The vacation rental market has, without a doubt, created new opportunities to make money in real estate. Millions of properties are now offered via short-term rental sites and more travelers seem to choose them over hotels. However, besides being lucrative, this is also one of the most competitive and ever-changing markets that you can enter if you’re looking to turn a profit as a real estate investor. The vacation rental industry is frequently evolving and changing, especially with the continuous rise of companies like Airbnb. Still, many investors today are confident that Airbnb real estate investing will help them build wealth over the long-term.
Whether you’re already investing in Airbnb rentals or planning to enter the market in 2020, you must be on top of emerging Airbnb market trends and challenges. This knowledge will help you keep pace with the growing Airbnb real estate business, stay competitive among other hosts, and become a significant player in this industry. So what are the most important trends for Airbnb real estate investing in 2020? Keep reading to learn six emerging Airbnb industry trends that both current and future hosts should be aware of to achieve success from buying and owning an Airbnb rental property.
#1. Guests’ Expectations Are Greater
As the demand for short-term rental properties has increased over the past years, so has the level of expectations – i.e. what guests tend to expect from a vacation rental. The first thing you need to know is that today’s travelers have high expectations. They don’t request just necessary accommodations like housekeeping and toiletries (these are often taken for granted). They also expect free Wi-Fi, free television, pool service, arrival and departure flexibility, and the list goes on. Offering such services means you’re just what the average Airbnb guest is looking for. And if you don’t, the odds of you attracting many potential guests to your Airbnb investment property become weaker.
Moreover, in today’s competitive Airbnb real estate investing business and the millions of vacation rentals to choose from, guests expect high-quality listings. Besides safety, cleanliness, and entertainment, they’re also looking for memorable experiences and Instagram-able backdrops. And to ensure those expectations are met, they do more research than ever before. They look at online photos, read reviews, and check that prospective rentals include the necessary amenities they’re looking for. In addition, just like they would book a hotel, they expect to be able to book the vacation rental property instantly and easily online. For an Airbnb investor, making money from owning an Airbnb rental property heavily relies on meeting these expectations.
#2. Family Vacations Are on the Rise
Millennial families are an emerging group in the travel and vacation rental industry. And studies revealed that generation Alpha (those born after 2010 and the children of millennials) is influencing this trend. One study by Expedia Group shows that the number of families who travel with their children has increased. On a global average, travelers with generation Alpha children are taking more than three family trips a year. This tells you that family travelers are not only a growing segment in 2020, but they are also a segment that is worth considering for Airbnb real estate investing. For those investing in Airbnb, this consequently tells you that demand for spacious short-term rental properties is increasing as well. One tip if you’re thinking of buying an Airbnb property is to consider buying a single-family home rental.
Another trend regarding family travelers that Airbnb hosts should know is that nothing matters to them more than keeping their family happy and entertained. This is another example of how experience beats expenses for Airbnb guests in 2020! Hence, when marketing your vacation rental for family travelers, you should highlight what you’re offering rather than solely the price of your short-term rental. You can attract family guests by providing services that make vacations comfortable and safe for both parents and their children. For example, consider childproofing the Airbnb investment property, offering free use of laundry machine/dryer, offering family passes to local attractions, or suggesting nearby family-friendly places like public parks or zoos.
#3. There Are More Pet-Friendly Properties
Should you allow pets in your short-term rental? Historically speaking, most Airbnb hosts haven’t allowed guests to bring pets with them during their stays at the rental property. Pet-friendly vacation rentals can be a lot of work, after all. However, pet-friendliness is one of the most desired amenities among Airbnb guests in 2020. With that in mind, and due to the competitive nature of Airbnb real estate investing, more hosts have been altering their stance. The number of pet-friendly Airbnb rental properties is seeing a year-over-year increase as hosts attempt to positively distinguish themselves from those who continue to have a “no pets allowed” rule.
