Airbnb Calculator to Project Annual Revenue: Step-By-Step Guide

Using an Airbnb calculator to estimate the profitability of a rental property would probably be the best idea for prospective investors.

Going into the business of real estate investing with no previous knowledge about the actual location, current financial situation, or potential revenue could cost you a lot – both professionally and financially.

An Airbnb profit calculator reduces the task of doing research to a minimum. The tool does most – if not all – of the work for you. You need to know your way around different real estate investment tools and use them properly, of course.

Luckily, that’s what we’re going to do today.

We will simplify the process of using an Airbnb income calculator to project your annual revenue so that you don’t need to stick to the “old-fashion way.”

The Importance of Airbnb Calculators for Investors

Before we break down the steps of using an Airbnb calculator, let’s take a few moments and mention what it means to the user or the investor.

First off, you get to formulate a short-term rental strategy without any significant complications. By “significant complications,” we mean unverified sources and unexpected losses (primarily financial). The critical issue seems to be calculating and evaluating the income property and the strategy you’re going with here.

At the mere mention of money, investors who just “entered the market” tend to become very nervous and may even question their decision-making skills. Understandably, you’re unsure about how to deal with investment money – even more so when you’re investing in long-term projects that will become rental vacation properties.

Thanks to Mashvisor’s Rental Property Calculator and its extensive list of features, real estate investors are given a unique opportunity to determine the best possible approach to their rental strategy and invest their money in a profitable location.

Should they use their own cash or opt for a mortgage? Mashvisor gives you the answer to this – and many more questions.

Related: A Guide to Investing in Short-Term Rental Properties With Ease

Before You Use an Airbnb Calculator

Before you decide to invest in any rental property, and primarily in a city somewhere in the US market, you should do an external analysis.

What does it mean?

In addition to the financial side – that is your focus at the moment – you still need to take note of the legal one. It implies researching Airbnb regulations in the location you’re interested in here.

We’re emphasizing the fact because we often encounter cases where investors who abruptly entered the business or didn’t explore the target market find themselves in unfavorable legal situations. For example, listing Airbnb could be illegal in a certain city.

So, in order not to get ahead of yourself, take the time to research the regulations in the city you’re planning on investing in at the moment.

Better safe than sorry, right?

Let’s assume that you’ve found a favorable location for investment; that’s not enough. It would be best if you were a bit more specific. And luckily, with the help of our Airbnb Estimator, you can locate a profitable neighborhood according to your preferences – target visitors. Filters like listing price can help you with the property search, too.

Even if the real estate market is all-encompassing, you should make sure that the exact location of your investment is lucrative.

Estimating Airbnb Rental Income: Steps Explained

Here are the steps that’ll help you with your Airbnb estimate.

1. Calculate Cash Flow

The first – and most crucial – step is to determine your cash flow. In essence, it is the money that you will receive every month as an investor in the property. It also means that you’ll be taking into account all types of expenses that you will have to cover first – and then get in return. For this step, an Airbnb fee calculator will be helpful.

Once you’ve entered all the expenses, you will be able to estimate your gross profit, and based on the figure you get, decide whether it is worth continuing with this strategy or not.

Here are the formulas that’ll help you with calculating your cash flow:

Number of Days Airbnb Is Booked = Days in the Month x Airbnb Occupancy Rate

 Gross Rental Income = Airbnb Daily Rate (Price Per Booking) x Booked Days

2. Use the Cap Rate Formula

The next thing you’ll do is use the capitalization rate formula, which is especially important in determining whether you’ll be getting the anticipated profit in the long run.

You may be focused on developing a solid short-term rental strategy here – but you shouldn’t neglect the long-term gains that will actually keep you in the Airbnb business.

Here’s the formula you’re going to use:

Cap Rate = [Net Operating Income (NOI)/Property Value] x 100

 Related: What Is a Good Cap Rate for Rental Property: Traditional vs Airbnb

3. Conduct a Comparative Market Analysis

Also known as CMA, comparative market analysis will provide investors with 99% of the data necessary for their investment to be successful. It essentially involves using an Airbnb calculator, estimating your rental income, and running rental comps.

Rental comps play a significant role here because they’re based on the three most important factors within the Airbnb rental calculator:

• Property value
• Occupancy rate
• Average daily rate

Don’t worry! We will analyze all the above parameters and explain the actual process of using our investment tool to understand it completely.

What Data Do Investors Work With?

It’s time to focus on the most important part of the guide and answer the following question:

What does an Airbnb analysis provide investors with?

Airbnb Income Calculator: The Estimates

An Airbnb income calculator is a type of investment tool – also known as a rental property calculator – that uses available Airbnb data to help investors analyze the potential profitability of the location they’re interested in.

As for the accuracy of the data, don’t fret. It comes straight from Airbnb sites, and it’s 96% accurate, so there’s no confusion.

Here are the estimates you’ll get by using the said calculator:

Airbnb Occupancy Rate

The occupancy rate represents the ratio of used space on your property to the total amount.

