What have you got planned for 2022? Are you looking into the possibility of becoming one of many real estate investors in the coming year? Perhaps you’re considering a short-term rental property because you heard such good things about Airbnb.
There’s no denying that becoming an Airbnb host offers an excellent return on investment. Investment property analysis shows that short-term rentals generate much more annual revenue than more traditional rentals. COVID-19 restrictions also look set to change over the coming months, which means more and more people will be taking vacations.
One question you’re bound to ask yourself is whether Airbnb is as profitable as people say it is. Unfortunately, not all Airbnb properties are equal, so it stands to reason that while some will generate good returns, others might not be so profitable.
There is something you can do before you buy an Airbnb investment property, and that’s to look at potential returns. Don’t worry if you’ve not got a head for figures or you don’t know where to start with your real estate analysis. Again, technology comes to the rescue with Mashvisor’s Airbnb fee calculator.
This post will look at how this tool can help real estate investors make intelligent investment decisions and increase their earning potential going into 2022 and beyond.
What is an Airbnb Calculator?
You’ll find investment property calculators all over the internet. It’s a digital tool investors use when they want to analyze the potential of an investment property.
Mashvisor’s Airbnb calculator is similar in many ways but also vastly different. It focuses on the potential of Airbnb investment properties. Mashvisor’s Airbnb profit calculator can help because it has access to reliable Airbnb data and analytics. Using that information, the tool analyzes the profitability of a potential Airbnb investment housing market in the United States.
The data the Airbnb income calculator uses comes directly from Airbnb.com. So rather than spending weeks gathering data yourself and working out projections, all the work is done for you. Using the most critical data and real-time analysis, you’ll be able to make smarter decisions about your potential Airbnb investment property. Rather than taking weeks, you’ll be able to do it all in a matter of minutes.
What Does an Airbnb Calculator Do?
Mashvisor’s Airbnb fee calculator provides a wide range of information you can use to help you find the best Airbnb rental property for sale.
Let’s look at the Airbnb data and analytics you have access to with Mashvisor’s Airbnb fee calculator.
Airbnb Occupancy Rates
The vacation rental marketplace is very seasonal. Fluctuations in bookings are commonplace, but the patterns tend to be unique to each short-term rental market.
If you want to calculate the rental income of an Airbnb property, you need to know its occupancy rate. The higher the occupancy rate, the more significant rental income you’ll generate every month. If you can generate a high Airbnb income during the high season, it should be enough to cover you during the off-season.
Mashvisor’s fee calculator uses data relating to the performance of comparable rental properties in the same area to estimate Airbnb occupancy rates.
Airbnb Rental Income
To determine your potential cash flow and return on investment, you need to know about Airbnb rental income.
Once you’ve decided on a location, the next step is to begin your investment property search. There are many places you can look, such as newspapers, your network, or through real estate agents. However, a more efficient way to look for properties is to use Mashvisor’s property finder.
The Property Finder is an online property search tool that helps you find top-performing Airbnb properties for sale in a location of your choice. You can input various criteria and preferences to ensure you get the best match.
Using the Airbnb fee calculator, enter an address, and the revenue estimator will deliver accurate estimates of potential Airbnb rental incomes.
The Airbnb investment calculator bases the estimate on Airbnb daily rates and Airbnb occupancy rates of similar rental listings in the area.
As well as using the data for determining cash flow, you can also use it to help you decide how much rent to charge guests. The Airbnb fee calculator also provides data for traditional properties, which means you can compare the profitability of two rental strategies and decide which works best for you and will give the best rental income.
Airbnb Rental Expenses
Anyone new to rental property investment might not appreciate that you need to cover lots of expenses. But, then there’s the old adage: You’ve got to spend money to make money!
Being able to estimate all those Airbnb rental expenses will be very helpful when you’re deciding whether to buy an Airbnb property. Such estimates also prove helpful in calculating expected cash flow and return on investment.
The Mashvisor Airbnb fee calculator provides a list of possible expenses, including one-time startup costs and recurring monthly expenditures. For each of these categories, you’ll also get a total cost.
Some of the Airbnb rental expenses you’ll find included in Mashvisor’s Fee Calculator include:
One-time startup costs such as:
- Closing costs
- Total repair costs
- Furniture and appliances
In terms of monthly expenses, you’ll find the following:
- Rental income tax
- Property tax
- Property management costs
- Property maintenance
- Cleaning fees
- HOA dues
Compared with a traditional landlord, an Airbnb owner/host has more recurring costs. While some of these recurring costs might not be included in the Airbnb fee calculator, you do have the option of modifying the expenses and adding custom ones as you see fit.
