Airbnb real estate investing emerged in 2008 and ever since has been catering to a growing population. The platform has not only enabled homeowners to rent out part of their properties for profit, but it also allows real estate investors to buy and rent out whole investment properties. And according to Priceonomics, the average Airbnb rental income is $924 a month. As a matter of fact, Airbnb rental income has helped many investors accumulate more cash which allowed them to tap into more lucrative real estate investment opportunities.
But how much should you be earning in Airbnb rental income and how much should you charge for rent to ensure a positive cash flow?
This article is designed to help real estate investors determine their Airbnb rental income. It will look into the crucial factors that will play a major role in identifying the income you will be making on your Airbnb investment property. Moreover, we will provide some tips to help you accurately determine your rental income and achieve a high return on investment.
Now, let’s talk about the factors that will help you determine your Airbnb rental income.
Related: How Much Can I Rent My House For?
The Airbnb Market
When you are thinking of integrating into the housing market and becoming an Airbnb real estate investor, you should first study the Airbnb market in your area. The location of your Airbnb rental property is one of the most important factors contributing to a high Airbnb rental income. After selecting a good location, go about retrieving and analyzing Airbnb market data and Airbnb rental data. One way of doing this is by analyzing real estate comps. Airbnb comps are Airbnb listings that share similar attributes to yours which can help you better determine the value of your short-term rental property and the kind of rental income that you can expect in the location.
Related: Airbnb Data: What Real Estate Investors Need and Where to Get It
Airbnb Tip #1: Don’t look for and analyze real estate comps manually.
Instead of manually searching Airbnb listings and finding and analyzing comps, many real estate investors nowadays rely on Airbnb analytics platforms that provide them with a comps analysis automatically. At Mashvisor, we utilize both traditional and predictive analytics, translate them into ready-to-read data, and provide it to real estate investors through a number of investment tools. Our Heatmap Analysis Tool, for example, uses comps to find the average Airbnb rental income for any neighborhood in the US. That way, you will know how much you should be making in the Airbnb market of your choice in minutes.
The Local Airbnb Regulations
Government officials across the United States have enforced more stringent laws and regulations on Airbnb. In some states, renting for less than 30 days has been banned. Other states have stiffened the registration and business licensing process for Airbnb hosts and increased their fees. All of this can affect how much Airbnb rental income you can make or if it’s even possible to make money renting out on Airbnb at all!
Airbnb regulations vary from city to city and state to state. After selecting a location, study regulations and learn about all the Airbnb taxes to better assess the feasibility of your Airbnb investment. Reach out to your local city council and inquire about the most recent city regulations regarding Airbnb.
Related: Short-Term Rental Strategy: Best Cities for Airbnb Rental Income
The Airbnb Occupancy Rate
A real estate investor must look into occupancy rates to determine the profitability of an investment. The more guests you have, the fewer days your investment property stays vacant, the more Airbnb rental income you will realize. In order to maximize the return on investment for your Airbnb rental property, aim to have your property rented out for as much of the year as possible. Of course, the location is a strong determinant of your Airbnb occupancy rate. Locations that welcome tourists and business travelers are more likely to have a better Airbnb occupancy rate. Mashvisor’s Heatmap Analysis Tool will also show you the average Airbnb occupancy rate for neighborhoods across the US.
Airbnb Tip #2: To increase your Airbnb occupancy rate, consider becoming a Superhost, provide better amenities, and work to get positive reviews. Also, consider hiring Airbnb property management services to manage your rental property for you.
The Fees and Expenses
Airbnb fees and expenses should be well assessed and included in your budget when determining your Airbnb rental income and how much to charge to ensure positive cash flow. Below is a list of the major fees and expenses that you should consider for your Airbnb investment property:
- Airbnb Service Fees: Airbnb charges 3% for processing payments.
- Supplies: Clean linens, towels, and home supplies should be accounted for in your budget.
- Cleanup and Maintenance: Your rental property should be up-kept and clean. Take maintenance and cleaning fees into account when writing out your budget.
Airbnb Tip #3: Repairs can be expensive, so ensure you conduct regular maintenance and account for other contingencies. Maintenance includes checking for HVAC, electrical, interior and exterior structural components, and landscaping. This will ensure large repairs are minimized and that their costs don’t cut into your Airbnb rental income.
Often times, real estate investors do not take the aforementioned fees seriously and end up with lower Airbnb profit margins down the line. To avoid incurring losses, we recommend that you meticulously study the fees and expenses explained above before proceeding with your investment property.
Airbnb Tip #4: Use an Airbnb Rental Income Calculator.
Purchasing an Airbnb rental property and achieving a desired Airbnb rental income can be assiduous. However, with the emergence of various investment tools, investing in real estate has become more reliable and profitable. The Airbnb Rental Income Calculator will present investors with the most accurate Airbnb rental data using predictive analysis. Simply put, the Airbnb calculator will provide you with key metrics in order to find and maintain a successful Airbnb rental property. The metrics provided include Airbnb ROI, Airbnb Rental Income, and Airbnb Occupancy Rate. So instead of manually collecting this data and performing calculations, you can retrieve information about an investment property with a few clicks of the mouse.
Mashvisor’s Airbnb Rental Income Calculator
Related: The Best Ways to Increase Airbnb Rental Income
Bottom Line
The location, occupancy rate, taxes and regulations, and fees associated with an Airbnb investment are all determinants of your Airbnb rental income. Make sure to conduct thorough research prior to your investment to learn of your investment potential. Resort to online investment tools like Mashvisor to ensure that you get accurate data regarding your investment property. To learn more about Mashvisor and what it can offer to increase your Airbnb returns, click here.
