Thinking of buying an Airbnb investment property? Here’s what you should and should NOT do!
Owning and renting out an investment property on Airbnb has surely become an optimal rental strategy in the US housing market. In fact, many real estate investors are making a killing from leasing out their properties using this short-term rental site. However, you can’t expect to get bookings and make money the minute you list your Airbnb investment property. Real estate investors (whether investing for the long-term or the short-term) must do certain things and avoid others to achieve successful real estate investing. So, if a profitable Airbnb investment property is what you’re aiming for, here are 4 dos and 4 don’ts to keep in mind.
Do a Real Estate Market Analysis
As a real estate investor, there are certain things that you’ll always be told are important before making any investment decision – one of which is a real estate market analysis. This will help you understand all you need to know about the location where you’re investing to determine if an Airbnb investment property is really the best way to go about making money in real estate investing. When you analyze the real estate market, you get an idea of which type of rental property is in demand, which areas have a high rental income, property prices, and other necessary data needed to make an informed and smart investment decision.
Related: These Are the Best Cities for Airbnb Investment 2018
We know what you’re thinking: what if it takes me months to perform a real estate market analysis only to end up with the conclusion that renting out an Airbnb investment property is NOT the optimal strategy in my housing market? That would be a great waste of time and energy, but there’s no need to worry about that happening when you’re using Mashvisor’s rental property calculator!
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Don’t Forget to Check Airbnb Laws in Your City
Just because a certain place might seem perfect for an Airbnb investment property, does not mean it’s legal. You may or may not know this, but a number of city councils across the US housing market still have legal issues with Airbnb. Moreover, some cities enforce very strict laws and regulation on Airbnb hosts or real estate investors regarding how many days they can rent out on the short-term rental site, tax payments on their rental income, etc. Thus, it’s important to check what regulations apply to you and your Airbnb investment property before making any decision.
Related: Top 3 Cities in the US with Strict Airbnb Regulations
Do Prepare the Airbnb Investment Property
Whether you’re renting out a unit of your primary residential house or you’re buying an investment property for the purpose of renting it out on Airbnb, some changes need to be done. Airbnb guests have certain expectations of the rental which they’re paying to stay in. Thus, depending on the condition of your rental property, you need to conduct some repairing and fixing to assure that the property is rentable. Make sure it has all the necessary amenities that Airbnb guests will need during their stay. Additionally, it’s a good idea to add things that set your Airbnb investment property apart from the rest and give it a competitive advantage. However…
Don’t Go Overboard
Real estate investors need to carefully plan their finances when fixing up their rental properties. Sure, you want it to attract potential tenants, but you shouldn’t spend too much on the Airbnb investment property to the point where your rental income won’t be able to cover your rental expenses (negative cash flow). For example, you might be tempted to add a swimming pool, but think about how much it’ll cost you to build it, maintain it, and fix it in case it got damaged by a guest. Are you sure you can cover these costs? If not, think of adding something else that’ll give the Airbnb rental property a homey feeling – which is something a lot of Airbnb guests will appreciate.
Do Know What Guests Are Looking For in an Airbnb Rental
Speaking of Airbnb guests, you need to know that just like there are different types of tenants for traditional long-term rental properties, there are also different types of short-term tenants – each with their own set of expectations. For example, a business traveler who’s only staying in an Airbnb rental for a couple of nights would not be interested in renting an entire vacation home rental just for himself. Likewise, you can’t expect a family of four to spend their summer vacation renting out a small housing unit.
Do you see why it’s important to study the real estate market? It’ll help property investors understand the type of tenants they can expect to rent out to and the type of property they’re looking to rent. For example, based on a real estate market analysis, you might come up with the conclusion that short-term Airbnb tenants in Florida are mostly families looking for vacation homes near Disney Land. When a real estate investor knows this kind of information, he/she is able to find an Airbnb investment property and prepare it to comply with what tenants are looking for.
Looking for an Airbnb investment property? Click here to use our Property Finder and find rental properties in any city in the US housing market in a matter of minutes!
Don’t Forget About Airbnb Reviews
Making sure that your guests are satisfied with your Airbnb rental is important to get positive reviews. Airbnb rental property investors must always seek to get positive reviews as they’ll boost occupancy rates. Thus, make sure to pay attention to even little things like the tidiness of the Airbnb rental property, the way you communicate with your guests, and how you respond to their needs to build a good reputation as an Airbnb host and, consequently, get positive feedback from your guests.
Related: How to Always Get Positive Airbnb Reviews
Do Improve Your Airbnb Listing
With the increasing competition in the short-term rental market, a real estate investor should work on improving and optimizing his/her listing to boost occupancy rate and guarantee that potential guests will notice it. One way to optimize your Airbnb investment property listing is through writing a great property description. Moreover, when it comes to Airbnb rentals, people do judge the book by its cover. Thus, Airbnb hosts should use pictures that leave a great first impression and encourage potential guests to hit that “Book” button. BUT…
Don’t Be Misleading!
This is absolutely essential with an Airbnb investment property! We keep hearing stories of people falling in love with pictures of Airbnb rentals they see online, but they turn out to be completely different when they arrive. Don’t think you can get away with misleading pictures – guests will leave negative reviews which will have a huge impact on your business. This will only make it harder for you to get more bookings in the future.
Running an Airbnb investment property is a great real estate investing strategy to make money in the business. Just remember to follow the “Dos” and avoid the “Don’ts” mentioned above to guarantee a profitable investment. For more information, I recommend reading Four Things to Consider Before Purchasing an Airbnb Investment Property.
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