Are you looking for a new investment to add to your real estate portfolio? Learn why you should invest in an Airbnb Davenport FL in 2022.
If there is one thing that characterizes the US real estate market in the past two years, it would be the high home prices pretty much everywhere. Even though these have been on the rise before 2020, they have skyrocketed since the pandemic hit.
The median existing property price for the entire country rose to over $350,000, about twice what it was 10 years ago. And in the past year, the price for an average home went up by almost 20% across the nation and even higher in over 125 metropolitan areas.
Fortunately, the 2022 US housing market is not in a bubble, according to The Washington Post. But this phenomenon has been making it more difficult for real estate investors to find great deals.
Because of this, it is more important than ever to be very careful with choosing an investment property. If you are investing in a short-term rental home, you need to make sure that the unit you buy will bring solid returns.
In this article, we take a closer look at the profit potential of Airbnb in Davenport FL:
- 3 reasons to invest in Airbnb Davenport FL this year
- Legalities surrounding Airbnb properties in Davenport
- How to choose the best Airbnb investment in Davenport
If you are investing in real estate and want to add Florida to your portfolio, keep reading to learn why you should choose Davenport.
Why Invest in Airbnb Davenport FL in 2022
To determine whether a city is worth investing in for short-term rentals like Airbnb, we look into three factors:
- Location and reasons to visit
- Historical performance of existing Airbnbs in the area
- Florida real estate market
Why People Are Visiting Davenport, FL
Located in Polk County near the I-4 and Hwy 27, Davenport is minutes away from Disney World and Universal Studios. It also provides easy access to the beaches of the Gulf Coast and Atlantic Shore. Because of this, there are over 7,000 short-term rentals and Airbnb Davenport FL.
Visitors flock to this city so they can be close to world-famous attractions and have a place to retreat to at the end of the day. Aside from its proximity to Orlando, tourists would enjoy the local attractions in Davenport.
How Airbnb Davenport FL Performed in 2021
Here is a quick list of Davenport FL housing and Airbnb stats as of January 2022:
- Airbnb Rental Income: $1,924
- Airbnb Cash on Cash Return: 1.68%
- Airbnb Daily Rate: $163
- Airbnb Occupancy Rate: 60%
- Median Property Price: $369,821
- Average Price per Square Foot: $218
- Days on Market: 58
- Walk Score: 34
This month has not been good for the average Airbnb Davenport FL. This is due to the COVID-19 Omicron variant that has been disrupting travel patterns all over. Looking at the stats from 2021, though, we found that these short-term rentals had a great year:
- The average monthly Airbnb rental income was as high as $4,271 (December 2021)
- The monthly occupancy rate of an Airbnb income property was as high as 80% (March and May 2021)
We expect Airbnbs in this area to recover and earn at least this much in 2022 after the Omicron surge is over and people feel safe traveling again. And with the US reopening its borders, more international visitors will definitely book vacation homes. They would want to experience the comfort of home while enjoying hotel-like amenities. This will also help lessen their interactions with other people.
Florida Real Estate Market: 2021 Trends and 2022 Forecast
The Florida housing market has been great for investors in 2021 and will remain a smart investment in 2022, even as inventory remains low and prices stay high. Here are some quick market stats:
- The median property price in Florida is $472,557 as of January 2022.
- Florida median property prices have grown by almost 24% over the past year and nearly 69% over the last five years.
- According to Florida Realtors, the median price of single-family homes that sold in December 2021 was 21% higher compared to the previous year.
- Single-family homes in Florida spend an average of 77 days on the market before selling.
- At the end of December 2021, active listings for single-family homes were down by almost 34% compared to one year ago, with the inventory at a very low one month’s supply.
Because of the high property prices, those who wish to live in Florida may put off their plan of owning a home. Instead, as long as they can work remotely, they are more likely to rent an Airbnb home for a month or so to enjoy the local area without making such a huge investment. Airbnb Davenport FL hosts should take advantage of this by accepting longer bookings.
Is It Legal to Operate an Airbnb Davenport FL?
The city of Davenport mostly follows the state regulations of short-term rentals, which are considered friendly for investors making money in real estate. In Florida, property owners must apply for a license through the Florida Department of Business and Professional Regulation. They have two licensing categories:
- Vacation Rental – Condominium license: This is issued to owners of a unit or group of units in a condominium complex or in a co-op that will be turned into a vacation rental
- Vacation Rental – Dwelling license: This is for owners of single-family houses, townhomes, and a unit or group of units in a duplex, triplex, or quadruplex
Each category is then further divided into three types of licenses based on the number of vacation rental properties that the registered owner has:
- Single – The owner has one vacation rental property
- Group – Covers multiple vacation rental units in one building
- Collective – Multiple vacation rental properties in different locations
Upon receiving their license, the owner or property manager can legally list and operate the registered rental in the state of Florida on Airbnb and other short-term rental platforms.
