Mashvisor’s Airbnb property profit calculator can help you identify the location and home that would give you solid returns. Here’s how to use it.
As short-term rentals got more popular, investing in an Airbnb income property has become up to three times more profitable than having a traditional rental home. But at the same time, the market is now more saturated, making competition to get bookings more intense. Because of this, it is more important than ever to estimate your return on investment in a property before you decide to buy it. The best way to do this is by using an Airbnb profit calculator.
In this article, we will take a look at one of the most powerful a real estate investor should have by answering the following questions:
- What is an Airbnb profit calculator?
- How does it work?
- What are the benefits of using one?
- Where can you find the best Airbnb income calculator?
- Who can use it?
- How is it accurate?
We will also discuss how much you can earn on Airbnb, and list the top 10 US cities for Airbnb in 2022. If you are looking for a tool that can help you find the best Airbnb investment property this year, keep reading.
How Much Can You Earn on Airbnb?
As mentioned in the introduction, the rental income on Airbnb can be up to three times higher than traditional rental income. But this depends on three main factors:
- Location – Is the Airbnb property in a tourist hotspot or a business district? Does it get visitors year-round, or only during certain seasons?
- Property type – Do guests only book a room, or do they have the entire place to themselves? How many guests can stay at once?
- Occupancy rate – How often does it get booked in a month or year?
According to Airbnb’s Fast Facts, the average annual earnings per host was $9,600 as of the end of April 2021. However, these figures include hosts’ revenues from around the world and whether they only rent out a room or multiple properties. Using Mashvisor’s data as of mid-January 2022, the median income of an Airbnb property in the US is $2,500 per month or $30,000 per year.
These earnings are higher than the federal minimum wage. Thus, it is no wonder why homeowners and even renters host a part of their property on Airbnb. And investors who want to turn this into a full-time business are able to pay back their mortgage and eventually expand their portfolio thanks to the high returns. But to ensure your success in this endeavor, you need to estimate your investment payback with the property you wish to buy.
What Is an Airbnb Property Profit Calculator?
Also known as an Airbnb estimator, the Airbnb property profit calculator helps determine the approximate earnings of a home if it was rented out as a short-term rental. It usually bases its estimates on the property’s size, location, selling price, and performance of actual Airbnbs similar to the house you are analyzing in the same neighborhood or zip code.
Using comparable properties in the same area is crucial to making an accurate analysis as these define an Airbnb rental’s profitability.
The Airbnb calculator allows real estate investors and aspiring Airbnb hosts to run efficient analyses and make smart decisions on where they should invest. Beginners would feel more confident about starting their own Airbnb business when they know that they can actually make a profit. And investors who are already overseeing several rentals can decide on whether to invest without leaving their homes to tour the place.
How Does an Airbnb Property Profit Calculator Work?
There is more than one Airbnb income calculator you can find online. While they are different from each other, they also have similarities. A basic Airbnb investment calculator may require you to input the following information:
- The address of the property you are analyzing
- The number of bedrooms
- The number of bathrooms
- How many people it accommodates
Using these details, the calculator would find Airbnb properties with similar characteristics in the same area as the home you are analyzing. It will then get the average metrics from these rentals, such as the monthly or annual income, average daily rate, and occupancy rate. Some even provide a forecast for a few months or several years. There are also calculators that include an overview analysis of similar rentals in the neighborhood.
Meanwhile, there are other Airbnb revenue estimators that need you to input more details such as:
- Property purchase price
- Down payment, if applicable
- Mortgage details such as duration and interest rate, if applicable
- Running expenses such as property taxes, insurance, utilities, and more
Depending on what needs to be indicated in the calculations, there might be variables that beginners are not familiar with. A good calculator would leave concise explanations for each variable that requires input. This way, anyone who uses it can understand what they are typing into the calculator and why they need to take it into account.
After inputting the needed information, the calculator will then display its estimates for the following metrics:
Monthly Rental Income
This is your total earnings in a month from renting out your Airbnb property. While some Airbnbs earn higher than others, it does not tell a complete story. For example, a rental might bring in $5,000 a month from bookings but may incur $4,000 in running expenses. Meanwhile, a $3,000-per-month rental may run $1,500 in costs.
Cash flow is the difference after deducting your expenses, including mortgage, from your monthly income, and will be the lifeline of your Airbnb operations. Making money in real estate would be impossible with a negative cash flow. But with a positive cash flow, your Airbnb income is covering your expenses and leaving you enough money to spend elsewhere or save for future investments.
Cap rate, which is short for capitalization rate, is one of the most commonly used metrics for comparing investment properties. It is similar to estimating the rate of return. A simple formula for calculating this is by dividing the annual net operating income by total acquisition costs. However, some Airbnb estimators may include other variables in their calculations.
Occupancy rate is the number of nights an Airbnb property is rented divided by the total nights it is available for booking in a month or year. It is one of the most important performance indicators for this particular real estate investment strategy. In general, the higher the occupancy rate, the more revenue the Airbnb property generates. However, this does not always apply. You also have to consider the average daily rate you can charge.