If you’re considering investing in rental properties, you surely know that they vary by season – meaning that there’s a peak and a “leaner” time when people book a stay.

You should be able to calculate the rental income by taking into account the occupancy rate. The higher your occupancy rates, the higher the revenue your rental property will generate during the season; that’s self-explanatory.

Airbnb Rental Income

Estimating rental income is the first thing investors should turn their attention to since it helps determine the possible cash on cash return on their investment.

What investors often overlook are opportunities that are not listed. However, Mashvisor helps with that by analyzing any on or off-market property. You enter the exact address – and our calculator provides an accurate estimate of potential rental income.

Related: What Is a Good Cash on Cash Return?

Airbnb Rental Expenses

You need to spend some money to receive money in return; that’s real estate investing 101. So, you will not be able to avoid investing in your property to some extent.

Our Airbnb estimator will help you prepare for the inevitable costs, mainly:

One-Time Startup Costs

• Inspections
• Closing costs
• Total repair costs
• Furniture and appliances

Monthly Expenses

• Property tax
• Rental income tax
• Insurance
• Property management
• HOA dues
• Property maintenance
• Cleaning fees
• Utilities

Airbnb Cash Flow

For rental properties, Airbnb cash flow is the difference between what you receive and spend during the month. It’s also one of the fundamental indicators of the profitability of your investment property. Of course, you should be anticipating a positive cash flow.

A positive cash flow will help you generate an income – and maintain a successful residential vacation property.

Airbnb Cap Rate

The Airbnb cap rate is a shortcut for investors to calculate profitability without considering the financial aspect. You should know that calculating the cap rate on multiple properties can be time-consuming – but you can get these estimates faster using our Airbnb calculator.

Airbnb Cash on Cash Return

Unlike the cap rate, the cash on cash return method considers the financial aspect.

Suppose you’re considering investing in a real estate property by taking out a loan. In that case, you should definitely put your trust in the hands of Airbnb calculators because they’ll give you the most accurate estimate of your cash on cash return.

You want to know whether your investment venture will have a positive return or not; trust us on that.

Airbnb Comps

Running Airbnb comps means that you’ll have to conduct extensive market research.

What does it do? It essentially factors in the real estate areas near you that are considered good options for potential investment.

The easiest way to locate rental comps near you is by using our Airbnb profit calculator. You’ll be able to see a list of active Airbnb rentals and how these properties perform in terms of nightly rates, occupancy rates, and the like.

Financing Method

Real estate investing means putting real money into the project. You undoubtedly understand that this is not easy – especially when you have limited resources and work on a tight budget.

The Airbnb Estimator includes an in-built mortgage calculator that gives investors insight into how reliable their financial situation is. It is important because you certainly don’t want to invest both time and money in a strategy that will not generate a positive cash flow.

How Much Can I Make on Airbnb Calculator?

The answer mostly depends on the location you are investing in here. Of course, in order to achieve a high return on investment, you’ll need to take advantage of all the features of your Airbnb income calculator.

Suppose you succeed in establishing a strong short-term rental strategy; here is an example of a successful investment venture:

• You charge $150 per night.
• You achieve a 70% occupancy rate.

Your expected contribution would be around $38,000, minus expenses and taxes.

The Pros of Using an Airbnb Calculator

Now that we’ve clarified how to use an Airbnb income calculator and how to make the most out of your investment venture, we might as well conclude this guide with a few key reasons why you should stick to using Mashvisor’s Airbnb calculator.

For one, it’s a great opportunity for beginners who are unsure and want to check if hosting is for them – or if they should perhaps invest their money in something else.

Although the primary focus is on investors, it gives second-home owners an opportunity to consider converting their homes into residential areas – all in all, another option for intelligent investments.

The Airbnb profit calculator, being a professional-grade investment tool, allows property investors and managers to evaluate the property’s value and calculate the ROI.

Lastly, rental arbitrage investors can make use of this tool, as well. Using the features of the Airbnb profit calculator can help them evaluate the difference in revenue generated between short- and long-term rentals.

Conclusion

Finally, we’ve come to an end. We’ve discussed everything you should know about using an Airbnb calculator, so let’s briefly go through the facts one more time.

The essential thing you should take from this guide is that using an Airbnb calculator is a time-saving strategy that provides more accurate results than the “old-fashioned” ways of researching available rental properties. It applies to the entire US housing market, and that’s perhaps is its biggest advantage.

What’s more, using an Airbnb profit calculator to estimate profitability and revenue is as easy as ABC. Now, you just have to sign up – all of the features are at your disposal. You can filter the ones you’re the most interested in, too. Within just minutes, you’ll be able to calculate the occupancy rate, rental expenses, and potential rental income – all the numbers that matter.

Mashvisor is here to answer your questions regarding real estate investing and help you make a well-calculated decision.

Book a demo or sign up for a 7-day free trial, followed by a 15% discount on your quarterly or annual subscription!