How Much Money Can You Make From Renting Out Your Home?

If you’re interested in a side gig that potentially brings in tens of thousands of dollars each year, renting out your vacation home is the way to go. Property rental websites like VRBO (Vacation Rental By Owner) and AirBnb have boomed in popularity as travelers demand more from their vacations.

The “free” hot breakfast and on-site restaurant simply aren’t making the must-have amenities list anymore. These alternative lodging websites are now two of the top choices for vacationers, connecting travelers to property owners hoping to rent out their homes for extra cash.

The appeal of having the luxuries of home – but in an awesome city – pulls travelers to the 2 million rentals on VRBO, and the 5 million on AirBnb.

If you want to make some serious cash with a side gig, renting out your vacation home is the way to go. Before you start researching whether VRBO or AirBnb is better, decide how you want to rent your space. Your answer will likely help guide which platform is better suited for your property.

How Much Space Do You Want to Offer?

The main difference between VRBO and AirBnb is the types of spaces that can be offered on each site.

• VRBO: Only entire homes are offered for rent on the site. So if you’re not willing to give up the whole condo, cabin, or beach house, this isn’t the platform for you. This restriction gives your guests comfort in knowing they won’t be sharing the property when they arrive.
• AirBnb: Don’t mind sharing your space or want to rent to travelers who are up for renting just a room? AirBnb is the place to be.  AirBnb owners can rent out their entire home or offer up a single room.

How Much Can You Make on Vacation Rental Sites?

There are a number of factors that go into how much you can make by listing your property on VRBO or AirBnb. While some vacation property owners rake in more than $10,000 per month, renting out a single room can still help you bank a few hundred dollars each month.

Those who list their property on AirBnb bring in an average of $11,000 per year, while VRBO owners make an average of $28,000 annually. Before you list, it’s important to understand the fees you’ll pay to place your vacation home on each platform.

VRBO & AirBnb Fees

• VRBO Fees: Owners can opt into a VRBO subscription or a pay-per-booking model.
  • The VRBO subscription requires each owner to pay a $499 yearly subscription fee and a 3% processing credit card fee. For owners who rent their property for at least 6 weeks out of the year, this model works best.
  • VRBO’s pay-per-booking model allows you to skip the subscription fee, but you’ll pay 5% for each booking made through VRBO as well as the 3% credit card fee.
• AirBnb Fees: A pay-per-booking fee of 3% is charged for each reservation made on AirBnb.

In general, AirBnb attracts visitors looking for a short stay or weekend trip, while VRBO caters to those planning a week-long vacation or new city experience.

What Determines My Vacation Home Rental Revenue?

Even after you decide how much of your home you want to rent out and which vacation rental platform is best, there are outside factors that play into your revenue potential. When you price your vacation home, consider these elements:

• Area events (Concerts, festivals, sporting events)
• Amenities you offer
• Location, location, location (VRBO traditionally does better in vacation destination areas)
• Local taxes
• Personal usage
• Regulatory considerations
• Seasonality
• Self-managing vs. hiring a property manager
• Vacation rental competition
• Wear and tear, plus the cost of maintenance

 

Make More Money from Your Vacation Rental Property

If you want to make more than the yearly average of a typical vacation rental owner, you need to implement a strong strategy for how you’ll screen renters, accept payment, and set property policies. When you have the right procedures in place, your property will bring in top dollar. Here’s how to do it.

• Screen renters: You wouldn’t let just anyone into your home if you were there, so you should be even more vigilant about who has access to your property when you won’t be home. Speak with potential renters on the phone, not just via email, to determine if your home is right for their trip and if you’re comfortable with the guest.
• Establish a rental agreement: A clearly written rental agreement establishes expectations for you and the guest. The document should include the rental period, pet policy, occupancy limits, and rental and incidental fees. You and the renter should sign and receive a copy of the agreement.
• Request deposit: Allowing guests to pay for the rental upon arrival leaves you at risk for a no-show. Require a 25% deposit to book the room and the remainder of the amount with enough time for the payment to clear before handing over the keys.
• Meet in person: Even if the guest pays in full before arrival, don’t send the keys in the mail or leave them in a pick-up location. Meet the guest who booked the home and introduce yourself. This not only allows you to confirm the person who is staying in the home is in fact the person who booked the rental, but it also allows you to spot any potential challenges like unexpected pets.
• Enhance the experience: Not only should everything in the home be in working order, but offering custom luxuries—like clean linens, toiletries, and a welcome basket—will enhance the guest’s stay. The more the guest enjoys their rental experience, the more 5-star reviews you gain. Owning a top-ranked property on the rental website means your rental property value increases.

Price Your Property Well

Avoid vacancies in your vacation home rental by pricing the property well. Consider the size, amenities, and location of the home, and study other vacation options available to travelers. A price that’s too low will make it hard to get your money’s worth, but over-pricing the home means the property will stay empty. Airbnb makes this part a bit easier with Smart Pricing, which sets the rental price based on a number of factors, such as time of year, and location.

There are also a number of tools out there to help hosts with things like set up (HappyHost) and pricing (Beyond Pricing).

Use your vacation rental as a side gig revenue when you know where to list, how much to ask, and how to feature the home’s best assets. Consider how much of your home you’re willing to rent and put the proper procedures in place to attract quality guests to keep your vacation rental full—maxing out your side hustle income.