Airbnb investment properties have had continuous growth over the years as tourists and vacationers find them a more favorable option than hotels.
Consequently, the Airbnb investment strategy has become a great way for investors to make money in real estate. More and more investors are turning to Airbnb real estate investing to take advantage of opportunities presented by the short-term rental market. Generally, short-term rentals make up to three times more than traditional long-term rentals. However, not all areas are good for Airbnb investment. Your Airbnb return on investment will vary depending on the location. Before you think of buying a rental property to rent out on Airbnb, you should make sure you’ve picked the best area for Airbnb investment.
As you know already, location is the most important factor to consider when finding income properties. It is even more important when it comes to Airbnb real estate investing. Therefore, if you are thinking of owning an Airbnb, you should first learn how to find the best area for Airbnb investment.
What Makes for a Good Area for Airbnb Investment?
Here are some of the factors to consider when thinking of where to buy Airbnb investment property:
1. Close Proximity to Popular Attractions
When looking for where to buy Airbnb investment property, you should consider cities that enjoy a large number of visitors. Visitors may be business travelers or tourists. Cities with sought-after attractions like national parks, mountains, and beaches are typically desirable to tourists. Such areas usually have a high Airbnb occupancy rate and are the best places for Airbnb investment. Occupancy rate is one of the most significant determinants of Airbnb return on investment. The fewer vacancies you have, the higher your Airbnb rental income will be.
2. Low Competition
Competition will also influence your Airbnb occupancy rate and ROI. To make sure you have a high Airbnb occupancy rate, choose a location with a low supply of hotels and other short-term rentals. Areas with fierce competition like big cities are best avoided. Medium-sized towns with fewer hotels and high occupancy rates would be your best bet. In areas with a relatively low supply of hotels and vacation rentals, Airbnb prices tend to go up. If there are many hotels in the area, you’ll be forced to keep your rates low.
3. Low Seasonality
When thinking of how to find the best area for Airbnb investment, seasonality is a factor you should take into account. You don’t want to purchase an Airbnb investment property in an area with long off-seasons. If your property stays empty for long periods without generating rental income, it may cost you more money in the long run. Savvy Airbnb hosts invest in areas that have a high influx of travelers all year round. In such areas, the demand for short-term rentals is consistent.
4. Lenient Airbnb Laws and Regulations
Even if an area has a high demand for short-term rentals, you must first check the local laws and regulations regarding vacation rentals before investing. Some cities have strict Airbnb laws which may make the area unfavorable for Airbnb investment. In cities where investing in Airbnb is illegal, renting out on Airbnb can lead to serious legal issues.
In other cities, Airbnb investment may not be illegal but there may be harsh Airbnb regulations that could adversely affect your Airbnb return on investment. For instance, the taxes and fees you are expected to pay in a particular city will influence your Airbnb profit margin. Before you decide to buy a vacation rental property in a particular housing market, be sure to research and understand the Airbnb rules and regulations. Look to invest in Airbnb-friendly cities only.
5. Access to Public Transportation and Amenities
Airbnb guests care about having access to public transportation and amenities such as restaurants, shops, gyms, etc. Make sure the area you intend to invest in provides them with the convenience they need.
6. Affordable Management Costs
Some of the best real estate deals may be found in areas far from where you live. However, if you are not going to live at the Airbnb property yourself, you should consider the cost of managing the Airbnb property. Does hiring a professional property manager make financial sense?
Using Mashvisor to Find the Best Area for Airbnb Investment
The process of finding a good Airbnb investment location takes a lot of time and effort. You need to look at many different factors, collect Airbnb data, and make calculations. If you are wondering how to find the best area for Airbnb investment quickly and easily, Mashvisor’s tools are the answer. Mashisor’s tools will help you find the best-performing Airbnb locations in the US housing market in a matter of minutes.
Finding the Best Cities for Airbnb Investment
First, you can find the best cities for Airbnb investment by checking out Mashvisor’s blog. You will be able to access reliable and up-to-date Airbnb occupancy rate data and other Airbnb data for major cities in the US.
We recently released our 2020 housing market predictions for the best cities for Airbnb! Check it out: 20 Most Profitable Airbnb Locations in 2020: Cash on Cash Return.
Finding the Best Neighborhood for Airbnb Investment
Once you find a profitable city for Airbnb investment, the next step is to find a profitable neighborhood. The potential Airbnb return on investment also varies from neighborhood to neighborhood. You can easily find neighborhoods with the highest ROI in your city of choice using Mashvisor’s heatmap analysis tool. Our real estate heatmap uses Airbnb analytics to perform accurate neighborhood analysis. The tool provides a visual representation of Airbnb data using different colors. You can use it to find the best Airbnb neighborhoods in your city of choice using filters such as listing price, Airbnb occupancy rate, Airbnb rental income, and Airbnb cash on cash return.
Finding the best neighborhood for Airbnb investment is a crucial step to owning a profitable Airbnb investment property. However, it’s not the end. You still have to analyze different properties to find a profitable Airbnb for sale in your neighborhood of choice. Mashvisor’s Airbnb profit calculator will help you perform an Airbnb investment analysis in a matter of minutes.
Ready to start making money with Airbnb in 2020 but not sure how to become a host? Read our complete guide on becoming an Airbnb host.
The Bottom Line
As a first-time Airbnb investor, knowing how to find the best area for Airbnb investment can greatly increase your potential returns. As we have seen, finding the best places for Airbnb investment needs a lot of market research. Sometimes the most unexpected areas may be goldmines of high returns. With Mashvisor’s tools, you will be able to easily find the best Airbnb investment location and reduce investment risk.
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