As an Airbnb real estate investor, you probably know about the Airbnb rental income calculator. However, is it really that important for your business?
One of the things that help successful Airbnb investors are the real estate investment tools they use. The Airbnb rental income calculator (also known as the Airbnb profit calculator) is no exception. Still, the question of its importance arises when you are really trying to cut off on costs. Therefore, this blog post is the one that’s going to answer this particular question once and for all.
You see, owning an Airbnb investment property is no easy responsibility. It often comes with more duties than rights for you as the landlord. Moreover, it becomes a nightmare for most Airbnb investors when the time comes to manage the financial aspects of the business.
Perhaps the biggest problem is when a real estate investor fails to deal with the financial part and struggles to make ends meet. Why does that happen? Because every transaction that’s related to the investment property affects the process of making money in real estate through short term rentals.
To answer the main question, however, you will need to know first what’s so good about the Airbnb rental income calculator. So, sit back and enjoy this learning experience!
Reason #1. the best Airbnb location is an Airbnb rental income calculator away!
As an Airbnb investor, you already know that any property investment is heavily dependent on the location. The best locations mean the best real estate investments. Therefore, using the Airbnb rental income calculator is vital in this case. Aside from calculating the dollars, the Airbnb rental income calculator performs a real estate market analysis. This analysis is vital to finding the best Airbnb locations in the country. It starts with choosing a certain Airbnb investment property and it automatically looks into the area where it is located.
The criterion for the best Airbnb locations is based on the appreciation potential as well as the turnout. As you already know, Airbnb investments are heavily dependant on locations with tourist attractions. Be it the beach, an archaeological site or even landscape, people are always looking for places that can offer them a unique experience. The Airbnb rental income calculator does exactly that! Even though it does not tell you what a certain location has to offer, it still provides you with numbers. These numbers represent the Airbnb rental income, cash on cash return, and cap rate – all of which indicate whether or not Airbnb is the optimal rental strategy in that area.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Reason #2. how much should I charge for rent?
The question that every Airbnb investor wants to find the answer to is “How much should I charge for rent?“. We’re sure that is a worry of yours as well. After all, you want to get a feel of how profitable what you’re getting into is.
Remember the real estate market analysis in the previous section? That is exactly what’s going to help you find out how much you should charge for rent. By using the Airbnb rental income calculator, real estate investors are able to compare their property to other similar ones within their location. In other words, you can see how much other Airbnb hosts are charging for a similar rental property and base your pricing on that.
Say, for example, your investment property is a two bedroom house with a swimming pool and a private parking lot. With a real estate market analysis, you may find a couple of properties that are very similar and are renting for $50 a room/night. That is fantastic because now you’ll have the basis which will help you decide how much you should charge a night. Additionally, this gives you a sense of what is too cheap or too expensive so that you can find a middle ground for your pricing strategy.
Reason #3. positive cash flow properties
Income properties are meant to provide a rental income for the real estate investor. Same goes for an Airbnb investment property. Therefore, the Airbnb rental income calculator is your best friend in this case.
You see, part of investing in rental properties is the rental expenses. Also, in order to calculate the cash flow and make sure it is a positive one, you must take into account every penny that goes in and out of your business on a monthly basis. However, why generating positive cash flow is so important in real estate?
First of all, it is important in order to keep track of your rental expenses. Airbnb property management, repairs, and welcoming guests are all part of such expenses. Another reason is the return on investment. The number one indicators of a high rate of return are the capitalization rate (cap rate) and the cash on cash return. A positive cash flow will guarantee higher figures as that is your goal at all times!
Reason #4. Airbnb occupancy rate
It’s time to get real here. Your whole Airbnb investment business depends on what we call the Airbnb occupancy rate. What does it mean? Simply the percentage of the times when your investment property is occupied with Airbnb guests.
As for why this should be a concern of Airbnb hosts is simple. The higher the occupancy rate, the more cash flows into your pockets! After all, it does not make any difference whether you are renting out a room or an entire house. What matters is the number of days you manage to rent out the investment property.
How is the Airbnb rental income calculator useful for the Airbnb occupancy rate? When you start analyzing an Airbnb rental property, you look into the location. Aside from the appreciation rate and the rental rate in the real estate market, this tool also presents the exact rate of occupancy that area experiences on an annual basis!
To sum it up
The Airbnb rental income calculator (the Airbnb profit calculator) is a powerful real estate investment tool in the hands of the most successful property investors. If you really want to learn how to make money in real estate, consider investing in one. If you are wondering where to get it, just sign up for Mashvisor; the ultimate source of the best real estate investment tools!
To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.