The Airbnb rental strategy is becoming more and more popular among real estate investors worldwide, and the US rental real estate market is no different. But before you jump in and buy an Airbnb investment property, there are several things you need to know. Read through for a 101 guide to the Airbnb rental property investment strategy.
Airbnb Rental Property Investment Strategy: What Is It?
An Airbnb rental property investment strategy is a strategy through which real estate investors choose to buy a property and rent it out on Airbnb. Some investors begin by renting the spare room in their own house before becoming an Airbnb host full time and later invest in an entire property.
Investing in Airbnb has the potential to generate high profits and to generate a higher return on investment and rental yield in comparison to the traditional rental strategy. It’s a strategy that fits both new and experienced investors.
How to Get Started with the Airbnb Rental Property Investment Strategy
Getting started with an Airbnb investment strategy can be a bit overwhelming, especially if you are a beginner in real estate. However, there are some basic steps that you can follow to get started with an Airbnb investment. Take it one step at a time:
Carry out market research
This is the very first thing you need to do before you buy Airbnb property. Look into current Airbnb markets in different US cities and states and measure their performance and profitability potential. If you already have a location in mind, you’ve cut your research in half. The other bulk of your research will be specific Airbnb market research, which involves taking an in-depth look at the US Airbnb market you’ve chosen and the neighborhoods in the area. For example, say you want to invest in Phoenix real estate – you’ll want to conduct research about the general Airbnb market in the city, and then how well different neighborhoods are doing; are others making money with the Airbnb rental property investment strategy here? There are real estate websites and blogs out there that can help you with your research – so be sure to take advantage of the available resources.
Perform an Airbnb investment property analysis
After you’ve conducted your market research, it’s time to look for an Airbnb for sale and conduct Airbnb investment analysis. When looking for an Airbnb rental property, consider factors such as location, price, expected Airbnb rental income, and profit generation. To do this, use Mashvisor’s Airbnb calculator (or Airbnb profit calculator). This real estate tool will provide you with Airbnb data on CoC return, cap rate, Airbnb occupancy rate, and expected rental income. You can also compare a property’s performance against other properties by looking at Airbnb comps.
Get your hands on the right tools
Investing in real estate can be quite a challenging endeavor, and that’s no different for an Airbnb rental property investment strategy. To make things easier, make sure you’re using the right real estate tools. These include online property finders, interactive heatmaps, and investment property calculators – all of which are available on Mashvisor. These tools can facilitate your investment property search and will give you access to data that can help you make profitable investing decisions.
Prepare the means to finance your Airbnb investment
Without a doubt, you need a way to finance your real estate investment – and there are many ways to do so. Some investors dip into their savings, while others take out a mortgage. Some investors also consider partnerships, in which they invest with another real estate investor, decreasing their costs. Look into different financing means, and see which works for your Airbnb investment.
A Few Tips for Getting Started
Find out where the Airbnb trends are heading
Real estate market trends in general, and Airbnb trends, are always changing. If you want to “stay in the game”, you need to stay updated on the latest trends and keep adjusting to meet them.
For 2020, Airbnb trends are shifting towards offering excellent customer experiences, as well as the ultimate accommodation for guests’ needs. For example, you’ll find more Airbnb properties that accommodate bigger families (and pets) to target family travelers. You’ll also find more “trendy” rental properties, anything from a treehouse to a tiny house to a luxury villa, on the platform.
Learn what the Airbnb laws and regulations look like for 2020 in your location
The Airbnb rental property investment strategy is associated with important legal implications. This is due to the fact that many US cities and states impose very strict Airbnb laws and regulations. In cities like New York City and Boston for example, you can’t rent your property for less than 30 days if you don’t reside in the property. This means that legally, it’s not possible to invest in non-owner occupied Airbnb rentals in such areas. This regulation was part of a wave of similar laws that were passed in cities and states across the country. So when considering an Airbnb rental property investment strategy, also bear in mind the laws and regulations that accompany it, and look into cities that have no legal issues.
The best cities for Airbnb investment in 2020 are ones with high profitability indices and few legal problems. These include cities like Phoenix, Indianapolis, Memphis, Philadelphia, Milwaukee, among others.
Related: 20 Cities with No Airbnb Legal Issues in 2020
Look into your options for Airbnb property management
Professional Airbnb property management refers to companies and businesses that, you guessed it, manage Airbnb properties. They do everything from managing and accepting bookings, hiring cleaning services, restocking the property with necessities, and tending to guests’ needs. You may want to consider hiring an Airbnb property management company for professional experience, to save time, to gain access to their marketing and advertising tools, among other reasons. One thing you should account for is the cost that is associated with these services. It’s up to you to decide whether or not it’s worth it to hire professional services when pursuing an Airbnb rental property investment strategy but it’s a good idea to look into your options.
Related: Airbnb Property Management: DIY or Hire a Pro?
Take advantage of Airbnb reviews
This is one of the most important things to take into account when choosing an Airbnb rental property investment strategy. Airbnb reviews are a way in which both hosts and guests can review their experiences on the platform. As with any other review feature, their purpose is to enhance the quality of the service provided on the home-sharing platform. But they’re more than just that; Airbnb reviews determine where you rank in the platform’s search, whether you receive a Superhost badge, and ultimately, your Airbnb occupancy rate.
Final Words on the Airbnb Rental Property Investment Strategy
So, should you go for an Airbnb rental property investment strategy?
Yes.
Investing in rental properties is a lucrative decision no matter if it’s Airbnb vs renting out traditionally. But success doesn’t come overnight. You need to put in the work, and take things one step at a time. Follow our above 101 guide for a kickstart, but don’t forget to continue with your research to succeed in the business.
