Airbnb Startup Costs: How Much You Should Really Budget
As avid travelers and experienced Airbnb Superhosts, we know how exciting–and overwhelming–starting your own Airbnb can feel.
With the short-term rental industry booming, diving into this entrepreneurial journey is an incredible opportunity, but it does come with its challenges.
That’s where we come in!
We’re here to guide you through the process, starting with a breakdown of all the Airbnb startup costs as you begin from scratch. Let’s explore the nitty-gritty of turning your hosting dream into a thriving rental business.
Airbnb Startup Costs
*Disclaimer: Some of the links in this post are affiliate links. This means if you click on the link and purchase the item, I will receive an affiliate commission at no cost to you. All opinions remain my own.
Purchasing a Home
The first expense to consider when entering the Airbnb business is the cost to purchase a home. If you do not already own a rental property, this will likely be your greatest expense.
Most lenders require 20% down when purchasing a home for rental property use. These loans also come with a higher interest rate than loans obtained for a personal residence.
In addition to your downpayment, you will need to consider all closing costs and any renovations needed to get the home rent-ready. Airbnb guests will expect their accommodations to be in excellent condition with all utilities functioning properly.
Furniture and Supplies
Budgeting for Furnishings
The cost of furnishing and decorating an Airbnb can vary greatly.
Opt for high-quality, durable items that can handle the inevitable wear and tear of guest use. While it may be tempting to splurge on designer pieces, they’re not the best investment for a rental property, as occasional damage is simply part of the business.
Here’s a very rough estimate of what you should budget for quality furnishings:
- 1 Bedroom Home: 7k-10k
- 2 Bedroom Home: 12k-15k
- 3 Bedroom Home: 20k-25k
- 4+ Bedroom Home: 30k+
For our 1,300 sq. ft., 3-bedroom, 1-bathroom rental we spent right around $20,000 to fully furnish and stock the home with all the essentials.
Stocking the Essentials
Don’t forget, setting up your Airbnb goes beyond just purchasing furniture–you’ll also need to stock the kitchen and bathrooms with everything a guest might need for a comfortable stay.
Additionally, providing consumable supplies like shampoo, body wash, paper towels, laundry detergent, and even snacks can elevate your guest experience. These thoughtful touches not only enhance their stay but also help you earn those coveted five star reviews and fill your calendar!
For our rental, we spend around $50 per month on these consumables.
Looking for inspiration to make your space stand out? Check out our guide to Airbnb bedroom decor for tips on creating a welcoming and stylish retreat.
Licensing
Your will need to check your state and city ordinances for the requirements to obtain a short-term rental license in your area. Certain cities are tightening the restrictions on short-term rentals and you will want to be aware of these ordinances before investing in an Airbnb.
Here in Oklahoma, short-term rental licenses typically run several hundred dollars and need to be renewed yearly.
Services
You may consider what services you will need to hire out as you prepare your home for guests.
Examples include a professional photographer, interior designer, contractor, or a handyman to assemble furniture. Some hosts also choose to invest in a social media manager to assist in marketing their short-term rental. These services may not be required if you are willing to do the work yourself.
If you only hire out one service, I highly recommend investing in quality professional photography for your listing photos. It is worth its weight in gold–I promise!
Recurring Expenses
This concludes the up-front cost to start an Airbnb, however don’t forget about the recurring expenses. These include but are not limited to:
- Mortgage
- Short-term rental insurance (which is pricier than traditional homeowners insurance)
- Property taxes
- Occupancy/ Hotel taxes
- All utilities (gas, electric, internet, tv, etc.)
- Cleaning after every guest
- Lawn care
- Dynamic pricing tool (we recommend using PriceLabs)
- Routine maintenance
- Re-stocking consumable supplies
- Repairs or other emergency expenses
- HOA or condo association fees
Ways to Reduce Your Airbnb Startup Costs
With a little creativity and sweat equity, there are many ways to reduce your VRBO or Airbnb startup costs.
1. Choose a Smaller Property
Start by simply renting out a room in your personal home.
Alternatively, if you wish to purchase an investment property, choose a smaller home which will have a more affordable mortgage and will cost less to furnish.
Smaller homes also have lower utilities and maintenance costs.
2. Purchase Second-Hand Furnishings and Decor
Saving money on furnishings and decor is easy when you shop second-hand!
There are great deals to be found at garage sales, resale shops, and on Facebook Marketplace. Look for clean, high-quality items that will stand the test of time and add character to your space.
Dining sets and couches are great high-ticket items to buy used, while you will want to purchase items like mattresses and linens brand new.
Not only is buying second-hand budget-friendly, but it’s also a sustainable way to furnish your rental beautifully.
3. Choose a Home in an Affordable Area
Another way to reduce expenses is to choose a home in a low cost-of-living area.
These locations will provide you will lower mortgages and taxes, as well as less expensive services such as lawn care, cleaning, and maintenance.
4. Shop Around
Shopping around is key to finding the best deals and providers for essentials like short-term rental insurance to protect your investment, reliable internet for your guests, and a professional cleaning crew to keep your property spotless.
Comparing options for maintenance services and even local amenities like landscaping can also help you streamline operations while staying budget-friendly.
Don’t forget–cheaper isn’t always the best option.
Take the time to research and compare the highest-rated options for the best cost. This will save you time and money in the long run.
5. Do it Yourself
Finally, take a DIY approach when setting up your Airbnb.
Assembling furniture, painting and tackling other handyman jobs yourself can save you money and stretch your budget further.
Common Mistakes for First-Time Airbnb Hosts
Many first-time hosts make avoidable mistakes that can impact their success.
One of the biggest is skimping on professional photography–trust me, high-quality photos are a game changer when it comes to attracting guests!
Another thing to watch out for is making sure any used furniture is in great shape. No stains or tears, just like new!
It’s also easy to underestimate expenses, so it’s important to budget for all the little things that add up, like utilities and supplies.
Lastly, don’t skip great interior design. Make your space feel cozy and inviting with extras like wall art, curtains, and decorative touches. These little details go along way in making guests feel at home and coming back for more.
Return on Investment
It is important to calculate the ROI (return on investment) before you start your Airbnb, so you know your projected profits.
The first step is to estimate your potential income. Look at comparable Airbnb listings in the area–pay attention to their nightly rates, occupancy rates and how much they’re earning monthly. You can even use tools like AirDNA to get more accurate estimates based on location and property type.
Once you have an idea of what you might earn, add that to your total estimated expenses, which should include the costs listed above.
To calculate your ROI, subtract your expenses from your estimated income, divide that by your total expenses, and multiply by 100.
This will give you a solid idea of how much profit you can expect to make compared to what you’ll invest.
Financially Preparing for your Airbnb Business
Before taking the leap into short-term rentals, it’s crucial to grasp the full scope of the associated expenses.
As you can see, Airbnb startup costs can vary greatly depending on the location, size of the property, and furnishings you choose. It is always helpful to plan some wiggle-room in your budget for unexpected costs that are sure to arise.
We hope this guide helps you have a realistic understanding of potential expenses, setting you up for a successful and exciting Airbnb business!
Sign Up as an Airbnb Host
Use our link to sign-up as an Airbnb host, and you will get a $40 bonus! This also gives us a referral bonus which we greatly appreciate!
Click here to sign up as an Airbnb host!
Explore more Airbnb resources:
How to Get More Airbnb Bookings for a Full Calendar
Airbnb Bedroom Ideas: Tips from a Superhost
How to Get 5-Star Reviews Every Time
