingly, the cost of furnishing a small treehouse will be less than the cost to furnish a mansion. Permit costs and licensing fees may also vary for homes of different sizes and those that have unusual styles. Permits and licensing may also vary in cost based on whether the whole home is offered as a rental versus part of a home, a shared home, or an individual room.

Host Fees

The cost to list on Airbnb, surprisingly, is nothing. The way Airbnb works is that hosts are not charged to list their property; they are only charged a fee when a guest books their property. Airbnb charges a service fee for every booking to cover the cost of its listing and booking service along with customer support. The fee can be paid in two different ways: split fee or host-only. For a split-fee listing, the host pays a much lower percentage of the cost and the guest pays the rest. Usually, in a split-fee listing, the host pays 3 percent of the booking subtotal and the guest pays the remainder, which is normally less than 14.2 percent of the booking subtotal. This is a financially beneficial option for the host, because the cost is shared and the guest can see the charge on their subtotal prior to booking, so there’s nothing underhanded about the shared cost. The other option is a host-only service fee, where the host pays the entire amount. Airbnb fees for hosts usually fall between 14 and 18 percent of the booking subtotal. Why would a host choose not to split the cost? Guests may feel that listings with a host-only fee indicate that the host is taking responsibility for the fees associated with their listing and appreciate the gesture. Also, host-only service fees make the cost of the listing lower, so the listing may be more appealing to guests.

Mortgage and Property Taxes

The cost of a mortgage payment and property taxes applies to almost anyone who owns a home. However, if a host is considering purchasing a property to rent out in addition to their primary residence, they’ll need to consider the additional mortgage cost, state and local property taxes, and homeowners insurance required by the mortgage lender. Paying the mortgage and covering the property taxes are basic costs that the host will have to cover regardless of whether they have guests.

Short-Term Rental Insurance

When any guests stay in a home, there’s a potential for damage to the property. When those guests are strangers who have paid for their accommodation and are staying in a private home, that chance is increased. Some guests may not take care of the property the way they would if they knew the owners well and were staying for free. While Airbnb does provide some insurance coverage, hosts may want to consider purchasing extra short-term rental insurance to make certain they’re protected. Prices vary, but it’s generally more expensive than standard homeowners insurance.

Utilities

It’s important for a host to factor utilities into an Airbnb budget. First, if utilities are not already connected, hosts can expect to pay for the hookup for electrical service, water and sewer, gas, oil, internet access and Wi-Fi, streaming services, and possibly telephone service. They can plan on the monthly bills for those services, but they’ll want to be generous in the estimates—guests won’t be concerned about the utility bills when cranking up the heat or AC, or when taking long, luxurious showers, so the bills may be a bit higher than normal.

Maintenance

Another factor to include when starting an Airbnb is the cost of maintaining whole-home services, repairing normal wear and tear, and repairing appliances and other items. Hosts will also want to include the cost of lawn and garden maintenance, tree trimming, snow removal, and general property maintenance. Typical home maintenance estimates are based on the home being occupied by people who know the home’s quirks and eccentricities, and hosts anticipate residents who have a vested interest in caring for the home. While some guests will treat an Airbnb more carefully than their own homes, others will not. Hosts can consider purchasing a policy from one of the best home warranty companies (such as American Home Shield or AFC Home Club) to protect against any surprise maintenance needs or system failures of the main home systems and appliances.

Cleaning Fees

Many Airbnb hosts hire one of the best cleaning services (such as The Maids or Merry Maids) to clean the home in between guests. Some hosts save on this service by taking on the task themselves, but that can quickly turn into a scheduling nightmare, making the cost of professional house cleaning well worth it. Hosts can negotiate costs based on how often and how quickly they need their unit cleaned, as well as any other services included, such as laundry or the occasional deep cleaning. Airbnb allows hosts to set a cleaning fee for each listing, which the guests pay and Airbnb passes on to the host through their payout, which means the cash passes through to the host to pay the cleaners. If the host chooses to completely cover their cleaning cost via this fee, then the regular cleaning services aren’t a budget line item. Some hosts prefer to undercut the cleaning fee somewhat to make the cost of the rental a little lower and make the listing more attractive, while others set the fee at the full price of the cleaning service. Aside from the regular cleaning after each guest departure, hosts may want to budget for deep cleans periodically through the year. They may also want to schedule a deep cleaning before the listing photos are taken so the property looks spotless to guests shopping for a rental.

