Buying property for Airbnb is often hailed as one of the best real estate investments an investor can make.
When conducted in a smart and calculated fashion, this statement is absolutely true, as it is with any rental strategy. This begs a question, however. Is purchasing an Airbnb investment property itself inherently a smart investment decision? In other words, should buying property for Airbnb be an avenue an investor pursues for making money in real estate?
Related: The Ultimate Guide to the Airbnb Investment Property
Why Buying Property for Airbnb Is a Smart Investment
Luckily for the potential Airbnb investors out there, Airbnb investing is indeed a smart rental strategy to follow for short term rentals. Here are three reasons why:
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Airbnb Rental Income
To a real estate investor, every investment property has one main purpose for existence: generating profit. Airbnb short term rentals meet this requirement quite nicely, typically to the extent of, or even more than, a traditional rental strategy. An Airbnb investment property, unlike a long-term property, uses nightly rates.
As a result, Airbnb investors tend to earn more than traditional investors. Setting up a rental price is also far more flexible with Airbnb short term rentals than with traditional long-term rentals. This further influences the high and profitable Airbnb rental income so commonly seen with many successful investors.
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Rental Strategy Flexibility
The flexibility of making money with Airbnb does not end there. Not only can you set up the amount of Airbnb rental income you’d like, within reason and due to some factors, but you can also dictate how active or passive you’d like your Airbnb investment property to be.
Since, once again, Airbnb takes advantage of nightly leases, you can rent out as often as you desire. You could be active with the investment and focus on renting out a house frequently. You could also be more passive and simply rent out part of your residence or property, depending on Airbnb regulations by city.
The spectrum is not limited to these two examples. You can be making money in real estate with Airbnb in any way that best suits your goals and situation.
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Low Risk Investments
Due to its flexibility of involvement, Airbnb is one of the best low risk investments available in real estate. This is especially true for passive Airbnb investors. Instead of buying a full rental for traditional investing, an investor can use part of the property as an Airbnb rental. Not only is this low risk, but it also acts as an excellent source of secondary income.
When Buying Property for Airbnb Is a Smart Investment
Buying property for Airbnb is a smart investment, without a shred of doubt. However, just as is the case with every other rental strategy, there are scenarios and conditions that make the investment worthwhile. Here are the three instances when buying property for Airbnb is the smart thing to do.
Related: Four Things to Consider Before Purchasing an Airbnb Investment Property
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Sustainable Regulations
As great as short term rentals are for making money in real estate, they sometimes run into a halting issue: stringent legal regulations and restrictions. Some cities require Airbnb investors to obtain multiple forms of licenses and registration.
Other cities may demand multiple costly taxes on an Airbnb investment property. Some cities may even have both! Airbnb regulations by city can hold the fate of the success of your Airbnb investment property.
As you’d expect, cities with established legal frameworks for short term rentals are home to the best real estate investments while others without such legal support do not have successful Airbnb rentals. Before buying property for Airbnb, make sure your location’s Airbnb laws are conducive to the platform. To learn more about Airbnb regulations by city, check out Airbnb’s Responsible Hosting page.
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Good Location
When asking “How much can I make with Airbnb?”, you should really be asking “Where is the best location in my city for an Airbnb investment property?” That’s because location is the most important aspect of investing in any type of real estate.
Making money in real estate is impossible without a good location. A location’s influence will trickle down to all factors relating to buying property for Airbnb, such as profitability, regulations, and tenant attractiveness. That last factor is particularly important for Airbnb investors.
Many Airbnb short term rentals peak during certain seasons or events in certain areas. Making sure your Airbnb property is near such events or is suitable for such seasons is a key to success. Be sure to research a location before buying property for Airbnb. Also, be sure to have access to the data, such as Airbnb rental income and Airbnb occupancy rate, by using an Airbnb profit calculator.
To learn about Mashvisor’s calculator, click here!
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Efficient Airbnb Property Management
Like all forms of property management, efficient Airbnb property management is a must for lucrative Airbnb properties. Property management for an Airbnb investment property is typically required more constantly compared to that of traditional rentals.
This is largely due to the high tenant turnover short term rentals experience. To make the smartest investment possible before buying property for Airbnb, be sure to estimate property management expenses using an Airbnb profit calculator.
How to Make Buying Property for Airbnb a Smart Investment
Now that we’ve discussed why Airbnb is a smart investment and when to invest based on certain situations, it’s time to talk about how to make buying property for Airbnb a smart investment. The answer is quite simple.
All Airbnb investors need to do is use an Airbnb profit calculator. The calculator, which is part of the broader rental property calculator, helps investors find a location, pick a property, and analyze the property. The calculator is also very interactive, which allows Airbnb investors to use a heatmap to pinpoint certain features, such as Airbnb rental income and property type, that they are most interested in.
To start your 7-day free trial with Mashvisor’s Airbnb profit calculator, click here!
Related: The Guide to Using an Airbnb Profit Calculator