This was the question I googled over and over when we were considering purchasing our first cabin, “is running an Airbnb profitable?” and so today I’m sharing my free Airbnb calculator spreadsheet.
When we were first starting out, I didn’t just want to know the expenses to expect, taxes, and general info that Airdna shows you about average booking nights and rates. I wanted to crunch numbers and know if I could make this dream into a viable business so we could go all in on this cabin dream of ours.
To do this at the level we wanted to, it was going to be a lot of blood, sweat, and tears (literally) and I wanted to know, would it be worth it? Today I’m sharing our personal Airbnb calculator spreadsheet to get to the bottom of this question in the hopes that it will help you more easily answer this question than it was for us when we were first starting out.
Is running an Airbnb business profitable?
The answer of course is: it depends. But unlike alllll the other blogs out there that seem to dance around this question, my aim is to dive deep and help you get your answer. There are so many variables to that question that no blog post or guru is going to be able to give you the answer. Where you’re located, how often you’ll rent out the place, at what rate, what the purchase price of your property was, what your taxes are, costs to run your business, and so on. You’re just going to have to roll up your sleeves and calculate this yourself. You ready?
What is my goal in starting an Airbnb?
I like to take a step back before talking numbers and get to the heart of why you’re investigating starting this business. Are you interested in a vacation home and looking for a way to fund that dream? Simply looking for equity and break even each year? Dreaming a bit bigger and dreaming of multiple locations, leaving that day job, and making an actual salary for your work? This answer is important because your spreadsheet will need to look different depending on the answer and that’s going to play a huge role in what you can afford, what properties you look at, and what makes sense for your family. I outlined the 3 questions to ask yourself if you’re dreaming of starting an Airbnb business that you can journal through right here.
What numbers do I need to know to calculate my Airbnb profit projection?
Ok, do you have a property you’ve been eyeing up and wondering if it’s going to fit with that dream you outlined above? We need to start with some research. We used a site called AirDNA which will tell you what you can expect for potential revenue, occupancy rate, the performance of your market, and more. This is going to help you get accurate information instead of guessing when it comes time to plug in numbers in the next step. I also simply like to check out all the properties on Airbnb for the area we’re considering buying. What’s their average nightly rate? How booked do they look currently, how about next quarter? Get a pulse on your area, and your competition and start to gain insight into what to expect.
What you’re looking for: Are there seasons to take into account? For example, our cabins book 100% in summer, however, we typically expect 30 – 40% occupancy rates in winter. Similarly, our rates are different based on the demand of the season and time of year. You’ll also want to start to estimate a nightly rate and how that number might change.
Next, it’s time to compile your mortgage payment inputs and expenses. You’ll need to estimate a loan start date, purchase price, downpayment amount, closing costs, and loan rate. It’s ok if these are estimates at this point, we’re not aiming to get exact number yet – simply seeing if the property we’re looking at is a viable option based on the vacation rental market in your area and what you can expect to pay for the property.
Finally you’ll need estimates for monthly utilities (electric, gas, phone, internet), home repairs or renovations you’re looking to do, if you’re going to use a property manager, etc.
Have all your estimated numbers? Great, it’s time for the next step.
Airbnb Calculator Spreadsheet: How much can you make on Airbnb?
Time to crunch your own numbers! As a reminder, this is simply an estimate so don’t stress too much about the exact numbers. At this stage we are seeing if this is a viable purchase and estimating what you can expect. Download my free Airbnb profit calculator spreadsheet below and let’s get started.
Once you’ve got your hands on the free Airbnb profit calculator, fill in the following numbers.
In the “Mortgage Payment Inputs” section you’re going to estimate:
Loan start date, purchase price, downpayment, closing costs, loan amount, interest rate, and loan term.
Next under the “Rental Rate and Expense Inputs” section, enter a nightly rate that you hope to get in your prime season. The calculator will adjust for seasonality in the next section.
Finally, fill out an estimated occupancy rate based on a percentage. Again, these are numbers that Airdna will tell you. If your property is in a seasonal area (aka people come mostly in summer at the lake or winter to ski) adjust that information in the “Seasonal pricing adj” column so that the calculator will adjust your nightly rate accordingly.
Is Airbnb actually profitable for hosts?
Now is the fun part, click on the 2nd tab and you’ll see your estimated profit mapped out per year. Where’d you land? This calculator has been eerily close to actual numbers as we’ve added 4 cabins in the last 5 years and it’s my bible when it comes to considering if another property is going to make sense. The spreadsheet also maps out your annual return on cash invested, ROI on your property, an annual return (aka the PROFIT) and annual return percentage.
I hope this process was helpful and sheds some light on what you can expect in this new business venture!
How to run a profitable Airbnb
If you’re wondering how to double that number (aka increase both your occupancy rate and your nightly rate) check out my free guide 10 Strategies for a Wildly Successful Vacation Rental Business.