With Airbnb now having approximately 650,000 hosts worldwide and more than two million guests/night in its rentals, it might be timely for agents to discuss house hacking with their potential buyers. After all, earnings on a 2-bedroom listing generate an average profit of $20,619/year. Is there a potential buyer of any age who would scoff at a yearly profit of $20,000 from passive income?
Several websites have calculated the financial potential of house hacking via Airbnb. SmartAsset determined that Airbnb hosts could cover more than 70% of their rent by using the average occupancy/room rates for their specific cities. Hosts in cities such as Dallas, San Diego, Philadelphia and Chicago could cover more than 90% of their average rent by using city specific occupancy/room rates. Priceonomics estimated that an average Airbnb host could make anywhere from $925/month to $10,000/month based upon location. The company also found multi-property hosts earning $100,000/year.
Airbnb hosts use their passive income in a variety of ways. Some pay off their student debt. Others pay down their mortgage balances or refinance their mortgages for better terms. Some hosts buy additional properties in order to generate more passive income from house hacking. And other hosts pay/save for their retirement.
Financially savvy investors appreciate the great income opportunity with Airbnb, the greater upside potential and less effort required than traditional hosting. After all, Airbnb handles the listing, advertises the availability, provides hosts with guest profiles and arranges for safe, upfront payment. The company also mitigates property damage risk by making available liability coverage up to $1M.
Entrepreneurial hosts have begun ancillary businesses to and income streams from Airbnb to supplement their finances. In an article in Forbes Magazine, pick and shovel purveyors of Airbnb were described as those offering consulting for hosts, monthly how-to webinars for hosts, property management for hosts, calendar updating, kiosks in cafes for key exchanges, tax compliance, data analytics and cleaning services.
To sweeten the Airbnb pie even more, financial institutions are now recognizing Airbnb host income in their income calculations. QuickenLoans, Better.com and Citizens Bank offer refinance programs that account host income so hosts can pull equity from their homes and/or get lower interest rates.
Remind potential buyers too that house hacking also opens opportunities for social/friendship connections, partnerships and travel. Who knows? Your potential buyers might host guests living half way around the world who click. The possibilities are endless.