Don’t Buy Airbnb Property Before Doing This

If you want to make incredible profits in real estate, one of the best ways is, without a doubt, to buy Airbnb property. In fact, with the increased popularity of Airbnb, you can now make more money with short-term rentals than with long-term rentals. But why do many new investors still fail in the business?

While there’s a lot of money to be made in the short-term rental market, you still potentially stand to lose money if you buy the wrong property. Having a successful Airbnb investment isn’t as simple as you might think. There’s a lot more you need to do before you buy Airbnb property than simply getting your finances ready.

There are usually more risks to Airbnb investing than meet the eye. Therefore, if you are thinking of buying a house for Airbnb, it’s crucial that you conduct a thorough Airbnb investment analysis before you commit to a particular income property. You need to do a lot of research first in order to figure out if buying a particular Airbnb property makes financial sense.

In this article, we show you how you should analyze Airbnb properties for sale to maximize your return on investment.

Related: How to Build an Airbnb Business in 2020

1. Find the Best City to Buy Airbnb Property

Location is the most crucial factor to consider before you buy Airbnb property since it will have the greatest impact on your return on investment. For this reason, your first step when analyzing an Airbnb should be conducting Airbnb market research. Not all cities will be good for Airbnb investment. If you want to find the best place to buy Airbnb property, you should pay attention to the following:

• Demand from tourists and business travelers

The best cities to buy Airbnb property are those with steady demand from tourists and business travelers. This will ensure a high Airbnb occupancy rate throughout the year. If you are looking to invest in Airbnb, focus on cities with popular tourist attractions like beaches, mountains, and parks.

• Cost of housing

Some cities may be great tourist spots but the property prices are too high. Such high costs can quickly eat into your profits. Therefore, you should find cities with affordable prices.

• Supply of hotels

A good city to buy Airbnb property in is one with a relatively small supply of hotels. If hotels are ample in supply and affordable, Airbnb hosts will be forced to lower their daily rates.

• Airbnb laws and regulations

The Airbnb laws and regulations of the city are another big part of the equation. You should study the Airbnb regulations of the city since they usually vary from one city to another. There might be regulations that will negatively impact your Airbnb investment. Some cities have strict laws restricting short-term rentals while others have banned Airbnb rentals entirely. Therefore, if you want to avoid getting into legal trouble, you should carefully review the short-term rental regulations before choosing a city to buy Airbnb property in.

Related: Is Airbnb a Good Investment Considering All of the Regulations?

The above factors will help you identify the sweet spot where you’ll buy Airbnb property. However, the easiest way to find such cities is to check out Airbnb data for major cities in the US on Mashvisor’s real estate blog.

2. Find the Best Neighborhood to Buy Airbnb Property

Once you have identified a profitable city to buy Airbnb property, you need to further narrow down your search to a specific neighborhood. While a city may seem lucrative in general, the neighborhoods within the city may have different Airbnb investment potential.

To find the best neighborhood for buying an Airbnb property, you can do a quick neighborhood analysis using Mashvisor’s Real Estate Heatmap. This tool uses color codes to help you easily and quickly identify the best-performing neighborhoods in your city of choice based on the following filters:

• Listing price
• Airbnb rental income
• Airbnb cash on cash return
• Airbnb occupancy rate

Related: Heatmap Analysis: The Secret to Successful Real Estate Investing

3. Find the Best Airbnb Investment Property in the Neighborhood

Now that you have a profitable neighborhood in mind, you can begin your Airbnb property search. To quickly find Airbnb properties for sale in any area in the US, use Mashvisor’s Property Finder. One reason you should use this tool for your property search is that it allows you to narrow down your options to only those that meet your criteria and offer the highest Airbnb cash on cash return.

To find the best Airbnb property to buy from your list, you need to conduct an in-depth rental property analysis. While an Airbnb spreadsheet can be used to analyze Airbnb data, it is usually time-consuming and prone to error. The best way to analyze Airbnb investment properties for sale is to use the Airbnb investment calculator, another tool offered by our real estate investment software. In just a matter of minutes, you can get a comprehensive analysis of any Airbnb investment property on the platform. You can also enter the address of any off-market Airbnb property in the US housing market and analyze it.

The calculator will provide you with the following Airbnb data:

• Airbnb expenses (One-time startup costs and recurring monthly expenses)
• Airbnb rental income
• Cash flow
• Airbnb cap rate
• Airbnb cash on cash return
• Airbnb occupancy rate
• Airbnb rental comps

By comparing the above metrics for the Airbnb properties on your list, you will be able to identify the most profitable one. Generally, you want to buy Airbnb property with high positive cash flow and return on investment.

The Bottom Line

There are several factors that you need to take into account in order to find the best Airbnb property for sale. Therefore, before you buy Airbnb property, be sure to conduct a thorough Airbnb investment analysis. And there’s no better way to access Airbnb analytics than to use Mashvisor’s real estate investment tools, particularly when conducting neighborhood analysis and investment property analysis.