A Year in Airbnb: My Profits, Lessons Learned, and Tips for Success

After hosting a new Airbnb for a year, I’m eager to share a comprehensive look at my experience. From revenue and expenses to insights on what works and what doesn’t, this blog post is packed with valuable information for anyone considering starting their own Airbnb. Let’s dive deep into my journey in Chicago and explore the ins and outs of Airbnb hosting!

The Power of Location—But Not in the Way You Think

My Airbnb is strategically located between key tourist attractions in Chicago and O'Hare Airport. This central positioning makes it appealing to travelers looking for convenience. While many believe that exotic or prime locations are necessary for success, my experience has shown that it’s more about how you market your space and manage your listing.

My three-bedroom, one-bath apartment spans about 950 square feet. I invested around $35,000 in renovations, which included a full overhaul of the kitchen and bathroom. As someone who isn’t particularly handy, I focused primarily on demolition and painting, hiring professionals for the more technical work. This approach not only saved costs but also allowed me to add personal touches that make the space feel warm and inviting.

Breaking Down Revenue

Over the past year, my Airbnb generated a total revenue of $42,200. Here’s how that breaks down:

• Airbnb Bookings: Approximately $35,000, which makes up about 84% of total revenue.

• Vrbo Bookings: The remaining revenue came from Vrbo, illustrating that while both platforms are valuable, Airbnb was the clear leader for my property.

I was surprised by how dominant Airbnb was in my revenue stream. Initially, I assumed it would be more evenly split—perhaps 60% Airbnb and 40% Vrbo. However, this discrepancy emphasizes the importance of choosing the right platform based on your local market dynamics.

A Deep Dive into Expenses

Understanding expenses is crucial for any Airbnb host. Here’s a detailed look at mine:

• Furnishings: I spent around $4,700 on furniture. Since most of this was a one-time setup cost, it won’t be a recurring expense in the future. I made sure to invest in durable and appealing furniture to attract guests and enhance their experience.

• Cleanings: Cleaning costs were another significant expense. I had 37 cleanings throughout the year, which is relatively low, especially since many guests stayed for 4 to 10 days. Targeting medium to long-term tenants helped me minimize cleaning frequency and costs. Each cleaning cost me $106 and is automated through the Turno Cleaning app.

• Utilities: Utilities were an ongoing cost, which I anticipated and planned for. I upgraded my utilities early on to allow for higher pricing and better guest experiences.

Above shows all the expenses in the year, along with the one-time furniture charges.

Above picture, excludes the initial one-time costs. My expected ongoing expenses per month should stabilize around $300. This will consist primarily of utilities and cleaning fees moving forward.

Analyzing Profitability

After accounting for all expenses, my profit for the year stood at $28,500. If I exclude the initial furniture setup, I anticipate my profits going forward to be around $33,300 annually. This is a significant return, especially when compared to the $21,000 I could earn from renting the unit long-term. The difference of nearly $12,000 clearly illustrates the financial benefits of Airbnb hosting.

Above is the monthly breakdown of revenue and expenses.

Above is the monthly P&L breakdown of revenue and all the various category expenses.

I initial didn't add in the mortgage (along with property taxes, insurance, and interest) because there's two other units in the building, but that's also a large part of the Airbnb's costs. The monthly mortgage payment for the entire building with interest is $2,116.07/mo, home insurance $151.96/mo, and $542.44/mo for property taxes. So in total it comes out to $2,810.47/mo. Since it's three units, divide by three for the Airbnb's portion and it comes out to $936.82/mo. Which would mean the total profit from the Airbnb comes out to $1,813.09/mo or $21,757.08/year.

Comparative Analysis: Airbnb vs. Long-Term Rentals

For perspective, I compared my Airbnb profits with what I would earn from a traditional long-term rental. If I were to rent my apartment for $1,750 per month, it would yield $21,000 annually. In contrast, hosting on Airbnb allowed me to earn an additional $12,000. Given the relatively low effort required for the returns, I firmly believe that Airbnb hosting is worth the investment, especially since I’ve implemented various automation strategies to make it more hands-off.

Strategies for Maximizing Airbnb Profits

Throughout my year as a host, I discovered several key strategies for increasing profitability:

1. Enhance Curb Appeal: Simple upgrades—like fresh paint and appealing landscaping—make a strong first impression and can significantly affect bookings.

2. Professional Photography: High-quality photos are essential. They highlight your space and attract more potential guests. Investing in professional photography pays off in increased bookings.

3. Amenities Matter: Adding thoughtful amenities, such as outdoor games, a grill, and kitchen essentials, creates a welcoming environment that encourages guests to leave positive reviews and return.

4. Automate Pricing: Utilizing pricing automation tools can help optimize your rates based on demand, ensuring you maximize earnings without constant manual adjustments.

5. Market to Longer Stays: By targeting medium to long-term tenants, I reduced the frequency of cleanings and wear on the property, making management much easier.

6. Engage with Guests: Excellent communication can enhance guest experience, leading to better reviews and repeat bookings.

The Future of My Airbnb

Looking ahead, I’m excited to continue hosting and refining my approach. I plan to keep enhancing the property and exploring additional marketing strategies to reach a broader audience. I’m also considering expanding my portfolio by acquiring more properties in similar markets, leveraging the lessons I’ve learned so far.

If you’re considering starting an Airbnb or want to dive deeper into specific strategies, feel free to reach out in the comments! I’m happy to share my knowledge and help others navigate this rewarding venture.

Thanks for reading! If you found this blog post valuable, please share it with others who might benefit. Here’s to a successful journey in Airbnb hosting!

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