What Are the Benefits of Using an Airbnb Property Profit Calculator?
Using an Airbnb property profit calculator helps you estimate how much a property can earn as a short-term rental based on Airbnb demand and other factors. It can also give you insight into how to optimize your existing rental property. You get all of this information upon entering the details that the calculator needs.
An Airbnb calculator is useful for figuring out the most profitable location for your rental strategy. If you already have more than one city, neighborhood, or property in mind and want to know which of them is the most lucrative, this tool can help you out.
If the calculator you use asks for the address of the property you are analyzing, then it will likely give an estimated monthly rental income based on the active Airbnbs in the area. This is especially useful for those who want to find out how much they can earn with that property in that neighborhood. And by typing in your running expenses, the calculator can show whether you will have a positive cash flow at the end of each month.
These are just some of the benefits of using an Airbnb calculator. However, it is important that you find one that gives all of the information you need to make good investment decisions.
Where to Find the Best Airbnb Property Profit Calculator
In competitive industries like short-term rentals, making data-driven decisions is one of the keys that will lead you to success. But you cannot just use the first Airbnb investment calculator that you find online; you must also make sure that the tool you are using gives you the information you need in an accurate and efficient way.
This is why Mashvisor is the best tool for real estate investors. More than an Airbnb calculator, it turns months of market research efforts into 15 minutes, making it perfect for both beginner and experienced investors who need to find an investment fast. Instead of just asking you to enter the address of the property you wish to analyze, we also help you search the thousands of homes for sale that were listed on the MLS database.
How the Mashvisor Airbnb Calculator Works
Once you find one or a few houses that you wish to analyze, you can find our Airbnb calculator on each listing page. There, we have already estimated the rental income, expenses, and occupancy rate of each property based on the comps and standard costs in the area. However, you are welcome to customize the amounts and add other expenses that were not listed in the breakdown so you will have a more tailored analysis.
If there is a term in the calculator that you wish to know more about, just hover over it or the “?” icon and a short description will pop up. Every time you update a variable, our calculator automatically updates its analysis; no need to refresh the page. And aside from providing the monthly income, expenses, and cash flow, we also calculate the following:
- Cash on cash return – If you are buying a property using financing, this metric calculates your rate of return based on how much you have paid toward your mortgage. It is a more accurate way to measure ROI compared to the cap rate.
- 10-year investment payback balance – This is your accumulated profit after 10 years after deducting your total one-time and recurring costs including your mortgage.
Who Can Use Mashvisor’s Airbnb Property Profit Calculator?
Mashvisor’s Airbnb calculator is a versatile tool for determining and maximizing the profitability of a rental investment property. But who exactly can use it?
- Beginner investors: When you are new to the industry, it can be overwhelming to find your first investment property with all of the factors you need to consider. Mashvisor’s calculator and other features simplify all of that while helping you learn more about investing.
- Investors who want to expand to a new market: If you are planning to buy a property in a state, city, or neighborhood that you are unfamiliar with, having all the tools at your disposal can help you find the right investment. Our calculator can analyze any property in the US and also help you find a lucrative property that is currently for sale.
- Owners of second homes: Even if you are not a career investor, you might be thinking about turning your secondary residence into a short-term rental property. By uploading details about your home onto our database, our calculator will be able to analyze and estimate the projected income that your property will generate.
- Real estate agents: If you want to work with real estate investors who are looking for a new investment property, using Mashvisor’s calculator will help establish your credibility.
- Rental arbitrage investors: Our calculator does not only analyze a property’s potential as a short-term rental. We can also determine if it is more optimal as a traditional rental home. This tool could then help you find a property that would do well with either strategy.
How Is Mashvisor’s Airbnb Property Profit Calculator Accurate?
Unlike other calculators that pull data from all active Airbnb listings and get the average figure, our AI tends to be more selective.
For our estimates, we only use the data pulled from Airbnb listings that are not just active but are also verified or have received at least three reviews on the platform. This means that we are only using the data from Airbnb properties that are already doing well while ignoring the listings of hosts that may still be giving the platform a try. This method helps us make sure that the information we give is based on successful short-term rentals.
We also get the median figures instead of the average for more accuracy. This eliminates any outlier data, which may skew the results and misinform the overall analysis.
For other variables in the calculator such as mortgage and expenses, we use the latest data collected from Redfin and public records. And as for the listings of properties for sale, these were taken directly from MLS websites, which can only be accessed by licensed real estate professionals.
Lastly, we verify the accuracy of the data we collect by comparing them to other sources like Realtor.com, Zillow, Auction.com, among others. Each of these websites provides different data: MLS, Realtor.com, and Zillow have the details of the properties for sale, which include the description, price, size, and more. Meanwhile, Auction.com provides data on foreclosed properties that are still available for purchase.
The Top 10 US Cities for Airbnb Investment in 2022
To give you a taste of how Mashvisor’s investment tools can help you, we used the platform to find the top 10 US cities for Airbnb investment this year. All of the information shown below is based on the data we collected from the aforementioned sources as of mid-January. These rankings and data might change when you read them, so be sure to sign up to get the latest information.
