Becoming an Airbnb host is easier than you might think. Once you create an account and decorate your space properly, you can get it up and running right away. And if you’ve been paying attention to real estate trends in the past years, you’d know that buying an Airbnb is a smart investment in the US. This is because short-term rentals can earn up to three times more than traditional, long-term rentals. However, not all hosts are making the profits they wished for when they first joined the Airbnb market. This is why the most important thing to know before buying Airbnb rentals is how much you can actually make. You can quickly and efficiently do this with the help of a single tool – the Airbnb calculator.
What is an Airbnb Calculator?
Until now, determining the potential profits of a vacation rental has been a bit of a guessing game. We all know that they’re profitable, but how profitable? Enter the Airbnb calculator (also known as the Airbnb profitability calculator or the Airbnb rental calculator). The name of the tool is quite self-explanatory. Basically, this is an online tool that uses Airbnb data and analytics to accurately predict how much money an Airbnb property can make before you buy it. In other words, it runs an Airbnb investment analysis which, when done manually, takes weeks or months to complete. Hence, there are many uses of the Airbnb profit calculator, including:
- Answer the question “Is Airbnb profitable?” for first-time hosts
- Find out if converting your vacation home to a short-term rental is worth it
- Estimate the value of a new investment opportunity and estimate Airbnb income
- Analyze the profit margin and rate of return of Airbnb vs renting out traditionally
Ultimately, you take luck out of the equation with the Airbnb estimator. It has the power to turn 3-month research (that’s how long it typically takes new real estate investors to find good rental properties) into 15 minutes! The best part of this tool is that it’s easy to access and use. Thus, it makes investing in Airbnb accessible to anyone, even first-time real estate investors. Getting your hands on an Airbnb calculator in 2020 is a must whether you’re looking to grow your investment portfolio or you’re a beginner Airbnb host.
To learn how to become an Airbnb host in 2020, read our comprehensive guide here.
Where to Find an Airbnb Calculator?
If you want to start making money from vacation rental homes rented out on Airbnb, then you’ll need not just any calculator you find online – but the best Airbnb income calculator out there. If you’re looking for an advanced calculator, look no further than Mashvisor. Mashvisor is a real estate investment software that helps investors make calculated decisions through several tools. One of the tools you’ll get access to when signing up is the Rental Property Calculator.
What makes our calculator unique is that it uses both traditional and Airbnb analytics to estimate the profits of both strategies for properties across the US housing market. Consequently, our tool works as a traditional and Airbnb profit calculator. When it comes to estimating how much you’ll make with Airbnb rentals, our Airbnb calculator is very accurate. This is because all of our Airbnb data, analytics, and estimates come directly from Airbnb API and reflect the performance of actual Airbnb listings over the past 12 months.
This enables Mashvisor to predict what any home around the US would earn as a vacation rental. As a result, instead of having to sort through Airbnb rental listings to try and see how much other hosts are making in an area (a tedious task that doesn’t guarantee that you’ll make the same), the Airbnb investment calculator will give you accurate profitability estimates with little to no effort on your part! To use Mashvisor’s calculator to analyze short-term rental properties, you only need to follow these 5 simple steps to get the results.
How to Use Mashvisor’s Airbnb Profit Calculator
#1 Choose an Airbnb Investment Property
The first step to use Mashvisor’s Airbnb calculator is to actually have a property to analyze. If you don’t have a property in mind, you can look for and find one using our investment property search tools. Simply enter the city you want to invest in, and you’ll get a Heatmap of the city and list of all homes available for sale in each neighborhood. You can further find the best neighborhood to invest in Airbnb by selecting either the “Airbnb rental income”, “Airbnb cash on cash return”, or “Airbnb occupancy rate” filters. This helps make sure you’ll find a property in a profitable Airbnb location.
If you already own a property and want to analyze its Airbnb profitability, you can also enter its address along with some basic information on our platform. Mashvisor will then compile a list of nearby properties that are similar to yours (rental comps). Mashvisor will also factor in market-wide metrics like seasonality, rental demand, and revenue growth in its final calculation. By comparing apples to apples, our Airbnb income estimator will be able to make accurate projections about the earning potential for the address you’ve entered.
#2 Determine Your Financing Method
Once you’ve chosen the Airbnb rental you wish to invest in, you’ll get access to the Rental Property Calculator. There, you’ll see a complete Airbnb investment analysis readily available based on our Airbnb analytics. The great thing about our tool is that it’s highly interactive. Meaning, if you make any change on the pre-calculated numbers, it’ll automatically recalculate the profit estimates. The first thing that you might change is your financing method. This is because the profitability of an Airbnb investment property, in fact, strongly depends on its financing method.