Who Should Apply for a Vacation Rental License?
Florida requires any vacation rental owner to apply for a license if they:
- Are renting out an entire unit more than three times in a calendar year for periods of less than 30 days or one month at a time
- Advertise their vacation rental property anywhere (online, in print, etc.)
- Regularly rent out their entire unit exclusively to the public, as opposed to only letting family and friends use it
These stipulations also mean that hosts who rent out just a room or a part of their property do not need to apply for a license as these are not considered by the state to be public lodging.
How to Choose the Best Airbnb Investment in Davenport
Here is a step-by-step guide to help you search for the best Airbnb Davenport FL.
Step 1: Decide on the Best Property Type
The location will dictate which property type is best for Airbnb in that area. For example, in commercial districts that get a lot of business travelers, apartments or condos on Airbnb are likely to get more bookings. Meanwhile, small towns would only have single-family homes as rentals.
The number of bedrooms and bathrooms will determine what type of guests you will attract as well. Solo travelers and couples would definitely book studio units or one-bedroom Airbnbs. Meanwhile, families or friends traveling together would get a rental home that has two or more bedrooms.
If you are not sure which property type is best in Davenport, we recommend you use Mashvisor’s Neighborhood Analytics feature to find out. Our AI collects data from short-term rental platforms like Airbnb to figure out the property type, number of bedrooms, and platform that are optimal for the area. To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Step 2: Set Your Budget
The higher the price you have to pay for, the more difficult it could be for you to earn a high return on investment and have a positive cash flow. Thus, it is important to set a budget that you are comfortable spending and will not put you at risk of defaulting on your mortgage.
When deciding on your budget, do not just think of the selling price; you also need to consider the following expenses that you will make before you can list your rental:
- Closing costs: These are your expenses upon closing the sale. It usually amounts to 2% of the selling price.
- Repairs and remodeling: Even though the actual cost depends on the home’s condition, you should set a maximum budget for it so you could factor this into your decision.
- Furnishing: The amount depends on what you are comfortable with as well, though you might want to hire a decorator to help you out.
- Business registration: This includes any fees you have to pay to apply for a vacation rental license.
- Other initial costs you may need to get your first few bookings. These may include hiring a property manager and advertising costs.
Step 3: Start Searching
When looking for an investment property, utilize different sources such as various online listings, local newspapers, and your investment network. And be open to buying a foreclosure, REO, or off-market property to increase your chances of finding a rare deal.
Also, make sure to keep your budget in mind while you search. You might get tempted to buy a property that is out of your range. If this ever happens, remember this: you are buying a rental home for you to profit from, not live in.
Step 4: Conduct a Thorough Analysis
After identifying a few houses that are within your budget and that interest you, it is time to select the one you will buy. The best way to do this is by conducting a comparative market analysis. Here, you will look at properties that are similar to the one you are analyzing, are located in the same area, and were sold in the last few months. Learn what their final selling prices were and account for their differences from the price of the house you are considering.
A comparative market analysis will help you estimate the fair market value of a house for sale so you do not overpay. It will help you with estimating your returns.
To estimate your returns, you must first estimate the daily rate and occupancy rate that your Airbnb will have. Then use these to calculate your monthly rental income and multiply it by 12 to get the entire year’s worth. Next, list down the one-time and monthly costs (multiplied by 12) that are related to your Airbnb operations, and subtract the total from your annual rental income.
This will help you determine your cash flow, at least for the first year. If you keep calculating this, you will get your total investment payback after several years. You should also calculate your cap rate, which is your net operating income divided by the property’s current value. A 10% cap rate would be ideal, but a range between 5% to 8% is good enough. Calculating these, however, can get complicated. You would be better off using an Airbnb calculator.
After analyzing your shortlisted properties, you should already know which one to buy based on the cap rate and possibly other factors. Once you have decided, you can now proceed to place an offer and start the transaction.
Find the Best Airbnb Davenport FL Using Mashvisor
While real estate investing aims to generate passive income, the initial stages always involve a lot of time and effort. And if you are not careful, you might end up miscalculating something that may lead to significant losses. To avoid this risk, consider using a real estate investment tool that helps you search for properties and provides an accurate analysis based on data gathered from reliable sources. One great example of this is Mashvisor.
With both beginner and experienced real estate investors in mind, we created a platform that would serve as your go-to resource for finding lucrative investment properties. Using it requires little or no learning curve, either, and you can do your search and analysis in one day at most without leaving your home. To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.