One of the best things you can do as a short term rental property owner is know how to research Airbnb market in your location of choice.
Learning how to research an Airbnb market is an important skill to learn if you want to optimize your investment in a short term rental property. As an investor, you need to be armed with the right market data and information. It will allow you to formulate the best marketing and operating strategies for your vacation rental business. This is especially helpful if you plan to list your property on Airbnb.
Table of Contents
- How Do I Know If a Market Is Good for Airbnb Properties?
- What’s the Best Tool for Researching the Airbnb Market?
Getting into the vacation rental industry requires more than just having enough capital for a property purchase. You also need to be equipped with the right knowledge about the rental property market so you can make well-informed decisions.
As a rental property investor, one of the things you should know how to do is to identify the right market for a short term rental property―whether you plan to list on Airbnb, Vrbo, or other similar platforms. This will require plenty of time for study and research on your part as an investor. Due diligence is an important part of real estate investing if you want to succeed.
In this article, we will talk about how to spot the best possible deals in the most profitable markets using the most efficient tool for Airbnb market research. We hope that, in the end, you can proceed with your Airbnb investment with greater confidence and conviction. We also hope you walk away armed with practical know-how as an investor.
Related: The Ultimate Guide to Real Estate Investing for Beginners
How to Know If a Market Is Good for Airbnb Properties
As a real estate investor, you will be faced with several excellent investment opportunities. If you do your research well, you’ll end up reaping the benefits and enjoying a positive cash flow on your rental properties in any market.
But as with any real estate investment, the key to a successful venture is primarily its location. The local market will play a huge role in determining whether it is fit for an Airbnb rental investment or not.
What Makes for a Good Airbnb Location?
The question now is, how would you know if a market is good for Airbnb or vacation rental properties in general? Let’s examine some of the things that will help you determine whether a particular rental market is good for Airbnb properties or not.
One of the very first things you should look at when it comes to vacation rental property investments is seasonality. Short term rentals are highly dependent on peak and off-peak seasons. As an investor, you need to understand how each season works, so you know what necessary adjustments you need to make per season.
Each market offers different things when Airbnb rental properties are involved. Some perform a lot better than others. You just need to identify how you can optimize your investment based on how a particular market performs in a given season.
The concept of knowing how to research Airbnb market involves you becoming familiar with how Airbnb properties perform in a specific market during specific seasons.
For instance, Valrico, FL is a city that attracts a high number of inbound tourists all year long. The city usually sees an overall Airbnb occupancy rate of 70%. If you’re in the market for an Airbnb property, you’ll do well in Valrico.
On the other hand, if the city or town you’re considering experiences peak seasons, you need to make sure that you have a good strategy in place for when the off-peak seasons roll in. Doing so will keep your business operational all year long.
Tourism is another aspect that you should research when considering a particular market for an Airbnb investment. While tourism has been generally associated with tourist attractions and vacation spots, it goes beyond that.
By definition, tourism pertains to any and all activities of people traveling to a certain destination, whether it’s for business, pleasure, or other purposes. That said, vacation rentals on Airbnb and other short term rental platforms get booked by local and foreign tourists traveling for any of the reasons stated above.
If you’re picking a city for an Airbnb rental, you need to know what the tourism industry is like in the area. You need to consider the proximity of tourist spots to the location of your choice. Generally, most guests prefer to book Airbnb and other short term rentals that are near the places they will be visiting.
In addition, you should also be on the lookout for important local events that drive up tourism in the area. Having a good knowledge of what the city or town can offer tourists in every season will add to the overall guest experience. Consequently. it will enable you to achieve highly favorable ratings.
You need to be strategic in picking an investment property for an Airbnb rental. The right location will help you attract more guests, leading to a lower vacancy rate. It ultimately leads to a higher monthly rental income for your Airbnb business.
Airbnb Occupancy Rate
One of the things that will significantly affect your rental property’s monthly income is its occupancy rate. When picking the right market for your Airbnb investment, you need to research the Airbnb occupancy rate for that particular location.
You can easily do it by looking at similar comparable rental properties in the area. You can check out a handful of rental comps to see what their occupancy rates are to give you an idea of what you can expect. Ideally, you should look for markets that offer above 50% Airbnb occupancy rates to give you a better return on investment.
Related: 4 Effective Ways to Increase Your Airbnb Revenue
Dining, Recreation, and Amusement Spots
No out-of-town trip, whether it’s for business or pleasure, is ever complete without side trips to the best dining and recreation spots a local market has to offer.
As a rental property owner, if you plan to have your property listed on Airbnb or other platforms, your knowledge of the top dining and entertainment spots will help you market your property. You can include them in your promotional or marketing materials, so potential guests have an idea of the options available to them.
Sometimes, even if a location has nothing special to offer in terms of local activities and events, the overall dining and shopping experience is enough to draw hordes of people in. If you’re investing in your own backyard, it is a pretty easy thing to do. You already know which restaurants, shopping complexes, and entertainment facilities are in your area.
You can even give them a tour as an add-on service. As long as you know your way around town, you’ll be fine.
If you’re an out-of-town investor, you can do some more research to see what the market can offer tourists. Look for top recommendations from other guests and Airbnb hosts. Take a look at reviews from credible critics. It won’t cost you much, plus it’s fairly easy to do your research online.
