3 Ways to Spot the Best Airbnb Investment Opportunities

To be a successful Airbnb owner, you need to know how to find the best Airbnb investment opportunities in your chosen short term rental market.

Making money with Airbnb has emerged as one of the most common ways to invest in real estate. Since home-sharing platforms became famous more than a decade ago, vacation rentals have been a preferred investment strategy. In fact, even in 2023 and amid the fear of a possible housing market cooldown, Airbnb still remains as strong as ever. 

Table of Contents

1. Is Airbnb Still a Good Investment Strategy in 2023?
2. How to Spot Profitable Airbnb Investment Opportunities

To be successful on Airbnb, there are several factors that you need to take into account. For instance, you need to know the right market to invest in and identify opportunities that are ideal for short term rentals. Successful Airbnb investors have established and integrated the right investment strategies that have helped them find the best Airbnb investment opportunities.

Before buying an investment property, you need thorough planning and careful analysis to strategize your investment. It is a key component of every Airbnb owner’s success. Before investing in real estate, you must first find an investment property that suits your goals. Keep in mind that not all properties will provide equal profitability.

As an Airbnb investor, choosing the location of the property marks one of the critical stages in your investment. After all, not all markets are optimal for short term rentals. Moreover, your rental strategy as an investor should be focused on generating a positive cash flow and achieving a high return on investment.

Is Airbnb Still a Good Investment Strategy in 2023?

Despite the recent fear of a possible mild housing crash any time soon, real estate experts remain optimistic that the short term rental market will still be a good investment in 2023. Since home-sharing options became famous in the late 2000s, many real estate investors have earned generous profits from owning Airbnb properties.

Let’s not forget, however, that the short term rental market is one of the top industries that was badly hit during the peak of the pandemic in 2020. Due to strict lockdowns, the Airbnb industry suffered a great deal, causing a huge amount of monetary losses. Fortunately, the Airbnb market was also among the first industries to have recovered quickly, starting in mid-2021.

Now that the Airbnb market is back on its feet, there’s another threat of a potential recession. It makes people—especially new investors planning to venture into the short term rental market—wonder whether or not it is still a good idea to buy an Airbnb for sale. 

Here are two important reasons why you should consider investing in Airbnb in 2023:

1. Short Term Rental Demands Remain High

Travel restrictions were gradually lifted in mid-2021, but most people only began to travel confidently in 2022. In fact, there was a sudden surge in the demand for short term rentals in 2022. Many investors decided to venture into vacation rentals, too. Despite talks of a possible recession in 2023, people are still eager to travel, and the need for Airbnb rentals remains high.

In general, staying at short term rentals is more affordable compared to staying at luxury hotels. With the uncertainties of the economy, people are more likely to save on travel costs by choosing to stay in vacation rentals than in hotels. It is expected that in 2023, the best short term rental markets will see high demand from guests, and hosts will greatly benefit from it.

Related: 100 Best Short Term Rental Markets in 2023

2. Airbnb Is a Safer Strategy in 2023

Depending on where you are located or where you plan to buy an investment property, investing in short term rentals can be a safer strategy compared to investing in long term rentals. The potential recession can be risky for landlords with long-term tenants. Sometimes, long term property owners have to deal with delayed or missed rent payments.

On the other hand, you won’t usually encounter this kind of problem if you invest in short term rentals. Because your guests only stay for a short period, there is a lesser risk of landing yourself with renters who won’t be able to pay their rent. Also, when you list your property on platforms like Airbnb, collecting payments can be done automatically through the system.

That being said, you need to understand that every investment comes with risks. It goes the same with investing in Airbnb. If you plan to buy vacation rental property, it’s crucial to know and understand all the risks involved, such as:

High Interest Rates

While experts predict that the increase in interest rates may slow down this year, the rates remain high—and it could affect your overall profitability. If you plan to acquire the investment property through a mortgage, your credit costs will be a lot higher due to the rising interest rates. However, choosing the right market to invest in may lower such risk.

If you invest in the best cities for investment properties, you might earn returns that will cover the cost of interest rates and other expenses, with more left for profit. When it comes to Airbnb investing, knowing how to find the right Airbnb investment opportunities is vital to your success.

Seasonality

It’s no secret that the short term rental market is a seasonal business. You cannot expect to receive a continuous flow of income all year long because there will be low-peak seasons when your Airbnb rental won’t be occupied. To weather the seasonality of the short term rental market, it’s important to choose the right locations where there are plenty of investment opportunities.

Buying the best investment property in a favorite tourist destination is generally a good idea. When choosing a location, make sure to consider its tourism industry and the seasonality of short term rentals. Find a market that attracts visitors almost all year round, adjust your pricing according to seasons, and you will no longer need to worry about low occupancy rates.

In the following section, we will help you learn how to find profitable Airbnb investment opportunities based on several factors.

How to Spot Profitable Airbnb Investment Opportunities

Your success as an investor will depend on the location where you invest. When it comes to investing in Airbnb rentals, your chosen location can either make or break your investment. Before you look for vacation homes for sale, you need to make sure that you are buying into a profitable market that offers plenty of Airbnb investment opportunities.

