Are you looking for an Airbnb analysis tool to use before investing in short-term rentals in 2024? Read on to discover the best online tool.
As a real estate investor, you know that there are a number of ways to invest in the real estate industry. One way that’s been gaining a lot of traction in the past several years is investing in Airbnb rental properties.
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Airbnb properties offer investors a higher potential return on investment. However, simply investing in any short-term rental property won’t guarantee you handsome profits. You need reliable data that is readily available.
Reliable data and analytics will help you accurately estimate your Airbnb’s monthly income and ultimate return on investment.
However, accessing the relevant data and analytics is an entirely different story. Many online real estate platforms only focus on traditional long-term rental properties. Others don’t assure you of accuracy and reliability.
In today’s blog post, we will look at the ultimate Airbnb analysis tool you need for 2024 and beyond. By the end of this post, you’ll understand why every real estate investor needs such a tool.
But first, let’s look at a few stumbling blocks that many Airbnb investors face.
5 Challenges of Investing in Airbnb Rentals Today
Let’s break down some of the challenges that real estate investors who seek to invest in Airbnb face today.
1. Finding a Suitable Location
Location is one of the core pillars of a profitable real estate investment. It can make or break your investment.
We can’t stress enough the importance of location, especially when it comes to Airbnb investments. You must focus on a location’s demand for Airbnb rentals before investing. The best locations for Airbnb rental properties are areas that receive many guests throughout the year.
Your best bet is with tourist hotspots, such as beach cities or cities with year-long sunshine, wildlife, and hiking trails. You can also invest in college towns, where you can host parents who are visiting their children. Business hubs also make good locations for Airbnb investments.
Unfortunately, many investors don’t have access to data analytics to help them choose lucrative Airbnb locations.
2. Short-Term Rental Regulations
One of the biggest challenges an Airbnb investor can face today is Airbnb regulations. With the increasing popularity of short-term rentals, many authorities have imposed strict laws and regulations.
For example, some have set a limit on the number of days one can rent out a non-owner-occupied short-term rental in a year. Others have city zoning laws that prevent the usage of Airbnb properties in certain neighborhoods. Some have even gone as far as limiting the number of occupants in such properties at any particular time.
In addition, if you’re investing in a townhouse or condo within a homeowners’ association (HOA), you must factor in the existing HOA rules and regulations. Just like local authorities, some HOAs have completely banned Airbnb rentals, while others limit the number of days one can rent them out or regulate the number of occupants.
The main challenge with these regulations is that they aren’t universal. In short, they aren’t the same everywhere and don’t apply to every Airbnb rental owner in the US housing market. They’re determined state-by-state and city-by-city.
As an Airbnb investor, you need an analysis tool that will allow you to look into your location’s Airbnb rules and regulations before investing. You need a tool that will ensure you aren’t following outdated regulations.
3. Setting the Rental Rate
Your Airbnb rental property can only stay profitable if you set the right rental rates. Right rental rates mean you aren’t charging too high that your target tenants choose to book your competitors’ Airbnb units. On the other hand, you’re also not charging too low that you’ll be leaving potential profit on the table.
Setting rental rates for Airbnb rental properties involves looking at real estate comps. For starters, real estate comps are comparable properties that are as similar to your property as possible.
Unfortunately, many real estate investors aren’t able to access readily available analytics on real estate comps to help them set a reasonable rental rate that will keep their properties profitable.
4. Estimating Airbnb Expenses
One of the main differences between long-term rentals and their short-term counterparts is the expenses. With long-term rentals, landlords don’t incur high expenses since they don’t need to deal with a lot of maintenance. A long-term tenant will keep their unit clean, mow the lawn, and pay their bills accordingly.
However, an Airbnb rental involves higher expenses since a lot of work falls on your shoulders. You must ensure that the property is always in tip-top condition to appeal to the guests.
Here’s what you need to factor in when estimating Airbnb property expenses:
- Furniture, appliances, and amenities: Airbnb hosts have to make sure their guests are as comfortable as possible. You’ll want to set aside a budget to ensure the place looks and feels classy and exquisite.
- Food: While you don’t need to cook for your guests, your unit needs to have some basic food items to keep your guests happy. For example, you can stock snacks, coffee, and other beverages. In addition, you can add a coffee maker for guests who prefer to brew their own caffeinated drink.