Additional Costs and Considerations

Mortgages, maintenance, taxes and fees, and cleaning costs are Airbnb expenses that every host can expect to pay. But there are other budget items that some hosts may need to consider when they begin planning and researching their Airbnb listing.

Ready to become an Airbnb host? See how much you can earn on Airbnb.

Renovations

Not all properties need to be renovated prior to listing. However, it’s important to consider what sort of experience the host wants to provide to guests, not to mention what the guests renting at the desired price point will expect. If a home is in reasonably good shape, cleaning it up for listing could simply involve fresh paint and some new furnishings. If the property looks dated and unkempt, however, the host can choose to either list it at a significantly lower price point or spend money up front to renovate the property and set a higher price. New bathrooms, new flooring, and new kitchens are common choices prior to listing. Adding windows or creating additional living spaces or bedrooms can also be well worth the cost. Renters won’t pay top dollar for listings that look gloomy and old, so investing in renovations will allow hosts to charge higher rental fees that will help cover the costs of the renovations.

Permits

Each state and municipality has its own policy on short-term rentals. Some areas have banned them completely, so it’s important for an aspiring Airbnb host to check on those ordinances before undertaking any other projects. Hosts can inquire at the city or town licensing and permit office to learn the requirements, in addition to the rules and regulations associated with owning an Airbnb in the area. The costs vary widely by region and individual town or city government. Some states also have permit requirements, so it’s critical for a host to check with the state as well. Many areas that require permits require that the permits be renewed annually, so this is not necessarily a one-time expense. If that’s the case, hosts will want to add the recurring fee to the budget.

Property Management Fees

For hosts who are handy and live nearby, basic maintenance and repairs are easy to handle. Remote owners, however, will need to hire assistance to manage the property. This could be a local, trusted handyman who the host can call to repair small things like a stuck window or broken tile. For an additional fee, that handyman might also be willing to serve as a de facto contractor to coordinate plumbers, electricians, and other repair and maintenance contractors as needed. However, many hosts find it preferable and more economical to hire a property management company to handle these types of jobs. A company will be on call all the time, will have a list of trusted repairmen and service contractors to call on when necessary, and can handle problems efficiently. The cost of handing off this portion of the host’s responsibilities is worthwhile to many hosts, especially those who don’t live close to their rental property or who have a full-time job that makes their time less flexible. For hosts who have a property to rent and are interested in additional income but not in the day-to-day handling of an Airbnb listing, Airbnb management companies have sprung up around the country to take the work of hosting off their hands. The best Airbnb management companies can handle as much or as little of the process as the host desires. They can take care of everything, starting with the selection and purchase of the property, and then handle the other details, including listing decisions, taking photos, staging, hiring cleaning services and maintenance services, and managing booking and payment. Or, if the host prefers, the company can manage select aspects of the property. These companies are also a great option for hosts who have many properties to manage. The professionals can manage all the details for a percentage of the host’s income or a flat management fee.

