The Airbnb strategy has picked up huge momentum among real estate investors in recent years. A few years ago, it may have seemed like a passing trend. But years later, the Airbnb investment strategy is still becoming more and more popular. If you intend to buy Airbnb property for the first time, here’s everything you need to know for success.
Study Up on Your Local Airbnb Laws
One of the most crucial steps to partaking in the Airbnb strategy in real estate is knowing the relevant laws. Some municipalities impose heavy restrictions which can ultimately impede your Airbnb rental property investment strategy. These restrictions can take the form of taxes or licenses (which are added costs that need to be factored into your Airbnb investment analysis) or sometimes even complete bans. Therefore, knowing the specifics of your region’s Airbnb laws is a crucial first step if you intend to pursue the Airbnb strategy in real estate.
Find the Right Location
It’s often said that real estate is all about location, location, location. This is truest in the context of Airbnb rentals. The primary markets for Airbnb rentals are tourists (whether local or international) and business travelers. Therefore, if you end up with a rental property in a subpar location, you may end up alienating a large portion of these two markets.
You should, therefore, take a systematic approach to real estate market analysis. Consider using an advanced heatmap analysis tool, like the one offered by Mashvisor. This tool provides a visual representation of any city you select, showing you which regions will be best for an Airbnb strategy. You’ll get crucial information like Airbnb occupancy rate and anticipated return on investment with just a quick glance. This is a fantastic starting point, allowing you to narrow your search to only the best neighborhoods for Airbnb.
Find the Right Investment Property
There’s a multitude of ways in which real estate investors can find an Airbnb for sale. Many people choose to enlist the help of real estate agents, which can be a fantastic way to find investment properties for a beginner real estate investor. Otherwise, you can take on the search yourself, and use the many online listing services available.
As far as online listing services go, Mashvisor’s Property Finder is a fantastic option for real estate investors. Not only does it provide a wide range of listings, but it also runs all of the right numbers that you need to know when pursuing an Airbnb strategy. By aggregating Airbnb data from comps, this tool will provide a series of advanced analytics that let you instantly know whether a rental property is more suited to a traditional or Airbnb strategy. This is an important step, since some properties may offer good returns when rented traditionally, but a subpar Airbnb profit margin.
Figure Out Your Cash Flow
Once you’ve found the right Airbnb investment property, it’s time to crunch your numbers. Finding out your cash flow is crucial with any real estate investment, but mostly so with an Airbnb rental property. This is because you’ll be anticipating a large number of short-term stays, which leads to many moving parts in your operation.
Using an Airbnb profit calculator will make this step a lot easier. Before using it, you’ll want to compile a comprehensive list of your expenses. This includes everything you’re going to spend to keep your rental property running. You also want to take into account any expenditure needed to make the space operational, such as upgrades and decorations.
Using Mashvisor‘s Airbnb profit calculator, you’ll immediately see your expected Airbnb rental income for any listing. The cash flow calculator will show you exactly how much income your property will be generating and you only have to provide some simple details like your financing terms. In fact, Mashvisor’s calculator even provides estimates for property management costs and other operating costs. Since taking on an Airbnb strategy involves so many moving parts, a cash flow calculator can make things a lot easier for real estate investors. Try out the calculator now by signing up.
Market the Airbnb Rental Property
Marketing for an Airbnb investment property is very different from traditional properties. When utilizing an Airbnb strategy, you, therefore, need to make sure you’ve thought up your Airbnb marketing strategy.
The first crucial part of marketing is choosing the right price. Going too high can leave you vulnerable to competition and lead to a lower overall Airbnb occupancy rate than would be desirable. Conversely, going too low means that you’ll be losing out on income that could otherwise be made. This is why Airbnb market research is key.
To strike this right balance with your Airbnb pricing strategy, it’s important that you compare your property to its rental comps. Comps are properties of similar specs, in the same general region. By looking at their Airbnb occupancy rate and their listing price, you can figure out which price would work best for your rental property. You can get these Airbnb rental comps here at Mashvisor.
As part of your Airbnb growth strategy, you should also consider using dynamic pricing. Since travel is often seasonal, reducing the price of your listing during off-peak seasons can be highly positive for your occupancy rate. Conversely, it can often be a wise idea to adjust your price during peak seasons, to meet the higher demand. An Airbnb investment strategy should be mindful of all of these details, to guarantee that investors are making a good profit.
To learn more about this step of the Airbnb strategy, read 4 Tips to Improve Your Airbnb Marketing Strategy.
Consider Professional Airbnb Property Management
Although often rewarding, the Airbnb strategy can be taxing. To actually make money on Airbnb, real estate investors need to create hospitable experiences that visitors will actually want to stay in. Keeping up with dozens of reservations can be a full-time job all on its own. That’s why many investors choose to enlist property management services, to keep the property running with minimal intervention. While this may eat into your profit slightly, delegating tasks provides you with ample time to search for new investment properties and maximize your rental income.
The Airbnb strategy can be a highly rewarding form of real estate investment. Although it may seem intimidating from afar, studying up on the numbers can often reveal that many Airbnbs are safe investments. The Airbnb rental strategy may be a fantastic choice for your next investment.
For more on becoming an Airbnb host, check out our 2020 Airbnb host guide.