Airbnb.com claims that people who rent out their spare rooms in New York City make an average of $21,000 a year. Sounds impressive, right? Imagine what you could do with an extra $21,000 annually!

But before you sign up, consider what you might need to sacrifice to earn that cash. Are you okay with giving up some privacy? What about the extra laundry and cleaning you’d need to do?

The amount you can earn from renting out a room heavily depends on various factors, with location being the most critical. Is there a college nearby? A major company with lots of entry-level jobs? Are you close to a big city or good public transportation? If you’re in a remote area with the nearest employer 10 miles away, finding a tenant might be tougher.

However, don’t lose hope—you can always rent to tourists. Is there a tourist attraction nearby? A nice park? Are you conveniently located near a highway? You could market your place as a perfect stopover for travelers.

Start by checking out local ads in places like your supermarket, community hall, or Craigslist. Compare what you have to offer with what’s currently available. Look at the “wanted” section to see what people are looking for and how much they’re willing to pay. If you have a quality offering, you’ll find interested renters.

Personally, I rent out three bedrooms in my apartment to different people. My rates are slightly higher than average, but I include utilities like electricity and broadband, so there are no surprise bills. Plus, I’m located right in the city center, and people are willing to pay extra for this convenience.

The same logic applies to short-term rentals. If you provide good value, you can set higher prices. Decide whether you prefer short-term or long-term rentals. Each has its pros and cons. Long-term renters can provide a steady monthly income, but you’ll share your kitchen and bathroom and might deal with noisy or messy roommates. Short-term rentals might bring in more money per night, but you’ll have to handle more frequent cleaning and guest preparations, including giving the same welcoming speech about local attractions and how to use the appliances.

Your earnings will ultimately depend on how well you market your place. I charge about $600 per room per month, earning $7200 per year. I’ve also tried short-term rentals when I was on holiday and might consider it again if I move to a more attractive location. But for now, I don’t think it would work in my current city.