Here are a few effective tips that can help you spot profitable Airbnb investment opportunities: 

Pick a Promising Location

The most common questions real estate investors ask are: How do I find the best Airbnb investment properties? And, how can I assess if a location offers the best real estate investments for Airbnb renting?

As a real estate investor looking for the best Airbnb investment opportunities, you would want to find a location where the costs of carrying an investment are not too high. Your goal as an investor is to find a property that generates positive cash flow. It means the potential profit must exceed the costs associated with owning and operating an Airbnb rental.

To assess the profitability of an Airbnb investment opportunity, you must study the market and perform a thorough rental analysis first. It’s also crucial to look at the supply and demand for short term rentals within a particular location. Is demand exceeding supply? Or, are the prices high due to a lack of supply? Consider the rates and financial metrics within an area as well. 

Additionally, you must also take into account several other factors that can affect your profitability. You need to know what is the occupancy rate for Airbnb within the area, as well as the rates charged by other current Airbnb owners. Find out how the rates compare to the profit that you would be making.

In general, a thorough real estate market analysis will be the determining factor in your decision when choosing the right location for your investment. With this analysis, you need to spend plenty of time studying the location to assess its profitability and investment opportunities.

Related: How to Choose the Best Location for Investment Property

Use a Heatmap Analysis Tool

Studying a location and assessing its potential profitability is an important step that you should not skip when finding the right market to invest in. Yes, it might be tedious and daunting to take into account all the factors that can come into play. Luckily, many real estate platforms and tools can help you find the right property.

One of the most efficient real estate investment tools to spot the best Airbnb investment opportunities is Mashvisor’s real estate heatmap tool. You should certainly get your hands on the investment tool to find the best real estate investments available. 

With Mashvisor’s heatmap tool, you will be able to observe the performance of Airbnb properties for sale within a specific neighborhood in just a matter of seconds. Plus, you can also conduct a comparative analysis to help you find the right area to invest in.

Two Effective Ways to Use the Heatmap Tool

1. To find the best-performing properties in an area

The heatmap tool shows the best neighborhoods to invest in, and the cheapest and most profitable properties. Moreover, the tool comes with a color scheme to help you spot the best properties with a single glance. 

The dark blue color means that the properties in the area show the best performance, the light blue color indicates an average performance, the gray color indicates a below-average performance, and those with no shade (white) are the worst-performing properties in the area.

2. To conduct comparative analysis

The tool also allows you to conduct comparative investment analysis based on financial metrics that you choose, such as cash on cash return or rental income. By doing s , you’ll be able to determine the safety of an investment in a particular neighborhood. You’ll also find out if the area is indeed optimal for investing in short-term rentals.

Find the best Airbnb investment opportunities in your preferred location using Mashvisor’s heatmap tool. Start your 7-day free trial now.

Study the Airbnb Regulations in Your Chosen Area

To find the best Airbnb investment opportunities, you must ensure that the market you choose has favorable Airbnb regulations. It’s crucial to look into short term rental regulations before buying vacation rentals for sale. It is to ensure that the market you choose allows the operation of Airbnb business without too many restrictions that can affect your bottom line.

Airbnb has proven to be valuable for guests since it caters to the needs of budget-conscious travelers. It is also beneficial to hosts because it offers another method for real estate investors to make money. Unfortunately, however, regulations have been stringently restricting the use of Airbnb in many cities, reducing the investors’ available options.

As an example, New York and Los Angeles have seen the most rigid regulations against the use of Airbnb. Worse, some cities have banned Airbnb rentals altogether.

In other cities, registering your real estate investment property, getting a permit, and/or obtaining a license before listing a property and accepting guests have become mandatory. 

Regulations vary from one city to another. Since the regulations can affect your ability to operate a business and overall profitability, it’s best to know the regulations before buying an investment property. To spot the best Airbnb investment opportunities, you need to reach out to your local city council and inquire about the most recent regulations governing Airbnb rentals.  

Regulations by City

The most stringent Airbnb regulations are found in New York, San Francisco, and Santa Monica. If you’re looking to invest in these areas, we recommend that you first assess how their regulations might affect you. Here’s a glimpse of each of the aforementioned cities’ regulations.

• New York: A NYC law allows only permanent residents to rent their real estate property. The landlord, moreover, must be present during the stay of guests, and the stay must not exceed 30 days. It means that New York City only allows owner-occupied short term rentals.
• San Francisco: Similar to the regulations of New York, San Francisco only allows owner-occupied rentals, and a landlord must be present throughout the accommodation. Rentals booked must not exceed 90 days. Airbnb investors, moreover, must register with the city council before listing the property and accepting Airbnb guests.
• Santa Monica: Regulations in Santa Monica have almost wiped out the presence of Airbnb rentals. In order to qualify as an Airbnb host, you must live in the property during the guest’s stay. You must also register for a business license and collect a 14% occupancy tax from tenants payable to the city.

