Investing in short term rentals is one of the best strategies to start off your real estate investing career. Similar to traditional long term real estate investing, learning how to find Airbnb property for sale is necessary to guarantee a good return on investment from your short term rental.
This beginner’s guide will explore:
- What is an Airbnb investment property?
- Why invest in short term rental properties?
- How can you find the best Airbnb property for sale?
What is an Airbnb investment property?
An Airbnb investment property is a rental property intended for short term use. For accommodation and lodging properties, a “short term” has an upper limit of six months. Rental properties that are rented out for more than six months are otherwise known as long term rentals or traditional rentals. An Airbnb investment property is, therefore, any type of real estate property that is bought with the intention of listing it on Airbnb.
If you don’t know what Airbnb is, it is the largest short term rentals booking platform that is estimated to reach 46 million users in the US by 2022. The reason behind its popularity among short term renters, especially vacationers, is a combination of price, comfort, and experience. Airbnb rentals tend to be cheaper than traditional hotel lodging, and for many people, give a better feel for the local culture.
When you become an Airbnb host, guests will be able to review your Airbnb rental, which greatly affects your Airbnb rental income and Airbnb occupancy rate. Therefore, it is important to learn how to become a good Airbnb host once you have found an Airbnb property for sale.
Related: The Ultimate Guide on How to Become an Airbnb Super Host
Why invest in short term rental properties?
Becoming a vacation rental owner is a good strategy to make money in real estate investing. The market for Airbnb short term rentals is expected to grow 7.9% annually and under the right circumstances, real estate investors can make more money with short term rentals.
Finding the best Airbnb property for sale: How to do it
A great deal of success with Airbnb rentals is attributed to finding the best Airbnb property for sale. Doing so requires a well performed real estate market analysis on the market level and an investment property analysis on the property level. Using real estate investing tools to perform these analyses will give you an idea of how well your Airbnb rental property will perform.
With that in mind, let’s look at the basic steps for finding the best Airbnb property for sale.
1- Follow market trends
Keeping up with the latest trends in the real estate market is essential when looking for an Airbnb property for sale. Which real estate market is performing better than others? Where would you find the best location for an Airbnb investment property? At Mashvisor, we update our list of the best places to invest in short term rentals several times a year, which helps real estate investors stay up to date with the latest market trends.
Related: 8 Best Cities for Airbnb Investment in 2019
The following cities are the best locations to look for Airbnb property for sale in 2019. These cities scored the best according to our Airbnb profit calculator in terms of occupancy rate and Airbnb cap rate and cash on cash return. For more information about cap rate and cash on cash return and how to interpret them, read this blog post.
- Lansing, MI
Airbnb Cap rate: 11%
Airbnb occupancy rate: 64%
Airbnb rental income: $2,674
- Tuscaloosa, AL
Airbnb Cap rate: 10%
Airbnb occupancy rate: 40%
Airbnb rental income: $3,274
- Dubuque, IA
Airbnb Cap rate: 9%
Airbnb occupancy rate: 43%
Airbnb rental income: $2,984
- Goshen, IN
Airbnb Cap rate: 9%
Airbnb occupancy rate: 66%
Airbnb rental income: $2,793
- Portsmouth, VA
Airbnb Cap rate: 9%
Airbnb occupancy rate: 58%
Airbnb rental income: $2,571
To start looking for and analyzing the best Airbnb investment properties in your city and neighborhood of choice, click here.
2-Use Mashvisor’s heatmap analysis
The best way to find Airbnb property for sale is through using a heatmap. Mashvisor’s heatmap analysis facilitates finding Airbnb investment property by identifying neighborhoods based on a unique color code that ranks areas from highest to lowest performing. The neighborhoods can be ranked according to listing price, Airbnb occupancy rate, Airbnb rental income and Airbnb cash on cash return. This way you can first shortlist neighborhoods that have Airbnb investment properties that are within your budget limit and promise high returns.
3- Use Mashvisor’s investment property calculator
The investment property calculator from Mashvisor can be used as an Airbnb profit calculator should you use it for an Airbnb rental property. When looking for an Airbnb property for sale, you can enter the basic information about the property. This includes purchase price, financing method, and cash invested. The tool will then provide you with crucial real estate metrics needed to decide whether or not to go for the investment.
To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.
4- Beware of short term rental laws
As a real estate investor, you should know that short term rental laws vary from city to city. Therefore, it is advised that you check the local legal requirements before you list your property on Airbnb for rent. Airbnb regulations have been popping up in many states across the US. Such regulations vary from the complete restriction of Airbnb rentals to limiting the number of days a property can be rented. So, before starting to look for an Airbnb property for sale, make sure to avoid investing in these cities where Airbnb rentals are heavily regulated.
Related: Airbnb Regulations 2018 – Invest in These Cities Where Airbnb Is Legal