Airbnb rental properties have become a popular choice for travelers looking for temporary accommodation and an attractive investment option. Indeed, buying Airbnb property can offer robust returns. However, investing in short-term rentals is not about purchasing any property around you and listing it on Airbnb.
Savvy real estate investors know that profit is made when you buy and that the best way to ensure success is to analyze Airbnb data before making an offer. You have to ensure that buying the Airbnb property makes financial sense. For decades, an Airbnb spreadsheet has been the go-to tool for Airbnb investment analysis but not anymore.
Times have changed and successful investors are using the latest technology for analysis. Technological advancement is making the once very useful resource obsolete. In this blog, we are going to show you why you no longer need an Airbnb spreadsheet for analysis and what the best alternative is.
But before we go into that, let’s go over what Airbnb investment analysis entails.
Airbnb Investment Analysis
Airbnb investment analysis involves computing a variety of real estate metrics to determine the performance of an Airbnb rental property. The metrics are then used to compare multiple Airbnb properties for sale to determine which is the most profitable one.
Here are the key Airbnb metrics that a real estate investor needs to compute before making a decision:
1. Airbnb Occupancy Rate
Airbnb occupancy rate is the number of nights an Airbnb investment property is booked compared to the total number of nights it was available for booking throughout the year. Airbnb occupancy rate data is important because it’s a key indicator of profitability potential.
2. Airbnb Rental Income
Airbnb income refers to the amount of money the Airbnb rental property will generate on a monthly basis. It is influenced by a number of factors including the nightly rate, Airbnb occupancy rate, and seasonality. Airbnb income is an important metric because it’s used in computing other key real estate metrics like cash flow, Airbnb cash on cash return, and Airbnb cap rate.
3. Airbnb Cash Flow
Airbnb cash flow is the rental income that is left after deducting the total rental expenses. As a real estate investor, you should always look to buy positive cash flow Airbnb properties. They will ensure that you have money in your pocket every month.
4. Airbnb Cap Rate
Airbnb cap rate is the ratio of the net operating income (NOI) to the property price. This return on investment (ROI) metric does not take into account the investment property financing method.
5. Airbnb Cash on Cash Return
This ROI metric is the ratio of the annual pre-tax cash flow to the total cash invested. Unlike the cap rate, cash on cash return factors in the financing method.
You now understand the key metrics real estate investors need to estimate. For years, the investment analysis spreadsheet has been the main tool used by investors to analyze these real estate metrics. But is it still the best option when it comes to Airbnb investment analysis? The answer is a resounding NO. Here’s why you no longer need an Airbnb spreadsheet to make projections on the profitability of an Airbnb investment.
Why You Don’t Need an Airbnb Spreadsheet for Analysis: 4 Reasons
With the emergence of the Airbnb investment calculator, the investment analysis spreadsheet has been rendered obsolete. If you are still using an Airbnb spreadsheet for analysis, you are actually putting yourself at a disadvantage in the Airbnb business world.
Here are the reasons why you need to retire the Airbnb income spreadsheet:
1. It’s prone to error
Since you need to enter data into the Airbnb spreadsheet manually, there’s always a chance that you’ll make a mistake. Moreover, a small data error will likely have a ripple effect, especially when analyzing large quantities of data.
2. It’s time-consuming
Setting up Airbnb spreadsheet formulas and keying in data manually can take up a lot of your time. If you are a beginner, you will also have to spend time learning how to program spreadsheets to compute Airbnb metrics. As you know, time is of the essence in real estate investing.
3. It doesn’t allow for real-time data change
With the dynamic nature of the housing market, being able to identify and respond to changes promptly is crucial. However, an Airbnb spreadsheet can’t handle real-time data change. You have to continually update the numbers yourself.
4. It doesn’t allow for efficient collaboration
As a real estate investor, you may have multiple stakeholders like mentors or partners who need to access your Airbnb data and analysis. They typically will want to see everything laid out for them directly as opposed to formulas and tons of data. So, if you’re using an Airbnb spreadsheet for analysis, you will most likely have to produce a separate report to share.
Why Should You Use Mashvisor’s Airbnb Income Calculator?
As we have seen, an Airbnb spreadsheet has several limitations. However, there’s a way to overcome these limitations – using Mashvisor’s Airbnb income calculator. While it does the same job as the Airbnb spreadsheet, it’s more efficient, more accurate, more flexible, and offers several other benefits. With this revolutionary and user-friendly tool, you can conduct an Airbnb investment analysis on multiple properties in the US housing market in a matter of minutes.
The calculator does the heavy lifting for you. You don’t have to gather or enter data manually. Mashvisor gets all of its data directly from Airbnb. You simply enter a few filters and you’ll receive a comprehensive analysis of the property’s investment potential. Our Airbnb income calculator uses big data, predictive analytics, and machine-learning algorithms to accurately estimate key Airbnb metrics. The calculations are verified by real Airbnb hosts in the US.
Thanks to Airbnb analytics, the calculator will provide you with cost estimates based on averages of the area. This eliminates the need for an Airbnb expenses spreadsheet. However, you can also personalize your Airbnb investment analysis report by entering your own costs. Apart from Airbnb expenses, the calculator will provide you with estimates for Airbnb occupancy rate, Airbnb rental income, Airbnb cap rate, and Airbnb cash on cash return.
What makes the calculator even more special is that it gives you more than just numbers for an Airbnb property. You’ll be able to determine whether Airbnb is the optimal rental strategy for a particular property. This is because it displays numbers for both Airbnb and traditional rental strategies.
To start finding and analyzing the best Airbnb investment properties in your city and neighborhood of choice, sign up for a 7-day free trial with Mashvisor.
The Bottom Line
Using an Airbnb spreadsheet for analysis can limit your potential as an Airbnb investor. While it serves the same purpose as the Airbnb income calculator, it is less accurate, less efficient, and less flexible. If you are looking to invest in Airbnb, instead of using an Airbnb spreadsheet, be sure to try out Mashvisor, the best Airbnb analytics platform.