Note: This list does not automatically indicate that Airbnb–especially non-owner-occupied rental–is legal and allowed in the cities mentioned. The data presented are solely based on what we collected from active listings on the Airbnb website. We recommend contacting the respective local government about their short-term rental regulations before committing to your purchase.
#1: Winslow, AZ
- Airbnb Rental Income: $2,134
- Airbnb Cash on Cash Return: 9.97%
- Airbnb Daily Rate: $111
- Airbnb Occupancy Rate: 54%
- Median Property Price: $204,250
- Average Price per Square Foot: $129
- Days on Market: 94
- Walk Score: 55
- Why Visit: Winslow is known as the centralized vacation spot of Northern Arizona.
#2: Milan, IL
- Airbnb Rental Income: $9,740
- Airbnb Cash on Cash Return: 9.61%
- Airbnb Daily Rate: $299
- Airbnb Occupancy Rate: 65%
- Median Property Price: $428,580
- Average Price per Square Foot: $223
- Days on Market: 67
- Walk Score: 5
- Why Visit: Located on the Rock River, this village offers shops and restaurants as well as a 104.5-mile state trail.
#3: Salem, AL
- Airbnb Rental Income: $4,901
- Airbnb Cash on Cash Return: 9.56%
- Airbnb Daily Rate: $212
- Airbnb Occupancy Rate: 56%
- Median Property Price: $364,933
- Average Price per Square Foot: $151
- Days on Market: 61
- Walk Score: 6
- Why Visit: The community of Salem is the location of one of the best motocross tracks in the southeastern part of the country.
#4: Vinton, VA
- Airbnb Rental Income: $3,231
- Airbnb Cash on Cash Return: 9.44%
- Airbnb Daily Rate: $124
- Airbnb Occupancy Rate: 71%
- Median Property Price: $223,780
- Average Price per Square Foot: $119
- Days on Market: 40
- Walk Score: 68
- Why Visit: The town of Vinton offers small-town charm and fun outdoor activities.
#5: Westover, WV
- Airbnb Rental Income: $2,792
- Airbnb Cash on Cash Return: 9.35%
- Airbnb Daily Rate: $133
- Airbnb Occupancy Rate: 60%
- Median Property Price: $182,580
- Average Price per Square Foot: $146
- Days on Market: 90
- Walk Score: 24
- Why Visit: The city of Westover is experiencing economic growth and now has a lot of businesses and amenities to offer.
#6: Parkersburg, WV
- Airbnb Rental Income: $2,738
- Airbnb Cash on Cash Return: 9.33%
- Airbnb Daily Rate: $90
- Airbnb Occupancy Rate: 58%
- Median Property Price: $279,686
- Average Price per Square Foot: $115
- Days on Market: 120
- Walk Score: 65
- Why Visit: The city of Parkersburg is home to many historical sites because of its utilization as a medical center during the Civil War.
#7: Feasterville-Trevose, PA
- Airbnb Rental Income: $5,221
- Airbnb Cash on Cash Return: 9.20%
- Airbnb Daily Rate: $107
- Airbnb Occupancy Rate: 76%
- Median Property Price: $436,657
- Average Price per Square Foot: $229
- Days on Market: 22
- Walk Score: 64
- Why Visit: Feasterville-Trevose is one of the gateways between the city center of Philadelphia and the beautiful countryside of Bucks County.
#8: Plymouth, NH
- Airbnb Rental Income: $4,020
- Airbnb Cash on Cash Return: 9.19%
- Airbnb Daily Rate: $189
- Airbnb Occupancy Rate: 67%
- Median Property Price: $260,125
- Average Price per Square Foot: $177
- Days on Market: 200
- Walk Score: 77
- Why Visit: The town of Plymouth is less than a mile from Plymouth State University and is home to the renovated Flying Monkey Movie House & Performance Center.
#9: Creve Coeur, IL
- Airbnb Rental Income: $2,297
- Airbnb Cash on Cash Return: 9.11%
- Airbnb Daily Rate: $103
- Airbnb Occupancy Rate: 47%
- Median Property Price: $119,944
- Average Price per Square Foot: $78
- Days on Market: 60
- Walk Score: 38
- Why Visit: The village of Creve Coeur has a rich history, which visitors can learn more about in the Historic Fort Creve Coeur Park.
#10: Meadville, PA
- Airbnb Rental Income: $1,875
- Airbnb Cash on Cash Return: 9.06%
- Airbnb Daily Rate: $153
- Airbnb Occupancy Rate: 68%
- Median Property Price: $191,965
- Average Price per Square Foot: $115
- Days on Market: 60
- Walk Score: 82
- Why Visit: Meadville prides itself on its rich history and for being home to Channellock Tools, Dad’s Dog Food, and the many tools and DIY shops.
Find Your Next Airbnb Investment Property With Mashvisor
With an Airbnb property profit calculator, you can prospect lucrative investment opportunities, optimize your current short-term rental property, and pitch to fellow investors. 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.