So, it would be wise to consider removing any restrictions on guests who are pet owners and make your investment property pet-friendly if you want to stay competitive in the 2020 Airbnb real estate business. While managing an Airbnb rental that is pet-friendly can be harder, it can result in more bookings. When you accept pets, you open yourself up to more potential guests and, thus, increase your Airbnb occupancy rate. Also, Airbnb investors often charge an extra fee for pets and increase cleaning fees, which increases their earnings. Finally, having small pet amenities will go a long way for guests traveling with their pets and will likely be noted in their review. All of these are good reasons to operate a pet-friendly vacation rental in 2020.
#4. There Is a Shifting Preference in Accommodation
While a huge part of success with Airbnb investing relies on buying in the best cities for Airbnb, this isn’t enough to get bookings. A hot location definitely ensures a good Airbnb occupancy rate, but what’s the point if the property itself isn’t attracting guests? As mentioned earlier, understanding guests’ wants and demands is crucial for successful Airbnb real estate investing. For Millennial (and even Gen X) travelers, the idea of camping out in the great outdoors has become a popular way of enjoying a vacation. This has lead to increasing demand for untraditional accommodations like Yurts and RVs. But another type of short-term rental accommodation that has become a frequent demand among Airbnb guests recently is “glamping”.
Glamping is a combination of “glamorous” and “camping”. It refers to a style of camping with amenities and, in some cases, resort-style services that are not usually associated with traditional camping. This style of camping has become extremely popular and, hence, Airbnb rentals in the form of luxurious tents have become more common. Seeing as there’s a huge audience of potential guests out there that are increasing the demand for glamping, this can generate a decent real estate return on investment. Are you interested in a less conventional approach to the Airbnb strategy and is this something you’re capable of investing money into? If yes, then glamping is something worth considering as this emerging trend in the vacation rental industry is expected to continue beyond 2020.
Start your search for a profitable Airbnb short-term rental anywhere in the US housing market now!
#5. There Are New Regulations and Local Taxes to Consider
Non-owner occupied Airbnb rentals have had a hard time in 2019. The rise of Airbnb in the US has brought in lots of money for cities and boosted their economies. However, it has also caused a backlash from Airbnb critics. This is mainly coming from the hotel industry and local residents who are against Airbnb real estate investing. Some governments are also concerned that the high saturation of Airbnb properties in their communities is causing the rise of house prices and rental rates, making it unaffordable for locals. Consequently, many have started to implement Airbnb rental regulations. Recent changes that Airbnb investors have to know include:
- Licensing and ensuring owner and operator are paying required sales and lodging taxes.
- New regulations and policies covering how vacation rentals can operate, sometimes limiting the number of units in certain areas, the number of days per year allowable to rent, or requiring only owner-occupied rentals (not second homes).
- New legislation requiring leading platforms such as Airbnb and VRBO to collect and remit certain taxes from hosts across the US.
As you can expect, such restrictions will impact your ability to list a vacation rental on Airbnb in addition to your earnings and Airbnb return on investment. Of course, these regulations differ from city to city. So, if you’re just starting out in the Airbnb real estate business as an investor, it’s very important to check the legality of this strategy in both your state and city of choice. Make sure to invest in a market that is Airbnb friendly and doesn’t enforce too strict regulations on real estate investors owning an Airbnb.
#6. The Best Cities for Airbnb Are Surprising
Each year, Airbnb releases a report revealing a list of the top travel destinations for the coming year. The destinations were determined based on the company’s analysis of their data for the cities booked for 2020 trips as of September 2019. Last year, smaller vacation spots gained travelers’ attention. This trend is continuing in 2020 as according to Airbnb, people are expected to travel more to lesser-known, eco-conscious cities and avoid traditionally popular tourist cities. If you’re in the Airbnb real estate investing business, this tells you that these locations will have higher Airbnb occupancy rates. Buying an Airbnb investment in these “hidden gems” will surely bring in a good return! So, which cities in the US housing market have made the list?