Airbnb Cash Flow
The cash flow for any business is the difference between income and expenses. For an Airbnb business, it’s no different. The cash flow is your monthly Airbnb rental income minus your monthly expenses. If the cash flow for your Airbnb rental is positive, your property pays for itself and provides you with a dependable monthly income stream.
If you want to make sure the property you’re investing in has a positive cash flow, you must conduct a cash flow analysis before buying.
Use the Mashvisor calculator tool, and you’ll get carefully calculated Airnbnb cash flow estimates for any property you might want to consider.
Airbnb Capitalization Rate
When a real estate investor wants to compare the profitability of several investment opportunities quickly, they tend to use a return on investment metric known as the cap or capitalization rate. It doesn’t consider the financing method of the investment, but it can be very time-consuming, particularly when you want to compare multiple Airbnb properties for sale.
Luckily, our Airbnb fee calculator can do the hard work for you and deliver readily-calculated cap rate estimates.
Airbnb Cash on Cash Return
Another very important metric for anyone looking at purchasing an Airbnb property is cash on cash return. The Airbnb cash on cash return metric is slightly different than the cap rate because it considers the financing method.
If you’ve chosen to finance your Airbnb purchase with a real estate investment loan, calculating Airbnb cash on cash return is a critical part of your Airbnb property analysis.
It doesn’t matter if you don’t know how to make this calculation because the Airbnb income calculator pre-calculates it for you.
Airbnb Rental Comparisons
Knowing what level to set your Airbnb rental is essential when you’ve decided to invest in an Airbnb property. To help you choose, you can conduct a detailed rental market analysis. This involves comparing rental prices of similar Airbnb properties in the area.
There are many ways you can find rental comparisons, but one of the most effective, fastest, and easiest ways is to use Mashvisor’s Airbnb price estimator tool. Using this tool, you’ll get a list of active Airbnb rental comps for every property on the platform.
Looking at the data allows you to see how each of the rental comps is performing relating to the nightly rate, occupancy rate, rating, and rental income.
Using this information, you’ll be able to decide on an Airbnb rent that will maximize your occupancy rate and rental income. Running Airbnb rental comps is critical if you want to be competitive now and into 2022.
The financing method you use to purchase your Airbnb property will significantly affect your return on investment and cash flow.
So what are your financing options if you want to purchase an Airbnb rental property? Unfortunately, financing Airbnb properties is not as easy as you might expect. Their short-term nature means you’ll face higher levels of scrutiny from lenders compared to standard investment loans for traditional properties.
It depends on your situation, but one of the following might suit you:
You can get a conventional mortgage from many established lending institutions such as a national bank or a smaller mortgage lender like a credit union or local bank.
Conventional mortgages tend to have strict requirements that often include a higher credit score, higher cash reserves, a larger down payment, and lower debt to income ratio.
However, when it comes to mortgage rates, they are usually more competitive compared to other Airbnb loans.
Home Equity Loans
If you already own a property, you could use the equity to take out a fixed-rate home equity loan or a home equity line of credit (HELOC).
You could probably borrow enough funds to cover your down payment, but it would depend on your debt-to-equity ratio, the cost of your investment, and other factors. You would also have to use another financing option for the balance. Alternatively, you could borrow the total amount required to purchase the property.
One of the advantages of this type of loan is that the rates are low. Terms also tend to be very favorable. However, you’re putting your primary residence at risk if you fail to pay down the loan.
Small Business Loans
Small business loans are another way to finance the purchase of an Airbnb rental. There has been a rising demand for Airbnb financing in recent years, which has led to an increase in the number of companies offering small business loans.
A small business loan for an Airbnb property tends to be more challenging to secure. The reason is that most lenders would prefer to finance a business with an established track record. To get a small business loan, you also must be registered as a business entity.
Hard Money Loans
A hard money loan is a short-term loan given by an institution or private individual. This option tends to be a last resort because they typically require a high down payment and charge higher interest rates compared to other financing options.
On the plus side, they usually have fewer requirements and will be approved much quicker. For these reasons, they do make a viable alternative if you’re not eligible for other loans.
However, before you choose this option, remember you’ll need a sizeable down payment and will have to repay the loan in a shorter period.
If you want to know how much a financing option will impact your Airbnb investment, the Airbnb fee calculator includes an inbuilt mortgage calculator. Simply enter the details of your mortgage, and you’ll see how the cash flow and cash on cash return is affected by the size of your downpayment, the type of loan, and the interest rate.
Looking forward to 2022, Airbnb hosting could be a very lucrative business opportunity. First, however, you need to do your research to ensure you’re purchasing the right property and renting it out at the correct rate.
If you want to make an intelligent investment decision, you can’t go wrong if you run the numbers first.use Mashvisor’s fee calculator because it will make your analysis easier. The tool provides accurate analytics and Airbnb data in just a few minutes.