When it comes to investing in real estate, there are two residential rental strategies a house investor can choose from. These are, namely, short term rental properties and long term rental properties. Long term rental properties are associated with relatively constant rental income. Moreover, long term rental properties are occupied for longer periods of time. However, once vacant, they tend to stay so for a while.
Short term rental properties, on the other hand, generate higher rental income per night. Besides making money in real estate, many real estate investors think that owning and managing an Airbnb investment is a great source of interaction. Airbnb rentals can certainly make you successful. That is why when becoming a real estate investor you might decide that owning an Airbnb property is the best way to be making money in real estate. Well, that is only true if you know how to master your Airbnb investment and become the most successful Airbnb host. Intrigued to learn more? Keep on reading!
#1 Owning an Airbnb Property: What Do You Need to Know?
There are a few things you need to know before owning an Airbnb property. An Airbnb investment is certainly not a passive investment. In order to be making money in real estate with short term rental properties, you need to put a lot of work and effort into choosing, preparing and managing the properties. When becoming a real estate investor, is it essential to know what each investing strategy entails and if it is the right fit for you and your business. Further, when wondering how to start a real estate business, especially Airbnb rentals, be prepared that there is a lot of work to do when managing the property. However, the pre-purchase process also requires a lot of attention as it has a significant influence on your potential success. Let’s explore how to choose the best Airbnb investment.
#2 How to Find the Best Airbnb Investment
When becoming a real estate investor of Airbnb rentals and figuring out how to start a real estate business, there are some things to keep in mind in order to find the best Airbnb investment. Here is what you need to know before investing in real estate:
Location
When choosing an Airbnb investment, the location is of vital importance. In order to become a successful Airbnb host, choose a place which attracts tenants seeking short term accommodation. Such are for instance tourist cities or business towns. Additionally, make sure that your Airbnb investment is situated in a convenient location. This means that there is public transportation, shops, etc. Last but not least, choose a neighborhood with low crime rates. Airbnb guests want to feel calm and welcome during their stay. That is why you need to make sure that the location is suitable for such an investment. Remember that the Airbnb rental income you will receive depends on the location of your property as well.
Analyses
It comes as no surprise that one of the ways of how to start your real estate business is by conducting various types of analyses. The same is valid when searching for an Airbnb investment. It is important to explore the market and check the real estate metrics of an investment property. Metrics such as cap rate, cash on cash return, occupancy rate and Airbnb rental income can certainly indicate if the real estate investment has the potential of succeeding in the local housing market. Of course, computing cap rate, cash on cash return and exploring the occupancy rate for numerous properties is complicated. However, using a rental property calculator can help you in the task.
The Airbnb Profit Calculator
The Airbnb profit calculator is a type of a rental property calculator specialized in providing information regarding short term rentals. Similar to the rental property calculator, the tool can provide you with information regarding the cap rate, cash on cash return, occupancy rate and the potential Airbnb rental income of various investment properties. Mashvisor’s Airbnb profit calculator is one of the best tools you can find to help you in the process of renting out on Airbnb.
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#3 Renting Out on Airbnb
There are two main things an Airbnb host needs to know in order to be prosperous when investing in real estate. When renting out on Airbnb, you need to be competitive. Do not forget that your Airbnb investment is competing with not only other Airbnb investments but also hotels, motels and all types of short term accommodation. That is why you need to set your prices in such a way that they will still be attractive to Airbnb guests, but you will still be able to make a profit.
The marketing of your Airbnb investment is important as well. First of all, take professional and beautiful pictures of your investment property. Be sure to create an appealing and interesting advertisement so people will remember it. It is important to note that Airbnb reviews are another important thing to keep track of in your marketing plan. Why so? Read the paragraph below.
#4 Providing the Ultimate Airbnb Experience
As previously mentioned, Airbnb reviews have quite a significant impact on the ways Airbnb guests see your rental property. Such ratings and reviews will, then, influence your occupancy rates and the rental income you are making.
In order to have only positive Airbnb reviews and attract more guests to your Airbnb investment, you need to make sure you are offering and providing the ultimate Airbnb experience. This means that you rent out a perfectly clean property. Moreover, make sure that your guests feel comfortable and have all the supplies they need- towels, toiletries, toilet paper, etc. You can also take an additional step and provide your guests with information regarding the property. Such a booklet, for example, might include where they can find extra pillows/ blankets, how to operate the air conditioner/ TV, etc. Another important thing is to be available to answer your guests’ questions and assist them if they need anything. You can also make an additional effort and prepare them a local meal or take them to an interesting place to visit.
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