Furniture and Supplies

Meeting guest expectations is an important component of retaining a high rating on Airbnb. This means the furniture needs to be fresh, comfortable, and appropriate to the style of the unit. The kitchen, bathroom, and bedrooms need to be stocked with linens and supplies, and the home needs to be ready to be occupied. This can be a significant cost at the outset; after the Airbnb is up and running, the furniture will need to be replaced periodically, and supplies will need to be replenished and replaced more frequently. “Determine who your ideal guest is and market to that demographic,” advises Tina Crockett, former Airbnb Superhost and owner of Lake Norman, North Carolina–based Elevated Elements, a short-term rental design company. “We considered the type of experience we wanted our guests to have. The goal was to provide a luxury or 5-star experience, so the amenities we offered had to be at that level: quality linens, better mattresses, and unexpected touches like handheld body massagers and luxury bath products to use.” Crockett’s experience demonstrates that the provisions in the Airbnb rental don’t have to be expensive, but they do have to meet the needs of the ideal clientele, the style of the unit, and the intended experience the host wants the guests to have.

Pricing Tool Subscription

How does a new Airbnb host decide how much to charge per night? Consulting with a management company and looking at comparable rentals nearby can help, but many new and experienced hosts use a pricing tool. These apps or programs collect data on all of the rentals in the area, collect the data on the host’s rental, and spin the comparable properties and their rates around to produce an ideal forecasted rate. But pricing an Airbnb isn’t a static number; prices change seasonally, around holidays and major events in nearby cities, and in response to the ebb and flow of demand. A pricing tool subscription buys access to this data—pulled from Airbnb rentals and the best Airbnb alternatives (like Vrbo)—and offers suggested rates, which makes it easier to set the right nightly rate. Some subscriptions also include information about nearby occupancy rates, so a host can drop their price if there’s low occupancy and everyone else is priced high, or raise their rates if nearby properties are booked solid due to a local event. Prices on these subscriptions vary based on the number of services they provide, but they remove a lot of the stress involved in making pricing choices and can significantly increase the income for a host.

Homeowners or Condo Association Fee

If the host’s property has a homeowners association (HOA) or condo owners association, they may need to pay a monthly or annual fee to the association. In some cases, this fee may offset other costs, such as outdoor maintenance, lawn care, and physical repairs to the building and systems. The fee may also provide access to amenities that will be attractive to guests, such as swimming pools, clubhouses, and restaurants. This recurring cost is critical to include in the budget, because forgetting to pay the fee can create difficulties. It’s also important to note that belonging to an HOA or condo association can come with rules that affect rental properties. Some may not allow short-term rentals at all. Others may have Airbnb host requirements about the minimum or maximum length of stay, the total number of rentals, or the number of guests. The associations are also very likely to have regulations governing the exterior appearance of the property and the parking situation. Hosts will want to make sure they’re familiar with all of these rules and regulations to avoid fines for violations.

Benefits of Becoming an Airbnb Host

Is the Airbnb start-up cost worth it? With some costs reaching as much as $30,000, it’s a reasonable question. And for would-be hosts who need the income from an Airbnb to get by, even the lower end of the average range of start-up costs could seem prohibitive. However, hosting on Airbnb has quite a few benefits beyond the obvious.

Ready to become an Airbnb host? See how much you can earn on Airbnb.

Passive Income

Once a host gets the hang of pricing and managing their rental and has hired reliable cleaning services and maintenance contractors, the income generated from an Airbnb is largely hands-off. A well-managed property has a higher likelihood of being booked frequently, which can lead to almost-guaranteed income when the payout comes from Airbnb. While hosting requires some attention and effort, it doesn’t require a daily physical presence or hours and hours of work every week.

Tax Advantages

Is Airbnb start-up cost tax deductible? Not exactly, but there are several ways for hosts to minimize their tax liability. First, if the home is rented out for 14 days or fewer during a calendar year, the owner won’t need to pay taxes on that rental income. However, since most Airbnbs are rented out for more than 2 weeks a year, this likely won’t apply. Many of the costs and expenses associated with a rental property can be written off as tax deductions. These expenses can include mortgage interest, insurance, repair and maintenance costs, property taxes, legal fees, and credit card interest on purchases specifically related to the short-term rental. Of course, to take advantage of these tax breaks, hosts will need to keep meticulous records and carefully work their way through tax forms or hire a tax professional to assist. Keeping an Airbnb start-up cost spreadsheet from the beginning is an excellent way to track costs and keep good tax records, and once started, it’s easy to continue as the Airbnb business matures. Airbnb tax breaks can offer significant savings and increase the profit margin from the property.

