The Best Vacation Rental Income Calculator for 2020 

Thinking of buying a vacation home to rent out in 2020? Then, you first need to make sure to find a profitable one. The best way to do so is to use a vacation rental income calculator. What is this real estate investment tool? What does it do for real estate investors? Where can you find the best vacation rental income calculator in 2020? Keep reading to find out the answers to all these questions.  

Related: How to Buy Vacation Rental Property in 2020

What Is a Vacation Rental Income Calculator?

A vacation rental income calculator is an online tool designed to help real estate investors, both beginner and professional, search for and find top-performing vacation rental properties. It conducts a number of analyses to provide them with neighborhood-level as well as property-level data that they can use to evaluate the profitability of potential real estate investments. To use the tool, all they have to do is input some basic information such as their method of property financing (cash or mortgage loan) and their amount of down payment. 

Let’s see what the calculator does for a real estate investor in more detail.

What Does a Vacation Rental Income Calculator Do?

Buying a vacation rental property can be overwhelming, especially if you are a first-time real estate investor. Fortunately, the vacation rental calculator will help you do all the following things:

• Find the Right Location

The vacation rental income calculator helps real estate investors decide on the best location for vacation rental investment. As you may know, finding the right location for your vacation rental property is crucial in order to succeed in the vacation rental industry. The calculator spares you the need to perform neighborhood analysis manually by pinpointing the most profitable neighborhoods in your city of choice through the use of a real estate heatmap. The heatmap highlights the highest-ranking areas within the city in green and the lowest ranking areas in red based on a few different metrics including listing price and cash on cash return. This allows you to compare the different neighborhoods simultaneously and decide which one has a good ROI for vacation rentals.

Real Estate Heatmap

Related: How to Conduct Vacation Rental Market Analysis

• Find the Right Property

After identifying a good neighborhood for vacation rental investments, the vacation rental income calculator helps you find the most profitable rental property in that neighborhood. It does a full vacation rental investment analysis on all the properties listed for sale in the neighborhood and provides you with a comprehensive report with all the important numbers you need to assess the profitability of each property. These numbers include things like the property price, rental income, occupancy rate, and various ROI metrics (we’ll talk more about these later). All these figures are based on reliable vacation rental data from the local housing market to ensure the highest degree of accuracy. The best thing about the calculator is that it allows you to modify any value which you believe will be different based on your own analysis and knowledge, and it will immediately redo all the calculations. You can then easily compare the different investment properties based on these numbers and decide which one is the most profitable.  

• Find the Right Price

After finding a profitable vacation rental property, the vacation rental income calculator helps you to check if the property is priced reasonably and according to fair market values. It helps you carry out a complete comparative market analysis. The calculator finds properties that are similar to the one you are considering buying and that were sold recently (known as Airbnb comps) and then shows you their sales prices so you can be sure that you don’t pay more than the fair market value. The fact that the calculator allows you to access Airbnb comps saves you so much time, which otherwise you would need to spend on finding comparable properties in your market, analyzing each one individually, and comparing it with the others. 

What Kind of Data Can You Expect from the Vacation Rental Income Calculator?

Now that you have an idea of what the vacation rental income calculator does for a real estate investor, let’s take a further look at the important numbers which it will generate:

• Rental Income

As you might have guessed, the vacation rental income calculator will show you projections of the rental income which you will potentially make from renting out your vacation rental property. The calculator looks at the predominant nightly rate of vacation home rentals in the area where your investment property is situated in order to give you the most accurate estimate of the rental income that you will be able to make each month. 

• Cash Flow

The cash flow is the amount of money that your vacation rental will be making (or losing) per month. The calculator takes into account all the expenses that are associated with buying, financing, and operating your vacation rental, and subtracts them from the rental income to estimate the amount of profit that the property will be producing. The resulting cash flow can either be positive or negative, indicating whether you will be making or losing money. 

• Occupancy Rate

The occupancy rate indicates the number of days that your rental property is expected to be occupied by tenants in a year. The vacation rental income calculator estimates the vacation rental occupancy rate based on actual Airbnb analytics and data gathered from the neighborhood where your rental property is located. 

• Cash on Cash Return

This is an important return on investment metric. It estimates how much profit your vacation rental will generate based on the amount of cash you have invested in it. The vacation rental income calculator calculates the property’s cash on cash return by taking into account your cash down payment, as well as any other costs paid in cash such as closing costs. This metric is, therefore, particularly useful if you are considering investing in vacation rental property using a mortgage loan. 

• Cap Rate

This is another ROI metric. It estimates how much profit your investment property will make without taking into account the loan payments, but rather by assuming that the cost of the property has been financed 100% with cash. This allows you to get an idea of what your vacation rental property is worth and how profitable it is compared to its market value.  

Where to Find the Best Vacation Rental Income Calculator

Right here, at Mashvisor! The vacation rental income calculator developed by Mashvisor has all the features mentioned above to help you find the best vacation rental house to buy. The unique thing about our calculator is that it not only serves short-term rental investors but also long-term rental investors. So, if you decide at any point to turn to long-term real estate investing, you can still use our calculator to carry out all the necessary analyses. Moreover, our calculator provides data for both rental strategies, which can help you to figure out which strategy is optimal for your investment property. 

Mashvisor’s Vacation Rental Income Calculator

Related: What Is Mashvisor? What Can It Do for Real Estate Investors?

Get Started Now

The vacation rental income calculator is a must-have tool for every real estate investor. Whether you are a beginner investor looking to buy your first vacation rental property or a seasoned investor thinking of starting a vacation rental business, using this tool will help you make the smartest investment decisions. Sign up for a 7-day free trial to start using our vacation rental income calculator right away!

What’s next? After you find a great vacation rental investment, you’ll have to learn how to host it successfully. Read our guide on how to become an Airbnb host in 2020 to learn more.