Mashvisor’s Airbnb calculator comes with a built-in Mortgage Calculator which, by default, sets the financing method to cash. If you already own the property, keep the cash option as it allows the calculator to estimate profits for the property assuming that it’s already paid for. But, if you’re planning to buy it using a mortgage, then you’ll need to switch to the mortgage option. This allows the calculator to take into account all the costs of financing the investment, which naturally affects its profitability. After selecting the mortgage method of financing, you’ll need to specify:
- Property value/price
- Down payment amount
- Loan amount
- Loan term (15 years or 30 years fixed)
- The interest rate on the mortgage.
#3 Estimate Your Costs and Expenses
Mashvisor’s Airbnb investment calculator will already provide you with a list of all rental expenses and costs that you can expect to pay. The values represented in this section are, by default, based on the average costs and expenses for the area or housing market where the property is located. However, we always recommend Airbnb hosts and investors do some research and modify these values and/or add new types of expenses that are more accurate for the target property they’re analyzing. By customizing the table to your own expenses, you get the most accurate and realistic profitability calculations and predictions.
In the Expenses section of Mashvisor’s Airbnb calculator, there are two types of costs that you’ll have to fill in. First, there are one-time startup costs that you’ll pay only once when buying an Airbnb rental property. These include inspection, total repair, furniture and appliance, and closing costs. Second, there are recurring costs that investors have to pay regularly (monthly and/or annual expenses). These include:
- Property management
- Property maintenance
- HOA dues
- Rental income taxes
- Cleaning fees
Again, after modifying the values of these costs and/or adding additional ones that are specific to your subject Airbnb rental property, the Airbnb rental calculator will immediately re-calculate the return on investment metrics that you’ll see below. Thus, you can play around with the numbers to see how they’ll affect your projected profitability and get an idea of which costs you need to cut to make more money from your short-term rental property.
#4 Get a Rental Strategy Comparison
After entering all the above numbers, you can then check the rental strategy comparison section. Here, you’ll find all the important numbers and indicators that Airbnb hosts need to predict the investment’s profitability. Again, the ROI metrics will be shown for both the traditional and Airbnb rental strategies. This helps you do a quick comparison and determine the more favored rental strategy for the subject property. As mentioned, Mashvisor factors reliable rental comps data to assure the highest degree of accuracy. To help you determine if the property makes for a good Airbnb rental investment, the Airbnb calculator displays the following ROI metrics:
- Airbnb rental Income: the monthly rental income you can expect to earn from the Airbnb rental
- Monthly expenses: total monthly rental expenses including mortgage payments and recurring expenses
- Airbnb Cash flow: the difference between monthly rental income and monthly rental expenses
- Airbnb Cash on cash return: how much money the Airbnb rental makes compared to how much money you invest
- Airbnb Cap rate: ROI you’ll receive by comparing the net operating income to the property’s market value
- Airbnb occupancy rate: how many days the income property will be occupied at a given time. Airbnb occupancy rate data can be viewed as a number or a percentage
When it comes to the Airbnb rental income and occupancy rate estimates, you can adjust them if you think the provided numbers are higher or lower in your particular case. For example, if you believe you can get a higher Airbnb rental income or occupancy rate because you offer a service that other hosts in the area don’t, simply enter your own estimation. Then, our interactive Airbnb rental income calculator will provide new estimates of Airbnb cash flow, cash on cash return, and cap rate.
#5 Access Airbnb Rental Comps Data
The final step to get the most accurate profit prediction for your vacation home rental is to check the Rental Comps & Insights section of the Airbnb calculator. In this section, you can view Airbnb rental comps (active comparable rental listings), recent sales of similar properties, and additional insights about the neighborhood where the property is located all in one report. With all this real estate data, you’re able to analyze how similar Airbnb rentals are performing in the market. Most importantly, you’ll see the occupancy rate, nightly rate, rental income, and ratings of similar short-term rental properties. In return, this helps you estimate how much you can make from Airbnb as well as your property’s future performance.
The Bottom Line
As you can see, Airbnb hosts need the Airbnb profit calculator to make sound investments based on accurate and reliable data. Whether you’re a beginner looking to invest in Airbnb for the first time or you’re looking to add Airbnb rentals to an existing portfolio, Mashvisor’s Airbnb calculator is a versatile tool that helps in any stage of your journey. When you know how much you’ll make, you’ll be setting yourself up for success by buying an Airbnb investment that has the potential to make big bucks. The next step is on you to be a good host – or simply hire a professional property manager and enjoy the passive income!
To give our tool a try and see its benefits for yourself, start your 7-day free trial with Mashvisor now!