- Wi-Fi and Cable TV: With long-term rentals, tenants are responsible for getting their own Wi-Fi and cable TV. However, Airbnb guests expect to find such amenities when they book your unit. The cost of installing and maintaining them falls on you.
The above are some of the things that bring Airbnb expenses up. Keep in mind that you must also ensure that the unit is cleaned every time a guest checks out.
Like estimating Airbnb rental rates and income, you must use rental comps to determine your expenses. You need a good Airbnb analysis tool for that.
5. Irregular Income
Long-term rentals assure property owners of a consistent and regular income throughout the year. You collect an agreed rent every month.
On the other hand, rental income from short-term rentals can be irregular. Airbnb rentals are highly affected by seasonality. You may experience an occupancy rate as high as 100% during the peak season, only to fall below 40% during the off-peak season.
During the off-peak season, your primary concern should be minimizing losses. Remember, while the income falls due to low occupancy rates, you still need to settle property expenses and taxes. You don’t want to pay for them from your own pocket.
The best solution is setting a strategic dynamic pricing strategy that allows you to adjust your nightly rates depending on the season. The right Airbnb analysis tool will help you with your pricing strategy.
Where to Find the Best Airbnb Analysis Tool
At this point, you can already tell that investing in an Airbnb rental is quite complicated compared to investing in a long-term rental. You need to carry out an in-depth analysis to account for the frequent dynamic changes.
However, investors frequently find themselves struggling to find a real estate analysis tool that provides accurate and reliable data. If you’re one of these investors, worry no more. Your answer lies in Mashvisor.
What Is Mashvisor?
Mashvisor is an online real estate platform that was founded to help real estate investors at various points of their real estate investment journey. Our platform helps investors access lucrative investment properties suitable for both long-term and short-term rental strategies.
Also, Mashvisor is a reliable tool that helps investors analyze real estate housing markets at the city and neighborhood levels, as well as individual investment properties.
The real strength of the Mashvisor platform lies in its accuracy and speed in processing data. We pull our data from reliable sources, such as MLS, Airbnb, Auction.com, and HomeAway. We also work hand-in-hand with other real estate platforms, such as Realtor.com, Zillow, and Redfin.
Our data is organized in a way that’s easy to understand. You can also carry out side-by-side comparisons of different properties.
One factor that makes Mashvisor stand out is that we provide analytics for both long-term and short-term rental strategies. Most of our competitors only focus on one of the rental strategies. However, Mashvisor allows you to see how your rental property would perform if you followed either of them.
Since our focus today is on Airbnb rental properties, let’s look at how you can use Mashvisor as an Airbnb analysis tool.
How to Do an Airbnb Analysis Using Mashvisor
Mashvisor is an essential Airbnb analysis tool for investors looking to invest in short-term rental properties in 2024 and beyond. Here are some steps for you to follow to carry out a comprehensive Airbnb analysis on Mashvisor:
1. Identify a Good Airbnb Investment Market
The first step when carrying out a comprehensive Airbnb analysis is finding a good Airbnb city for short-term rental investment. As we mentioned, not all cities are suitable for Airbnb investments.
Finding a suitable Airbnb market can be a tricky affair, especially for beginners. However, Mashvisor makes it possible. Our Property Finder and heatmap tools will help you to spot a good Airbnb market.
Simply type the name of the city you’re interested in in the search box, then use the “Airbnb Occupancy Rate” filter to get a quick overview of short-term rental demand in that specific city and its different neighborhoods.
Occupancy rate is a metric used to measure the demand for rental properties. It’s calculated by dividing the number of nights a rental unit was booked by the number of nights it was made available for booking.
Of course, you can’t get a 100% occupancy rate with short-term rentals. A good occupancy rate needs to be above 50%, meaning that it will be booked for most nights of the year.
Mashvisor’s heatmap tool helps investors search for and find neighborhoods with excellent Airbnb occupancy rates.
2. Perform a Comprehensive Neighborhood Analysis
Finding a profitable city doesn’t mean you can set up your Airbnb business in any part of that city. Different neighborhoods within the same city offer different returns. Carrying out an in-depth neighborhood analysis will help you find a desirable neighborhood with good returns.
