As the adage goes: ‘If you want something you’ve never had, you must do something you’ve never done before.’ Or something along those lines. Essentially, if you want to be rich and build wealth in real estate or any other business for that matter, make sure you understand that it will require lots of work and determination to achieve the high level of success you aspire to. The most successful real estate investors have acquired wealth overtime and be rest assured, it entailed mistakes and failures to get to where they are in the present day.
The Perks of an Airbnb Rentals Business
Investing in Airbnb rentals is a sound investment, and whether you want to rent out your own home or buy rental properties for this sole purpose, go for it without hesitation. Airbnb has opened up many job opportunities and allowed people to make passive income from the comfort of their own living room(s).
Some of the perks of investing in Airbnb rental properties include:
- Fast-paced business, aka fast money, aka high cash flow returns
- Meeting new people
- Setting your own rent
- Being your own boss
- Having the full autonomy to choose your Airbnb guests
- Being in full control to increase or decrease your profit potential
How to Choose the Best Cities for Airbnb Investment Properties
Location is the main theme for finding the best cities for Airbnb. In real estate investing, the right location drives demand. This means that choosing to invest in a prime location with the right environment for a short-term rental strategy is the crux of making money in real estate. Without having the right location, neighborhood, or area, you won’t reap the financial benefits of an Airbnb rentals business. Of course, it goes without saying: choosing cities to invest in traditional real estate differs from investing in short-term rentals. For one, demand is strongest in populated cities that attract a good number of tourists, have positive economic indicators, and enjoy a booming economy with rapid job and employment growth. Demand is especially high near convention centers, sports stadiums, and major shopping districts.
If we were to give the top Airbnb markets in the US for investing based on these indicators, the list would include: Los Angeles, New York City, San Francisco, San Diego, and Miami. To look into this further, Mashvisor provides Airbnb occupancy rates and rental rates for all cities across the country.
If we have to shed light on one market in specific, it would have to be Los Angeles, ranked as a top Airbnb market in the country. LA is a top tourist destination attracting millions of visitors annually. Tourists come for Beverly Hills and the Hollywood Walk of Fame, and visit Universal Studios and Disneyland. So, choosing to invest in LA is definitely a smart decision to start your Airbnb business.
2. Affordable Real Estate
To invest in the best cities for Airbnb rental properties is to choose an affordable location for buying rental properties. Make sure to invest in housing markets with affordable real estate properties for sale. If you are looking for fast cash flow returns and a good ROI, it is necessary to mitigate your expenses and costs in return. If you are buying expensive rental properties, rental income may not compensate for the price you paid. Make sure to conduct cash flow analysis before you close a deal on any investment property.
3. Strong Tourism Is the Perfect Environment for an Airbnb Rental Strategy
The best cities for Airbnb are include the prime tourist attractions simply because these cities attract enough visitors to support a thriving Airbnb rentals market and grow the demand for Airbnb properties down the line. The more tourists and visitors a city attracts, the higher the occupancy rates for the Airbnb rental strategy. Internationally, Paris is a great example of showing the interdependent relationship between a thriving Airbnb business and strong tourism. Long story short, choose locations with high hotel prices and high occupancy rates in prime tourist destinations.
4. Shortage of Affordable Hotels and Resorts
The best cities for Airbnb rentals are those with a low supply of affordable hotels and resorts. Not only do tourists prefer to stay in Airbnb for an authentic experience, but it makes more sense economically. You spend less money and live like a local. This is the main reason why many travelers choose to book Airbnb rentals over a hotel room any day of the week.
5. Choose Cities with Low Saturation of Airbnb Rentals
The best cities for Airbnb rentals are not fully saturated with short-term rental properties. This is where real estate market analysis is so important because it helps real estate investors tap into opportunities and identify these locations before everyone else does.
6. Low Costs, High Returns
The main aim of real estate investing is to make nice fat profit margins. This entails keeping your taxes and expenses at a minimum. Make sure to look into property taxes and regulation on a macro level before you hone in on a rental property. Renting in cities with high property taxes and strict regulation laws for Airbnb rentals may hinder your profit potential and even burn a hole in your pocket. The best cities for Airbnb business maintain reasonable taxes and regulation, which allows real estate investors to reap the full financial benefits of operating their short-term rental business.
To find the best cities for Airbnb, make sure to:
- Work out the regulations
- Account for all of the costs
- Factor in house price appreciation
- Anticipate expected expenses and return on investment
The best cities for Airbnb are in prime locations with booming economies and attract a sizable number of visitors annually. Investing in Airbnb rentals is a great business, just make sure you crunch the numbers before you decide on a rental property. Before you invest your money, make sure to invest your time researching and doing your due diligence.
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