One of the most frequently asked questions among real estate investors is which investment strategy is better: Airbnb investment or traditional investment?To determine the optimal investment strategy, property investors have to take into account three specific factors before making such a decision.
Location
Some locations yield a higher ROI and are better suited for an Airbnb investment and others for a traditional investment. It all comes down to the demand for each investment strategy in the real estate market. For example, if you’re a real estate investor in a market with a strong tourism industry, like the Orlando real estate market, then an Airbnb investment would be more favorable because there’s a higher demand for Airbnb rentals than for traditional rentals.
Alternatively, if you own an investment property in an area that offers job opportunities and is attractive to students and employees, like the Austin real estate market, then demand for traditional investment properties would be higher, making it a favorable market for a traditional investment over an Airbnb investment.
Property Type
In the world of real estate investing, property investors are offered many types of residential investment properties to choose from. There are single-family homes and multi-family homes for sale that range from duplexes to entire complex buildings, condos and townhouses, etc. Some types work best as traditional investment properties and others as Airbnb rentals.
If you’re investing in a single-family home, for example, then the optimal rental strategy would be a traditional investment since families look for places to live in for a long time period. A beach house, however, would be a perfect Airbnb investment property.
Related: What’s the Best Property Type for Airbnb Rentals?
Target Tenants
If the real estate investor is targeting families, then a long-term traditional investment would be the optimal rental strategy. On the other hand, Airbnb rentals are more attractive to travelers or businesspeople. These are tenants looking for places to stay for a short time period that are not as costly as hotels. Thus, if these are your target tenants, then an Airbnb investment is best for you.
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Still Stuck? Mashvisor Can Help
Mashvisor’s rental property calculator is the best tool for a real estate investor to determine which investment strategy is optimal! It allows property investors to calculate the different values related to an investment property such as Cash on Cash Return, Cap Rate, Cash Flow, and Airbnb Occupancy Rate.
Mashvisor also provides Airbnb and traditional comps based on qualitative and quantitative data gathered from different sources. This allows a real estate investor to easily compare different investment properties (and different investment strategies) to determine the optimal rental strategy and property type for both an Airbnb investment and a traditional investment.
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Interested in learning more about this topic? Read this: Airbnb Investment or Traditional Investment: How to Determine The Optimal Strategy