To find a good neighborhood for Airbnb investing, you need to know what qualities good neighborhoods possess. Similarly, you must be aware of what qualities to avoid.
Some good qualities to watch out for include the following:
- Proximity to tourist attractions and amenities
- Access to public transport
- Security and low crime rates
- High walkability score
Mashvisor is your go-to tool when conducting neighborhood analysis. You can search for the city’s name on the platform and then click on the neighborhood of your choice to reveal the neighborhood analytics page.
The neighborhood analysis page provides you with important analytics to measure a particular neighborhood’s performance. The metrics include:
- Median property price
- Average price per square foot
- Airbnb rental income
- Airbnb cash on cash return
- Airbnb occupancy rate
- Active Airbnb rental properties in the neighborhood
- Walkability score
- Suitable rental strategy
The above metrics are crucial since they will help you get a glimpse of how much rental income you could earn if you invested in a certain neighborhood.
3. Find Rental Comps
As we saw earlier, rental comps are important when carrying out Airbnb analysis. You need to find similar properties that you can use as a yardstick. There’s no need for you to spend hours carrying out analysis for single-family rental units when you actually want to buy a condo or townhouse.
Looking for rental comps data helps you understand the demand for such properties in the neighborhood and see how much you can expect to make from your property. It’ll also help you set the right pricing strategy for your Airbnb property based on seasonality and demands.
When gathering rental comps for Airbnb analysis, you need to look out for properties with the following characteristics:
- Located in the same neighborhood
- Have the same amenities and finishings
- Have similar features, such as the number of bedrooms and bathrooms
You want to find direct competitors and compare apples with apples, not oranges. If you don’t find any comparable properties, chances are there’s not enough demand for the specific property type in that neighborhood. You can also look at the brighter side and be the first host to offer that property type as a short-term rental.
Mashvisor’s Rental Comps & Insights section provides a list of active Airbnb rental comps and their rental income for the past 12 months. You can also find a link to the actual Airbnb listing so that you can find out more about the property.
Real estate investors can use Mashvisor’s Rental Comps & Insights to obtain a list of comparable properties and other relevant information, such as average rental income and occupancy rate.
4. Estimate Expected Costs
Estimating the potential rental income is only half of crunching the numbers. You need to know how much you expect to spend to buy and maintain the property. It is an essential aspect of understanding whether the investment makes financial sense. Besides, you want to ensure that the rental income will be enough to settle the expenses.
Property expenses include:
- One-time costs: Also known as startup costs, these are expenses that you only pay for when obtaining the property. They include inspection, furnishing, and renovation costs.
- Recurring costs: These are costs that you can expect to pay every month. They include repairs, cleaning, taxes, utilities, insurance, management, and HOA fees.
5. Calculate Potential Profits
Estimating a property’s potential profits is perhaps the most important part of carrying out comprehensive Airbnb analytics. While the Neighborhood page shows you the average Airbnb rental income in that neighborhood, it isn’t enough to make an informed investment decision. You need to find numbers that are specific to the rental property you’re interested in.
Mashvisor provides the right tool for it. Our Airbnb calculator helps you calculate all metrics that determine a property’s rental income. The metrics include cash flow, cash on cash return, cap rate, and occupancy rate.
In case your research shows that the metrics may be different from what’s displayed, you don’t need to worry since our tool is highly interactive. Simply adjust the metrics and see how the results will change based on what you entered. Such real-time changes are helpful when you want to determine the expected profits.
Our Airbnb profit calculator helps you go the whole nine yards and also calculate the estimated property expenses.
Sign up for Mashvisor today to start enjoying all the tools that’ll help you conduct a comprehensive Airbnb analysis.
Use the Right Tool for Airbnb Analysis
Conducting an in-depth Airbnb analysis is an essential aspect of the investment process for both new and experienced investors. It helps you understand the demand for Airbnb rentals in a certain area and determine the rental income you can expect from your investment.
Carrying out the process manually is tedious and requires a lot of time and energy. But Mashvisor saves you the trouble of getting reliable and accurate data and analytics. In addition, you can access any data you require at any time and with just the click of a button.
Mashvisor is surely a one-stop shop for investors. You can analyze neighborhoods and properties, calculate expected income and expenses, and, most importantly, find profitable properties.
Schedule a demo today and access the ultimate Airbnb analysis tool for 2024.