Why You Should NOT Maximize Your Airbnb Unit Profit

Full time Airbnb rentrepreneurs should not try to maximize per unit profit, but should maximize profit per hour instead.

profit per unit

Profits Per Hour of Hosting

As a rentrepreneur, you’re going to have a difficult time building a portfolio of full time units if the amount of time required of you per unit scales linearly as you add more units.

You only have so many hours in your day.  If adding a 2nd unit doubles your time, you should instead look for ways to leverage your time and free it up so you can actually add more units.

Yes, freeing up time can mean giving up some of the profits to pay other people to perform what you could do yourselves.  But if you value your time, you’ll quickly see why it makes sense.

Cleaning Example

Let’s say on average you get about 8 bookings a month for a unit.  That means check outs and cleaning sessions.  If you’re paying $60 for the cleaning, that’s $480 a month of cleaning fees.  You’re pulling in $1000 net of cleaning fees so if you did your own cleaning, you’d make close to $1480 instead.

How much time does it take for you to complete each check out and cleaning including commute?  2 hours? 4 hours?  Let’s say total cleaning time is 3 hours per session including commute.  That’s 24 hours total for the 8 sessions, or about $20 an hour of your time.

How what if you have two units? Or three units?  At some point, it’s not sustainable.  But consider that without the 24 hours of cleaning, you spend only 12 hours of communicating and booking for that same unit for that same month.

Your $1000 profit at 12 hours of time is about $83/hour.   So instead of spending the 24 hours to clean to save $20/hour, you’re actually forgoing the opportunity to manage two other similar units with the time you saved to make an additional $2000 in profit at $83/hour.

 


So, would you rather save $480 or make $2000?  Do not look at profit dollars alone.  Always look at your profit dollars in relation to the time you spend in total to manage your units.  Aim to maximize your profit/hour and not profit/unit.


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2 Comments

  1. Tony Smith
    January 27, 2019
  2. Karen
    July 11, 2019

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