Another crucial thing to consider when conducting your Airbnb market research is finding out the types of people a city attracts. Having this piece of information will help you position your Airbnb rental property to make it stand out from the competition.
All you need to do is look at the city’s tourism website to get an idea of the local demographics. You may also consider adding Airbnb listings to your research process for a more accurate Airbnb data analysis.
Does the area attract more business people or leisure travelers? Are the visitors families, couples, elderly people, or young professionals? Are they satisfied with just the basics, or do they want premium features on their Airbnb rentals?
These are a few of the things that will help you determine your target market before starting an Airbnb business.
Lastly, before setting off to buy a property to list on Airbnb, you need to find out the rules and regulations for short term rentals in the area. Some locations are friendlier to Airbnb rentals than others.
As a rental property owner and potential Airbnb host, this should be included as part of your research. You may find a good deal on a property that has great income-generating potential on paper, but if the location greatly limits its operations, you won’t be able to optimize the property to its full potential.
So always be sure to check out the short term rentals regulations in any market you’re looking into, whether you plan to have the property listed on Airbnb or not.
What Is a Good Return on an Airbnb Investment?
Now that we’ve gone through some of the criteria for choosing a market suitable for an Airbnb investment, how do you know if what you’re getting in return is worth all the money and hard work?
Generally, a good ballpark figure for Airbnb returns is 8% to 12%, according to experts. However, realistically, these numbers are few and far between. At best, when investing in a short term rental property, look for any property that will give you an Airbnb cash on cash return of at least 2.00% with an Airbnb occupancy rate of above 50%.
If the market you’re considering has both of these and averages a minimum of $2,000 in Airbnb rental income per month, you’ve found yourself a good deal. Of course, you will also have to consider the property’s actual price, but with the numbers already stated, the lower the price is, the faster the ROI will be.
Related: How to Use Airbnb Predictive Analytics to Earn a High ROI
What’s the Best Tool for Researching the Airbnb Market?
We’ve talked about the basics of Airbnb market research. Now, let’s talk about the tools you need to properly do market research, not just for a vacation rental but for investment properties as well.
There are plenty of great real estate investment platforms online to use for market research. It is one of the best things about being a real estate investor in the digital age. You have access to a wide range of tools that allow you to look for properties and estimate ROI. However, not all real estate platforms are created equal. Some are a lot better than others.
And one of the best websites hailed by investors and real estate professionals is Mashvisor.
Mashvisor: Your Best Tool for Airbnb Market Research
As a real estate website, Mashvisor has been helping investors find the most profitable income properties online since 2015. It specializes in helping real estate investors find the right investment properties for sale in almost every location in the US housing market.
If you want to know how to research Airbnb market, simply go to Mashvisor to get started on your journey as a potential investor and Airbnb host. These are some of the tools you will have access to once you sign up for Mashvisor’s products and services:
Massive Real Estate Database
One of the things that Mashvisor’s users have grown to love about the platform is its database. It has a huge database that covers almost every real estate market across all 50 states. The platform pulls its data from highly reliable sources, such as Zillow, Realtor.com, the MLS, and Airbnb. It is regularly updated to give you the most up-to-date information you need for your analysis.
Property Search Tool
Mashvisor is also known for its property search tool that allows users to search for properties easily. You just simply need to enter the address, neighborhood, city, or zip code of the area you want to search for, and voila! Then, it will take you to a map that shows all the active listings in the area.
The map page has a sidebar containing three tabs: Investment, Short Term, and Long Term. Click on each tab to see the properties listed under each category.
The map on the left also functions as a real estate heatmap that allows you to use filters to customize your property search. Just click on the dropdown menu in the top left corner of the map to see the different filters available to you.
Once you turn on the heatmap features, it will show you a color-coded map that indicates areas that perform well, satisfactory, and poorly, depending on the selected filter. This makes the search for rental properties a lot easier and cuts down on the Airbnb market research time.
Investment Property Calculator
Perhaps one of the most important things in a real estate investor’s arsenal is a calculator to do the computations. Mashvisor takes that to the next level with its investment property calculator.
Mashvisor’s calculator allows investors to do the math with ease and use actual real estate market data for their calculations. Its calculator taps into the system’s data and gives you default numbers based on actual rental market data. Since the system runs on highly intelligent AI, you can customize your input based on your research, and it automatically adapts.
This highly intuitive and interactive system makes estimates and projections a lot more accurate and realistic since it uses updated information that’s available on the system. This gives you greater confidence when performing a rental property analysis.
To get access to our real estate investment tools and know some of the other great features we have to offer, sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.
Wrapping It Up
Investing in a short term rental property to list on Airbnb requires so much more than just having enough money to buy a property. You need to put in the necessary work if you want to succeed. A major part of succeeding in rental property investment is knowing how to research Airbnb market and what it can offer you as an investor.
If you’re armed with this knowledge, the decision-making process will be a lot easier. You won’t end up with buyer’s remorse because your research will show you whether a market is worth investing in or not. This way, you know how to proceed.
To do that, you will need the best tools available to you. The good thing about investing in this day and age is you have modern technology to back you up. Mashvisor is a platform that has helped thousands of real estate investors succeed. It can help you achieve the same level of success.
When you sign up for Mashvisor, you get access to a wide range of practical tools and a huge database that will help you pinpoint the right investment property that suits your needs.
Find out about how to find the best and most profitable investment properties with Mashvisor by scheduling a demo.