One of the main considerations of buying a vacation rental property is finding a good location. While many indicators can determine the success of a real estate investment, location is among the most important factors to consider when buying an Airbnb investment property. You can find the perfect property, but if it’s in a bad location, it’s less likely to become a successful investment.
But how should real estate investors choose the right location for a vacation rental? Check out the following tips:
Real Estate Market Analysis
When buying any type of property in real estate, investors should conduct a real estate market analysis. Conducting real estate market analysis requires extensive research of different location-related characteristics. Look out for the following when looking for the location of your next vacation investment property.
#1: Metrics of a Real Estate Market Analysis
Real estate metrics are indicators and they can aid investors in choosing the right location when buying a vacation rental property. Mashvisor has a really cool tool that can help you obtain information on these metrics – the Airbnb profit calculator. The Airbnb profit calculator provides the information you need to choose the right city. Among this is the median home price, cash on cash (CoC) return, cap rate, expected rental income, and Airbnb occupancy rate. These metrics can be a show of how well the average investment property does in a city and the profit it yields. For this kind of vacation rental data, check out our real estate investment blog- a rich source of information on all things related to a city analysis.
To analyze different neighborhoods, you can also use the heatmap analysis tool which allows you to browse through neighborhoods with investment properties for sale using color codes. You can specify what measures you want taken into consideration, and they’ll be depicted on the map. For example, if you were on the lookout for high Airbnb rental income values when looking at different neighborhoods, you can set a filter for this metric. The neighborhoods colored in green would be the best places to buy vacation rentals to generate the most revenue. Click here to test out the heatmap for yourself.
#2: Demand for Rental Property
Another “market” aspect to consider when buying a vacation rental property is the demand for this kind of rental property. When buying a vacation rental property, it wouldn’t make much sense to invest in an area where there’s no demand. So study the real estate market at large, and look into locations where demand for vacation rental property is high. If demand isn’t high, you risk having low Airbnb occupancy rates for your investment property, which will affect your rental income and return on investment.
#3 Laws and Regulations
If you’ve been keeping up with real estate news, you’ve probably noticed that several cities, both in the US and internationally, have been changing their Airbnb laws and regulations. This is a result of several lawsuits by cities against the home-sharing service. This has escalated to the point where investing in Airbnb properties has become illegal. Investors can no longer buy Airbnb properties in cities like New York City, San Francisco, and Las Vegas, among others. The laws imposed in these cities limit renting out to permanent residents of properties, something a real estate investor cannot manage when buying a vacation rental property.
The best vacation rental property locations are where laws and regulations accommodate real estate investors rather than create hassles. Cities where Airbnb is illegal, and cities that have tough regulations, are not considered a good location when buying an investment property to use as a short-term rental.
A general indicator for a good location for both traditional as well as vacation rentals is growth. So keep in mind areas where there’s evident
- Economic growth
- Population growth
It’s important to note that while growth usually implies that a location is good, it’s not necessarily always the case. So make sure to look into different factors as well when choosing a location for your vacation rental property.
- Proximity to neighborhood amenities such as grocery stores
- Proximity to nearby parks, touristy spots, cafes, bars, and restaurants
- Walkability: Not all travelers have or rent a car. So the more walkable, the better
- Transportation stations/hubs
The more “convenience items” you can check off the list, the more ideal the location is for buying a vacation rental property.
Safety is another factor to consider when choosing the right location for your Airbnb rental property. Guests usually look for safe areas to stay in. And even if you think a less safe neighborhood seems fine, one bad guest experience can affect your Airbnb reviews and future bookings. So before buying a vacation rental property, it’s advisable to research the safety of a specific location or neighborhood. Look online, ask around, and pay a visit if you can. Is this somewhere you would stay as an Airbnb guest?
The Best Places for Buying a Vacation Rental Property in 2019
The data for the best places to invest in real estate is constantly changing. But according to Mashvisor’s most recent assessment, some of the best cities for buying Airbnb rental property in 2019 include Dubuque, Portsmouth, Bainbridge Island, Columbus, Springfield, Akron, and Shawnee. Check out the full list: The 10 Best Places for Buying a Vacation Home in the US in 2019.
To Sum Up
Finding the right location when buying a vacation rental property is a challenging task. But any diligent real estate investor with the right tools and enough research can undoubtedly figure it out. Make sure to follow our above tips, and use Mashvisor’s various tools to achieve the best results. To learn about your options for signing up for our services, click here.
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