1) Milwaukee, WI
Milwaukee took the #1 spot as the worlds’ hottest up-and-coming travel destination in 2020! Located on Lake Michigan, this historic gem often slips under the radar. However, the city is experiencing an upsurge in interest among Airbnb guests. Part of this is due to the fact that it will be hosting the Democratic National Convention next year. Politics aside, Milwaukee has plenty to offer. It’s home to various cultural museums, to over 105 miles of bike lanes, and to the world’s largest music festival, the 11-day Summerfest. It’s easy to see why Milwaukee had an enormous 729% rise in bookings for 2020 and why owning an Airbnb here is a smart investment decision. Here’s our Airbnb Milwaukee data according to Mashvisor’s Airbnb Profitability Calculator:
- Median Property Price: $187,278
- Price Per Square Foot: $117
- Monthly Airbnb Rental Income: $2,080
- Airbnb Occupancy Rate: 60%
- Airbnb Cash on Cash Return: 5%
To start looking for and analyzing the best Airbnb investment properties in Milwaukee, click here.
2) Eugene, OR
Eugene was listed as #7 among the best cities for Airbnb worldwide as it experienced a 213% YoY growth in bookings. The city is hosting national track and field qualifying trials in June 2020, which is attracting thousands of fans who will want to book a short-term rental. Also, the city’s commitment to reducing greenhouse gas emissions has long attracted eco-conscious visitors. Located on the Willamette River, Eugene is noted for its natural environment, recreational opportunities, and being home to numerous parks and hiking trails. Given that one of the emerging Airbnb real estate investing trends is guests’ growing interest in camping and enjoying outdoor experiences, it’s clear why Eugene is a good location for hosting a short-term rental in 2020. Take a look at our Airbnb analytics for Eugene:
- Median Property Price: $387,431
- Price Per Square Foot: $209
- Monthly Airbnb Rental Income: $2,527
- Airbnb Occupancy Rate: 57%
- Airbnb Cash on Cash Return: 3%
To start looking for and analyzing the best Airbnb investment properties in Eugene, click here.
3) Cape Canaveral, FL
Cape Canaveral, located on Florida’s Atlantic coast, is best known as the home to Cape Canaveral Air Force Station. However, the city has other attractions and amenities to offer travelers and vacationers which gave it a 136% YoY boost in bookings (#12 in Airbnb’s list of top travel destinations). First, it offers 72 miles of beachfront and three significant protected areas: The Canaveral National Seashore, Merritt Island National Wildlife Refuge, and Sebastian Inlet State Park. There’s also a busy port for cruise ships, the popular Brevard Zoo, and exquisite dining. It’s only an hour away from Orlando making it the perfect travel destination for families! Here’s our Airbnb rental data to prove why you should consider investing in Airbnb Cape Canaveral:
- Median Property Price: $378,689
- Price Per Square Foot: $219
- Monthly Airbnb Rental Income: $2,770
- Airbnb Occupancy Rate: 71%
- Airbnb Cash on Cash Return: 4%
To start looking for and analyzing the best Airbnb investment properties in Cape Canaveral, click here.
Is Airbnb Real Estate Investing Smart in 2020?
As you can see, the growth in the Airbnb real estate business is showing no signs of slowing down! As a matter of fact, if the current market trends continue at this pace, experts predict that vacation rentals will topple the hotel industry by the year 2020. The Airbnb investment strategy is still an attractive one for those currently hosting or planning to enter the market. But with more changes to come, anyone who wants to invest in Airbnb rentals would be a fool not to keep paying attention to the ever-changing trends in this industry. To ensure successful Airbnb real estate investing in 2020, stay tuned to our blog where we’ll bring you tips on how to buy a vacation rental, how to start an Airbnb business, the hottest Airbnb locations, and much more.
Mashvisor provides must-have investment tools to help you find and analyze Airbnb rental properties for sale using Airbnb analytics! To use our tools and data to start making smarter decisions as an Airbnb host or real estate investor in 2020, sign up to Mashvisor now.