If you want to invest in real estate and guarantee high returns on your investments, make sure you do not dive in headfirst without studying the housing market, your finances, your projected income and expenses, and your long term financial goals.
Without a proper plan set in place, capitalizing on profitable rental properties and making big financial wins won’t be in your favor. This is especially important if you are a novice investor, so it is highly advised to hire a real estate agent or seek advice from a mentor to show you which favorable real estate markets to invest in and which real estate strategy to take on early in your venture.
Related: Airbnb Rentals: Finding Income Properties Using a Heatmap
How to Choose the Best Vacation Rentals for the Highest Rewards
The Airbnb business isn’t projected to slow down in the upcoming years, and investors are jumping on the opportunity to make money and capitalize in the right neighborhoods. Starting an Airbnb business is a sound investment this year, and if you have the financial means, invest in vacation/short term rental properties and don’t think twice.
But first and foremost, learn how to choose the best vacation rentals for a high ROI.
1. Property Location Is a Dominant Factor
Learning how to choose the best vacation rentals boils down to the property location. This isn’t a secret formula; location determines the long term success of your rental property to a great extent. BUT, this doesn’t mean the location of your rental property doesn’t have to be in a place you see yourself living in.
The optimal place to invest in a short term rental is in a location favorable to real estate investing and favorable to your own living preferences. Also, another tip on how to choose the best vacation rentals is that vacation rentals are more successful when they are equipped with amenities that make it easy for your prospective guests to enjoy the local neighborhood.
The bottom line is invest in locations you are familiar with and enjoy.
2. Make Sure Local Laws Work in Your Favor
This is another deal breaker! Learn how to choose the best vacation rentals in neighborhoods/areas where local laws favor the landlord and real estate investors, especially for a short term rental business. We highly recommend that investors/landlords pay attention to the local laws before deciding on buying any type of rental property; this applies to both traditional and Airbnb properties.
In some areas, it’s illegal to rent a condo for a short term stay, while you can rent it out on long term basis. The bottom line here is that local laws can dictate what real estate strategy makes for a good investment. So, be very careful because the law can eat into your profits.
3. Property Amenities Maximize Your Rental Income
Renovating before renting out is another key criterion to a successful Airbnb business. Invest your money in refurbishing your rental property for bigger rewards later. Airbnb tenants are extra picky nowadays due to the abundance of options on the website.
So, if you want to beat your competition and have the leverage to charge high rent, make your rental property stand out in a good way. Quality trumps all and can set you apart from the cutthroat competition.
4. Use Mashvisor to Find the Best Vacation Rentals
To hone in on profitable real estate properties across the US, investors use Mashvisor analytical tools like the heatmap tool, the Airbnb property calculator, and the property finder tool to arrive at positive cash flow properties guaranteed. Click here to learn more about Mashvisor Airbnb profit calculator feature.
Mashvisor heatmap tool is another key feature for finding rental properties in a matter of minutes; the visual tool gives you quick analysis of which area to invest in for high rental income and high cash on cash return, and which areas to stay away from, respective to time and real time market trends.
Meanwhile, the property finder tool gives you the chance to filter your preferences, i.e., location, rental income, etc., to find your match. Don’t believe us? Subscribe for free and try it out for yourself here.
Top Cities for the Best Vacation Rentals for a High ROI
In order to help you in your quest of how to choose the best vacation rentals, we provide you with a list of some of the most profitable locations to buy and invest in short term rentals in 2018, based on data from Mashvisor:
Boalsburg, PA
- Average Property Price: $283,940
- Airbnb Rental Income: $8,274
- Cash on Cash Return: 12.37%
- Cap Rate: 12.37%
Fairfield, CA
- Average Property Price: $446,377
- Airbnb Rental Income: $7,072
- Cash on Cash Return: 10.49%
- Cap Rate: 10.49%
Marbletown, NY
- Average Property Price: $482,645
- Airbnb Rental Income: $5,360
- Cash on Cash Return: 11.27%
- Cap Rate: 11.27%
Seward, AK
- Average Property Price: $309,500
- Airbnb Rental Income: $5,214
- Cash on Cash Return: 10.76%
- Cap Rate: 10.76%
Cayuga, NY
- Average Property Price: $215,920
- Airbnb Rental Income: $4,835
- Cash on Cash Return: 10.74%
- Cap Rate: 10.74%
Hatch, UT
- Average Property Price: $374,780
- Airbnb Rental Income: $4,639
- Cash on Cash Return: 10.54%
- Cap Rate: 10.54%
Puyallup, WA
- Average Property Price: $300,000
- Airbnb Rental Income: $4,158
- Cash on Cash Return: 10.45%
- Cap Rate: 10.45%
Allentown City, PA
- Average Property Price: $168,581
- Airbnb Rental Income: $4,069
- Cash on Cash Return: 10.31%
- Cap Rate: 10.31%
Pegram, TN
- Average Property Price: $274,633
- Airbnb Rental Income: $4,056
- Cash on Cash Return: 10.7%
- Cap Rate: 10.7%
Tofte, MN
- Average Property Price: $169,999
- Airbnb Rental Income: $3,663
- Cash on Cash Return: 14.53%
- Cap Rate: 14.53%
Port Matilda, PA
- Average Property Price: $437,375
- Airbnb Rental Income: $8,378
- Cash on Cash Return: 9.89%
- Cap Rate: 9.89%
Mt. Pleasant, IN
- Average Property Price: $168,650
- Airbnb Rental Income: $3,500
- Cash on Cash Return: 13.24%
- Cap Rate: 13.24%
South Bass Island, OH
- Average Property Price: $169,000
- Airbnb Rental Income: $3,138
- Cash on Cash Return: 10.19%
- Cap Rate: 10.19%
Newburgh, NY
- Average Property Price: $336,343
- Airbnb Rental Income: $3,504
- Cash on Cash Return: 10.18%
- Cap Rate: 10.18%
State College, PA
- Average Property Price: $326,133
- Airbnb Rental Income: $5,026
- Cash on Cash Return: 9.7%
- Cap Rate: 9.7%
Conclusion
Without the right due diligence, real estate investors won’t reap the benefits of an Airbnb business for a high ROI. The vacation rental business is generally cyclical, determined by seasons and holidays, but if done right, your profits in peak periods will make up for the slower months.
Choose the best vacation rentals using must-have real estate investment tools such as Mashvisor heatmap tool, Airbnb property rental calculator, and property finder tool to streamline your search and cut your time and money in half. It cannot be overstated that the right due diligence begins with knowing what you want as a real estate investor and optimizing the resources available to you to get to your goal.
To start your 7-day free trial with Mashvisor and subscribe to our services with a 15% discount after, click here.