Airbnb rental properties are becoming a popular choice for real estate investors. And since guests tend to prefer Airbnb to hotels since they are relatively cheaper, Airbnb rental income can be one of the best sources for making money in real estate.
However, many real estate investors have issues achieving positive cash flow, which is key to making money with Airbnb. Since Airbnb cash flow is influenced by many factors, sometimes it may be hard to know where to begin when working to achieve positive cash flow. For this reason, I have put together a list of ways to achieve positive cash flow with Airbnb rental properties.
1. Find a Good Location
One way to ensure positive cash flow with Airbnb rental properties is to select a good location. Ensure that your Airbnb investment property is close to sought-out attractions, has access to public transportation and other amenities.
Besides those characteristics, you also need to be looking at the Airbnb rental data for a location. For example, the location of an Airbnb rental property will have a huge influence on the Airbnb occupancy rate. The most profitable Airbnb locations that will bring you positive cash flow usually have a high Airbnb occupancy rate. For reliable occupancy rate data, turn to Mashvisor’s real estate investment blog which helps real estate investors choose the best cities for Airbnb investment. In addition to that, Mashvisor has readily available Airbnb analytics to help you with your search. Using the tools we offer, you can then select any neighborhood in a real estate market and view the Airbnb occupancy rate.
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The location will also determine if there will be positive cash flow because of short-term rental taxes and Airbnb laws. If there is a restriction in the number of Airbnb rental properties you can own or short-term rentals are not allowed, this will affect your Airbnb rental income. It is also wise to choose a location with low Airbnb taxes so as to reduce the overall expenses and ensure positive cash flow.
2. Perfect Your Airbnb Listing
To achieve positive cash flow with Airbnb rental properties, investors also need to know how to lure in guests from the get-go with their Airbnb listing. Airbnb guests don’t treat all listings the same. A poorly made Airbnb listing will lower your occupancy rate and hurt your income.
To prevent this, ensure that you use beautiful professional pictures, add enticing information about your Airbnb rental property, have good formatting, and be straightforward and accurate in your description. You can also change your listing regularly to appeal to different Airbnb guests when the seasons change. Also, check out listings of competitors and see what they are doing right.
3. Customize Your Pricing
A common mistake beginner Airbnb investors make is not optimizing their rental rates frequently enough. The pricing strategies used for Airbnb rental properties should match the demand and be updated frequently. This means that the prices should take into account factors such as seasonality, major local events, weekends, average Airbnb occupancy rates, competitors’ prices, and local hotel prices.
It is okay to raise your rates when the market is hot and vacation homes are in high demand and lower them when the demand goes down. Note that the goal here is to be competitive. Setting up an Airbnb pricing strategy that varies with demand will enable your listing to get a competitive ranking in Airbnb search results.
4. Hire Airbnb Rental Property Management
If you are busy and cannot manage your Airbnb properties on your own, consider hiring a professional Airbnb management company. Hiring Airbnb rental property management can help increase rental income and ensure positive cash flow. That’s because the management company will be responsible for ensuring that there is a high Airbnb occupancy rate by providing Airbnb guests with an excellent experience. The company will take care of various aspects related to the Airbnb rental properties and guest handling. They tend to the Airbnb guests all the time and ensure that their check-in, stay, and check-out is comfortable.
5. Hire Professional Airbnb Cleaning Services
Airbnb guests usually prefer a place that is clean and tidy. Negative reviews about the cleanliness of your property can greatly damage future bookings. Hiring a professional cleaner will ensure that the place is kept clean all the time and between turnovers. This will ensure that your guests have a better experience during their stay.
6. Make Improvements to Your Airbnb Rental Properties
Sometimes you have to spend money to make money. Another way to achieve positive cash flow is by improving your Airbnb rental properties. Making improvements will help to make the Airbnb properties more visually appealing. An improved Airbnb rental property can also significantly increase in value and help it compete with other short-term rental properties in the area. It will attract more guests and increase Airbnb returns.
Before deciding what improvements you need to make, ensure that you clearly define your target Airbnb guests. Find out what they would need to be more comfortable. However, be careful not to spend too much money on improvements that won’t help increase your Airbnb returns. This can significantly decrease your positive cash flow or even lead to negative cash flow. Set a rigid budget for the improvements and stick to it.
7. Sell Additional Services
Renting property is not the only way that money can be made with Airbnb. You can ensure that you achieve positive cash flow by offering extra services for a fee. Additional services will not only increase your profits but also add to the guests’ impressions. Some of the additional services you can offer to make more money from every booking include guided tours, bicycle and motorcycle rentals, airport pickup and drop-off, tickets to events, cooked meals, laundry, and even dry cleaning services.
The Bottom Line
Achieving positive cash flow with Airbnb rental properties is far from impossible. Airbnb rental properties are among the most profitable income properties when you do things the right way. Above are some of the best ways to achieve positive cash flow with Airbnb rental properties. There are no quick fixes. Know that you will need to put in the effort, time, and money. But it can all be worth it!