That being said, in order to spot the best Airbnb investment opportunities, we recommend that you invest your time looking into regulations across the US. Find out which cities have flexible Airbnb regulations. Usually, cities with favorable short term rental regulations offer the best opportunities for profits, so make sure to pursue these markets.

If you are not sure whether the location of your choice has flexible Airbnb regulations, head over to our short term and Airbnb regulations page to find out.

Use Mashvisor to Find and Analyze the Perfect Airbnb Property

In the past, looking for the right investment property that meets your preferred specifications was too time-consuming and involved a lot of work. With the advancement of technology, you can now to browse for available properties for sale without leaving the comfort of your home. 

The availability of real estate analytics platforms has paved the way for investors to easily find an investment property that meets their criteria. It’s worth noting, however, that not all real estate platforms are created equal. When choosing which one to work with, it’s vital to ensure the accuracy of the platform’s recommendations and effectiveness of the tools provided.

The best real estate platform that can help investors find and analyze the perfect Airbnb rental property is Mashvisor. What sets Mashvisor apart from other real estate platforms is that it offers carefully selected listings that match your preferences. Its user-friendly interface is intuitive that even new investors without any prior experience can understand the analysis provided.

Moreover, Mashvisor offers readily-available information about the property, including important financial metrics that can help you determine if the property will make a good investment. You can trust that the details are accurate and up-to-date. What’s more, you can also benefit from Mashvisor’s real estate tools that are useful in finding the best Airbnb investment opportunities.

Here are the best and most valuable features of Mashvisor:

Property Finder

Mashvisor’s Property Finder allows you to find investment properties based on your preferences and search criteria. What makes the tool great is that it utilizes a wide range of rental comps, analytics, and metrics to provide you with the best real estate investments. Such investments come with the highest potential for returns. 

The tool will study the properties in an area for you and provide you with accurate results tailored to your search criteria. You can set your preferred budget, rental strategy, property type, and number of bedrooms and bathrooms to find a perfect match. All you need to do is enter your preferred location (by city or neighborhood), set your criteria, and hit search.

You will then be provided with a list of results based on your specific requirements. Click on a property that interests you, and you will be taken to the property’s information page. This is where you will see an overview of the property, including details such as the rental income, expenses, cash flow, cash on cash return, and cap rate.

Neighborhood Analytics

Once you are on the property information page, you will see a button where you can view the neighborhood analytics. It allows you to see the neighborhood analysis so you can determine if the property will indeed make a good investment. You will see the rent analysis for both short term and long term rental strategies. 

Some of the important information that you will find include the occupancy rates, rental size distribution, and rental income statistics. You will also get an overview of the rental income history, historical average rental rate, and historical occupancy rate.

In addition, you will also see the Mashmeter score, which is the dynamic market opportunity scoring system that tells how optimal the neighborhood is for investing in rentals.

Related: How to Conduct Airbnb Rental Analysis

Investment Property Calculator

Mashvisor’s investment property calculator is one of the best and most useful tools for investors. The tool allows you to calculate your potential returns based on several factors, including the cash on cash return, cap rate, cash flow, and expenses. The best thing about Mashvisor’s real estate calculator is that you don’t need to research manually the figures that you need.

Mashvisor provides the necessary real estate data to help you find how much you can earn from a particular Airbnb property. You can rest assured that the information and figures provided are accurate and up-to-date. But even though the data is already provided, you can customize your computation by adding your own figures as you see fit.

The Airbnb calculator allows you to input your own expenses if you think you will spend more on certain expense categories than what was provided. The tool can also work as a mortgage calculator. It is because you are allowed to include your planned financing method and input your down payment, loan term, and interest rates.

Rental Comps

Another excellent tool from Mashvisor is the ability to compare similar properties in the same area. The process is known as rental comps, and it allows you to determine whether your chosen property will be a successful Airbnb investment or not. Through rental comp analysis, you will see how other properties with similar features as your subject property perform.

By studying the rental comps, you’ll also find how your competitors perform in the market, providing you with ideas on how to make your property stand out among the competition. The good news is that you don’t need to find similar properties in the same area manually, as Mashvisor provides all the necessary data for you.

Bottom Line

Investing in Airbnb is still a good idea, even in 2023 and beyond. Since Airbnb demand continues to be high worldwide, the short term rental market remains a strong investment strategy. To ensure that you make a profitable investment, be sure to choose your Airbnb market wisely.

As you’ve just learned, spotting the best Airbnb investment opportunities is not as difficult as you may have initially thought. With proper research and analysis, it’s possible to find the best location for Airbnb. Also, with the use of Mashvisor’s efficient real estate tools, you can find the most profitable and best Airbnb investment opportunities in just a matter of seconds. 

Most importantly, do not forget to study Airbnb regulations beforehand, as they can direct you toward areas with the best Airbnb investment opportunities. 

Are you ready to look for the perfect Airbnb investment opportunities? You can’t go wrong with Mashvisor! Schedule a demo now to see how our real estate tools work!