Are you dreaming of making money while you sleep through Airbnb? You’re not alone. Many people are drawn to Airbnb hosting with visions of easy passive income flowing into their bank accounts. But is Airbnb truly passive income? The reality might surprise you.
As of July 2025, odds are you joined Airbnb to make passive income from your property – but the question remains: how passive is it really? At Touch Stay, we’ve seen thousands of hosts navigate this journey, and today I’m going to share the unfiltered truth about Airbnb and passive income.
What Does “Passive Income” Actually Mean?
Before diving into Airbnb specifically let’s clarify what true passive income means
Passive income is money earned with minimal ongoing effort after an initial investment of time or money. Think stock dividends, royalties from a book, or a website that generates ad revenue while you’re off doing other things.
The key characteristic: once set up, it requires little to no daily involvement to maintain the income stream.
Is Airbnb Hosting Considered Passive Income?
The short answer? Not really – at least not in its purest form.
While Airbnb can certainly be profitable (with hosts in the US earning an average of £11,000 annually according to recent data), calling it completely “passive” stretches the definition
Here’s why
The Active Elements of Airbnb Hosting
When you host on Airbnb with your own property, you’re typically responsible for:
- Responding to booking inquiries (often within hours to maintain good response rates)
- Coordinating check-ins and check-outs
- Arranging cleaning between guests
- Restocking supplies and amenities
- Handling maintenance issues and emergencies
- Managing cancellations and special requests
- Responding to guest questions during their stay
- Leaving and responding to reviews
These tasks require active participation – hardly fitting the “set it and forget it” model of true passive income.
The Semi-Passive Potential
That said, Airbnb can become more passive with the right systems in place. Many successful hosts have found ways to minimize their active involvement by:
- Hiring property managers who handle day-to-day operations (typically for 15-25% of revenue)
- Using digital guidebooks like Touch Stay to reduce repetitive guest questions
- Employing cleaning services that handle turnover between guests
- Installing smart locks for self-check-in
- Setting up automated messaging for common communications
As Seth Sutherland, who co-hosts multiple properties, explains: “We spend about three hours a week managing five properties, making approximately $1,000 a month, peaking at $1,500 during summer.” That’s still some work, but much closer to semi-passive.
The Passive Income Spectrum: Where Does Airbnb Fall?
I think it’s helpful to view income sources on a spectrum rather than a binary passive/active classification:
| Income Type | Example | Level of Ongoing Effort |
|---|---|---|
| Truly Passive | Stock dividends, royalties | Almost none |
| Semi-Passive | Fully outsourced Airbnb property | Low (oversight only) |
| Semi-Active | Partially managed Airbnb property | Medium |
| Fully Active | DIY Airbnb hosting | High |
Most Airbnb hosting falls somewhere in the semi-active to semi-passive range, depending on your approach and systems.
5 Ways to Make Airbnb More Passive
If you’re determined to move your Airbnb business closer to the passive end of the spectrum, here are strategies that our most successful hosts implement:
1. Outsource Guest Communication
Guest communication can be one of the most time-consuming aspects of hosting. Consider:
- Hiring a virtual assistant to handle booking inquiries and guest messages
- Implementing a digital guidebook to answer common questions about the property and area
- Setting up automated messaging sequences for check-in instructions, wifi passwords, etc.
Pro tip: Touch Stay’s digital guidebooks have helped hosts reduce guest questions by up to 70%, making this aspect much more passive.
2. Automate Access
Nothing kills passivity faster than having to physically meet guests for check-ins. Instead:
- Install smart locks with unique codes for each guest
- Set up a lockbox system with clear instructions
- Consider a video doorbell for remote monitoring
3. Build a Reliable Cleaning Team
Turnover cleaning between guests is essential but doesn’t have to be your responsibility:
- Develop relationships with multiple cleaners for backup
- Use cleaning services that specialize in vacation rentals
- Set up digital cleaning checklists and automated scheduling
As Camilla Shipton found when she built her business managing 155 rental homes in Kent, England, having a reliable cleaning system is essential to scaling.
4. Hire a Co-Host or Property Manager
If you want to step back completely:
- Co-hosts can handle day-to-day operations for a percentage of revenue (typically 10-25%)
- Full-service property managers can take over everything for a higher fee (20-40%)
- Vacation rental management companies offer comprehensive services including marketing and revenue management
5. Systemize Your Property
Make your property itself more passive by:
- Installing durable, easy-to-clean furnishings
- Setting up preventative maintenance schedules
- Creating detailed SOPs (standard operating procedures) for all aspects of your operation
- Using smart home technology to monitor for issues remotely (water leaks, temperature problems, etc.)
The Harsh Reality: Why Airbnb Isn’t Completely Passive
Even with all these systems in place, some aspects of Airbnb hosting will always require attention:
1. Property Maintenance Issues
Appliances break. Plumbing leaks. Light bulbs burn out. And guests expect these problems to be solved quickly.
I had a host tell me once: “I thought I had a completely passive setup until the AC died during a 100-degree weekend with guests in the house. My property manager was out of town, and I spent two days on the phone with HVAC companies.”
2. Market Fluctuations
The short-term rental market changes constantly. Staying competitive requires:
- Regular pricing adjustments based on seasons and events
- Updating your listing photos and description periodically
- Monitoring competitor offerings and pricing
- Adapting to platform algorithm changes
3. Regulatory Changes
Cities and counties frequently update their rules around short-term rentals. Just when you think your system is perfect:
- New permits or licenses may be required
- Length-of-stay restrictions might change (like the 90-day rule in London)
- Additional safety requirements could be implemented
- Tax collection processes might be modified
4. Guest Issues
Some guest situations will inevitably require your attention:
- Complaints about property conditions
- Noise complaints from neighbors
- Guests who break house rules
- Emergency situations
Alternative Approaches to Airbnb Passive Income
If you’re committed to the passive income dream but wary of traditional Airbnb hosting, consider these alternatives:
1. Rental Arbitrage (with Management)
Rental arbitrage involves renting a property long-term and then subletting it on Airbnb (with landlord permission). Combined with a property management service, this can be more passive than owning.
