Making money in real estate comes in different forms and investing in Airbnb is one of them. There is no doubt that investing in Airbnb is lucrative if it is done successfully and having the right Airbnb pricing strategy is your way to making money in real estate.
Owning an Airbnb requires a lot of work from finding a good real estate property to maintaining a high occupancy rate. Keep in mind that the secret behind the success of Airbnb is that guests find it more affordable than traditional hotels and motels and also it offers a friendly environment that traditional short-term rentals lack. Therefore, making money in real estate with Airbnb requires using the right Airbnb pricing strategy.
For more information about making money in real estate, read Your Guide on How to Make Money in Real Estate.
The right Airbnb pricing strategy is a balance between what you offer to your tenants vis-a-vis what income you want to get in return. The question of how much should I charge for Airbnb rent entails different aspects which will be discussed as you continue reading.
Making Money in Real Estate: Check Out the Competition
You should check out the competition before you attempt to set your nightly price on Airbnb. The easiest way to do that is by doing a search for Airbnb rentals within the same parameters as yours in your area. Try to find answers for the following questions:
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- What is the most common type of Airbnb rental in the area?
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- What kind of prices are they posting?
- What kind of amenities are common with hosts in your area?
These are some aspects to take note of and consider in order to put the right Airbnb pricing strategy in place. Moreover, try to build a network with other investors in the area in order to get a closer understanding of the ins and outs of real estate investing. This can certainly prepare you for a successful Airbnb pricing strategy. Keep in mind that the closer the listing to touristic sites and restaurants, the higher the nightly rate will be.
Making Money in Real Estate: Airbnb Services and Amenities
A big part of pricing your Airbnb listing is the type of services and amenities you provide. The more amenities and services you provide, the higher your Airbnb rental income will be. There are many Airbnb hosts who put some cleaning fees and also charge for extra guests, which is a way to make extra money through Airbnb. To maintain a high Airbnb occupancy rate, it is advisable to make occasional discounts from time to time.
Making money in real estate with the right Airbnb pricing strategy requires you to be fully aware of everything related to investing in Airbnb. This includes being aware of Airbnb regulations, Airbnb marketing strategies, dealing with tenants and guests, etc.
Are you thinking of going with professional property management? Check out Airbnb Rental Property Management: A Must or a Waste of Your Money?
Making Money in Real Estate: Best Cities for Airbnb Investment
Nashville, Tennessee
Nashville is one of the hottest and most profitable housing markets in the US for Airbnb investment. Housing prices in this city remain affordable despite the city’s industrial growth. It attracts millions of tourists due to its cultural atmosphere, musical events, and the combination of traditional and modern surroundings, promoting the feeling that everyone is welcome. On the other hand, Nashville has no personal income taxes, a low cost of living, and a low unemployment rate. Mashvisor’s investment property calculator shows the following figures in regard to the Nashville real estate market:
Median House Price: $428,107
Airbnb Rental Income: $2,288
Airbnb Cash on Cash Return: 3.33%
Airbnb Cap Rate: 3.33%
For more information about the Nashville real estate investment market, make sure to check out Investing in the East Nashville Real Estate Market: Block Club.
Austin, Texas
Austin has always been known for its hip culture and plethora of tourist attractions and activities, making it one of the best places to invest in Airbnb rental properties. In addition, most of Austin’s visitors are millennials who prefer to use Airbnb over the traditional short-term rentals. It is worth mentioning that due to the high rate of Airbnb use in Austin, hotel revenues saw a 10% decrease in the year 2015.
Median House Price: $509,899
Airbnb Rental Income: $2,957
Airbnb Cash on Cash Return: 1.85%
Airbnb Cap Rate: 1.85%
Palm Springs, California
There are several factors contributing to the success of Airbnb in Palm Springs including but not limited to its sunny climate, the variety of activities to enjoy, the unique blend of attractions and constant popular festivals. Thus, Palm Springs is hopping with visitors all year long. Keep in mind that laws and regulations differ from one state to another, so check California Airbnb regulations and laws before investing.
Median House Price: $660,946
Airbnb Rental Income: $4,596
Airbnb Cash on Cash Return: 4.56%
Airbnb Cap Rate: 4.56%
Seattle, Washington
From its rainforests to its picturesque coastline, Seattle has it all for visitors to flock to the city constantly. As a real estate investor, it is of great importance to keep checking the market in order to know the best time to buy an Airbnb property or invest in one. Let us take a look at the real estate investment market in Seattle:
Median House Price: $805,932
Airbnb Rental Income: $3,225
Airbnb Cash on Cash Return: 1.77%
Airbnb Cap Rate: 1.77%
Making Money in Real Estate: Bottom Line
When deciding to put an Airbnb pricing strategy in place to help you in making money in real estate, you should keep in mind that this is not a one-time decision. Always keep an eye on the market, its needs and demands and adjust your pricing strategy accordingly. Making money in real estate requires paying attention to every single detail related to the US housing market, real estate investment strategies, and so on and so forth. Do not hesitate to sign up for Mashvisor for real estate guidance that is available at your fingertips.
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