Investment Diversification

Financial advisers often tout the benefits of having a diverse portfolio of savings and investment accounts, including a 401(k), Roth IRA, mutual funds, stocks, and bonds. Having diversified investments with varied levels of risk can help make sure that market variations don’t wipe out all of the host’s earnings. While a short-term rental property isn’t a market-based account, it’s still an investment in real property with a value that can increase or decrease with the real estate market. Purchasing a property with the intent of renting it through Airbnb can be an effective way to store assets in an additional market while using that investment to earn more income through rental profits.

Flexibility

For hosts who plan to manage their own properties, hosting an Airbnb offers a great deal of flexibility in terms of when and how long they need to spend handling the workload. One or two properties can easily be managed alongside a regular full-time job, while hosts who own many properties will need more hours to manage the workload—but they can decide what those hours are. Want to go on vacation with the family? Block out those days so there won’t be guests to check in or problems to handle. Need a little extra cash for the holidays? Open up the listing for a few extra nights around an event or holiday. As an Airbnb host, there’s flexibility in deciding how to use time.

How to Save Money

Airbnb hosts have many decisions to make when they’re first getting started, and some of those can directly affect the amount of money they’ll need to lay out to get their listing going. Some areas can’t be shortchanged, such as the cleanliness of the property or the basic household supplies, but there are quite a few ways to save at the beginning of the process.

• Start small. Hosts can start out by renting out a room or a portion of their primary residence while they get the hang of the rental business. This will allow them to make sure they’re happy hosting before investing more cash.
• Do your research. Hosts will want to be aware of any and all local and state regulations, licensing requirements, permits, and fees that might be necessary so they’re not surprised at the last minute.
• Shop around for insurance. A host can work with their current homeowners insurance company to see if it offers short-term rental coverage; often companies will offer discounts for bundling multiple policies.
• Budget low for furnishings. If appropriate for the market in which the property will be rented, hosts can opt for furnishings that are comfortable, durable, and attractive but not overly expensive. They can also consider purchasing most of the furnishings from the same store to take advantage of discounts on multiroom purchases.
• Keep up with home repairs and maintenance. Staying ahead of maintenance can help keep emergency costs down.
• Choose a longer minimum stay. Longer stays mean fewer cleanings and less laundry services, which can keep costs lower at first.
• Buy in bulk. For consumable supplies such as paper products, nonperishables like coffee and creamer, and other items that will need to be replaced frequently, hosts can look for good deals and then buy in bulk.
• Hire a property management company. Although it’s an additional expense, a property management company can save hosts time and money in the long run as they can help set up, market, and manage the listing while the host learns about the process to avoid costly mistakes.

Questions to Ask

New hosts will almost certainly have many questions as they begin making decisions about listing. The challenge with becoming an Airbnb host is that there are as many questions that hosts need to ask themselves as there are questions that require expert knowledge, and both are important.

Questions for hosts to ask themselves:

• Who will my ideal guests be, and what kind of experience will they want?
• How much time and effort can I afford to put into maintaining the listing?
• What are my financial goals?
• How often do I want to host?
• Do I want to outsource?
• How can I make my listing stand out from the competition?

Questions for hosts to ask an expert:

• What local and state regulations do I need to know about? What permits do I need?
• What challenges do other Airbnb owners in the area face?
• How can I set the per-night rate of my rental correctly?

FAQs

There are many decisions for hosts to make when starting an Airbnb listing. Doing plenty of research and asking lots of questions can help make the answers clearer and the process smoother. The following are some common questions about Airbnb start-up costs, as well as their answers, to help aspiring hosts get started.

Article Sources

ProjectionHub, ZipRecruiter, Little Hotelier