2. Investing in Airbnb-Focused REITs or Companies
Rather than operating properties yourself, invest in companies that do. Some real estate investment trusts (REITs) focus on short-term rental properties.
3. Becoming a Silent Partner
Partner with an active Airbnb operator who needs capital but has the systems and time to manage properties. You provide funding; they handle operations.
4. Airbnb Stock Investment
The most passive option of all: simply invest in Airbnb’s publicly traded stock. While this won’t generate the returns of successful property hosting, it requires no operational involvement.
Real Talk: Is Airbnb Worth It As Semi-Passive Income?
Despite not being truly passive, many hosts find Airbnb worthwhile as a semi-passive income stream. Here’s why:
- Higher returns compared to traditional long-term rentals (when managed effectively)
- Property availability for personal use during off-peak times
- Tax benefits specific to short-term rentals
- Scalability potential once systems are established
- Portfolio diversification beyond traditional investments
My Personal Experience with Airbnb “Passive” Income
We started with one property in 2019, doing everything ourselves. It was exhausting! After three months of running ourselves ragged, we hired a cleaner and set up a digital guidebook with Touch Stay.
The difference was night and day. Our time commitment dropped from 15+ hours per week to about 5. We added a second property, then a third, each time refining our systems.
Today, we manage five properties with about 3-4 hours of work weekly – mostly oversight and occasional problem-solving. Is it 100% passive? No. But the income-to-effort ratio is excellent, and it feels passive enough most days.
The Bottom Line on Airbnb as Passive Income
Airbnb can be a lucrative income stream that becomes increasingly passive as you implement systems and outsource tasks. However, calling it truly passive income is misleading.
A more accurate description would be “semi-passive income with higher returns than many passive investments but requiring periodic intervention and oversight.”
If you’re looking for complete passivity, traditional investments like index funds might be a better fit. But if you’re willing to put in some upfront work creating systems and can handle occasional involvement, Airbnb can become passive enough to fit comfortably alongside other pursuits.
Frequently Asked Questions
How much can I realistically earn through Airbnb?
Earnings vary dramatically by location, property type, and management approach. While the average US host earns around £11,000 annually (approximately $14,000 USD), hosts in tourist hotspots like Hawaii can earn upwards of $73,000 annually.
What percentage does Airbnb take from my earnings?
Airbnb typically charges hosts a service fee of 3-5% per booking, deducted from your payout. Guests pay a separate fee of up to 14.2%.
What’s the minimum startup cost to begin earning on Airbnb?
If you already own a property, startup costs can be as low as furnishing a spare room. Without property ownership, rental arbitrage typically requires first and last month’s rent plus security deposit (often $3,000-10,000 depending on location).
How long before an Airbnb property becomes profitable?
Most properties reach profitability within 3-6 months, assuming appropriate pricing and occupancy rates. However, if you’ve purchased property specifically for Airbnb, the timeline to recoup your investment is typically 5-10 years.
Remember, while Airbnb might not be entirely passive income, with the right systems and expectations, it can become passive enough to provide financial freedom while maintaining your sanity. The key is automation, delegation, and creating processes that minimize your required involvement.
Airbnb Active vs. Passive Involvement
One of the classifications the IRS makes when it looks at how you earned your income is “passive” or “active”. Active income implies you materially participated in the production of your income. Passive income implies you didnt materially participate in the production of your income. You may be wondering why does this matter? Well, if you are engaged in rental activities determining if your rental income is passive or active will have an implication on what IRS schedules you file, what taxes you are subject to, and how much loss you are able to deduct. Take a look at our diagram to better understand this concept.
Roger rents a room in his house on Airbnb for for an average of 3 days per reservation. He is an attentive host but he does not provide any substantial services to his guests. Rodgers activity would be considered rental, and he would report his rental activities on Schedule E. Since Rodger rents his property on a short-term basis, his rental losses on Schedule E cannot exceed his rental income.
Kelly rents a room in her house on Airbnb for an average of 3 days per reservation. During her guests stay, Kelly provides regular maid service and cooks all of their meals. Kellys activity would be considered business and she would report her activities on Schedule C. Since Kelly is deemed to be operating a business, rather than a rental, Kelly would not be subject to passive loss rules but she would have to pay 15.3% self employment tax on her business income.
Pat owns a second home that he rents on an annual lease to a long-term tenant. Pat makes repair and maintenance decisions, drafts rental terms, finds and approves his tenants, and overall is very involved in managing his property. Pats activity would be considered rental, and he would report his rental activities on Schedule E. Since he rents his property on a long-term basis and is actively involved, he can deduct up to $25,000 of rental losses on Schedule E.
Jack owns a second home that he rents on an annual lease to a long-term tenant. Jack is a busy guy so he has an agent and a management company handle the majority of the decision making for his rental property. Since Jack would not be considered actively involved, he would only be able to deduct his rental expenses to the extent he has rental income on his Schedule E.
Karen is a real estate agent who has a second home that she rents through Airbnb for an average of 2 days per reservation. Karen is very active in managing her rental and makes all decisions regarding the property. Further, she is spends at least 100 hours during the year managing her short-term rental, and nobody works more than her. Since Karen is a real estate professional and meets one of the requirements for material participation, she is eligible to deduct up to $25,000 of losses from her rental property, regardless of how much income or lack thereof her property generates.