It’s no secret that real estate investing is more diverse than ever before. With a plethora of property types and different rental strategies to choose from, there is bound to be a niche suitable for every real estate investor. If you’re familiar with short-term rentals, you’ve probably heard of Airbnb real estate investing. So, is an Airbnb a good investment? How can you be sure that your Airbnb investment will be profitable? In today’s blog post, we’ll answer these two important questions.
Why an Airbnb Investment Is a Good Idea
1. Growth of the Short-Term Rental Strategy
The short-term rental (STR) strategy has witnessed immense growth over the past few years. Recent studies project the STR market, which includes Airbnb, to increase by 7.9% annually. With over 7 million Airbnb listings, it’s easy to see why Airbnb sits at the top of the STR business. Vacationers and travelers are consistently choosing Airbnb over other STRs. The Airbnb business is also giving traditional hotels a run for their money, as many tourists (especially millennials) favor Airbnb rental properties. As a result, owning an Airbnb has become a successful rental investment strategy.
2. The Profitability of Airbnb Real Estate Investing
For investors, the purpose of real estate is to make a profit. This is why many choose to become Airbnb investors. Mashvisor’s data shows that an Airbnb investment property is generally more lucrative than traditional long-term rentals in many locations across the US housing market. Such profitable Airbnb locations range from well-known tourist hot-spots to more surprising locations like the Gatlingburg real estate market. Since Airbnb rental properties are rented out on a nightly basis, they can earn more rental income per night than long-term rentals. Like all rental properties, Airbnb rentals also come with their own set of fees, including vacancy costs and utility fees. Nonetheless, with these factors considered, Airbnb properties are still generally more profitable than their traditional counterparts.
3. Airbnb’s Duality of Use
There is another large advantage of owning an Airbnb investment. Not only can it act as a rental property, but it can also be your secondary residence while on vacation. This is particularly helpful for part-time Airbnb hosts. They can make money from their Airbnb rental property and use it whenever they want. In addition, Airbnb allows you to choose the dates when your property is available as a rental, which is something you cannot do with traditional rentals.
4. Potential for a Passive Real Estate Investment
Airbnb rentals also allow short-term rental investors to rent out actively or passively. If you decide to become a host, the Airbnb strategy involves a full-time commitment. However, if you decide to hire a professional Airbnb property manager, you can avoid management duties and simply reap the return on investment as a passive real estate investor. Although a manager will take a percentage of your rental income, they also typically work to maximize the profit earned from your Airbnb investment. So it can be well worth it.
5. Experiencing New Cultures and People
Finally, an Airbnb rental property is a good idea because it can be fun! As an Airbnb host, you’ll be exposed to many new people and cultures from all around the US and the world. Many hosts like to personally check in on their guests, and even pass by the rental property to make sure all is well.
If, however, you prefer to keep to yourself as an Airbnb host, that is completely fine. In such a scenario, consider printing out a property guide and installing digital locks. Be sure to clearly communicate with Airbnb guests regarding their stay to make things easier on yourself.
Ready to become an Airbnb host? Check out our guide to learn more.
How Mashvisor Helps You Make Sure an Airbnb Investment Is Worth It
Without a doubt, an Airbnb income property is a good real estate investment. Still, how can you make sure that a prospective rental property will be a good Airbnb investment? The answer is quite simple. All you need to do is use Mashvisor’s real estate investment software. Mashvisor’s assortment of Airbnb tools will help you make sure an investment property is suited for Airbnb in four ways.
1. Find Profitable Airbnb Rentals
In order to have the best Airbnb rental property, you need to invest in the best cities for Airbnb investment. But your choice of location doesn’t end with locating a profitable city. You need to identify a top neighborhood for Airbnb. With Mashvisor’s real estate heatmap, you can do just that!
The heatmap analyzes locations on a neighborhood level. It uses traditional and predictive Airbnb data, from existing real estate comps taken directly from Airbnb, to help you find the top locations for Airbnb rentals. The heatmap, along with all of Mashvisor’s Airbnb investment analysis tools, is interactive. As a result, you can conduct Airbnb market research using specific filters. These filters include listing price, Airbnb rental income, Airbnb return on investment (cash on cash return), and Airbnb occupancy rate.
Once you find a profitable Airbnb neighborhood, you will be able to see all of the available investment properties for sale in the area. This will help you put together a list of potential Airbnb rentals to invest in.
2. Analyze Airbnb Investment Properties for Sale
After finding prospective Airbnb properties for sale, you can study them using Mashvisor’s Airbnb investment calculator. Also known as the Airbnb profit calculator, it performs many functions pertaining to an Airbnb investment property analysis. The calculator will, for instance, estimate Airbnb income, assess cash flow and ROI, and project the overall Airbnb profit margin of the property.
3. Estimate and Manage Airbnb Rental Expenses
Mashvisor’s Airbnb investment analysis tools use the most up-to-date Airbnb analytics available. The Airbnb profit calculator, for example, provides expense estimates to help you determine your future costs before buying. These include furnishing expenses, mortgage payments, repair costs, and much more. You can also manually enter certain expenses. The calculator can then calculate Airbnb cash flow and Airbnb return on investment for a rental property based on your own estimates.
4. Determine the Optimal Rental Strategy
Finally, with the complete analysis conducted, Mashvisor will tell you the optimal rental strategy for the investment property in question. That way, you can make sure that a certain property will perform better as an Airbnb vs a traditional rental.
All in all, an Airbnb investment is one of the best you can make when investing in real estate. With Mashvisor’s investment tools, you will be able to learn where to buy an Airbnb investment property, analyze its profit and expenses, and know if it is the right property for Airbnb.
To start searching for Airbnb rentals anywhere in the US housing market, CLICK HERE to start your FREE trial with Mashvisor!