Today, we will review one of the best real estate investment strategies- investing in short term rentals. Many investors are wondering how to make money in real estate. Guess what, short term rentals might be the answer. Short term rentals are thought to be one of the best real estate investments in terms of making money fast as well as generating a good rental income, thus, profit. How to make money in real estate? Are short term rentals really one of the best real estate investment strategies? Is it the optimal rental strategy for you? These are just some of the questions we will answer, so keep on reading!
#1 The Optimal Rental Strategy
As previously mentioned, real estate investing offers various real estate investment strategies. One of the most popular ones is buying a rental property. However, when buying a rental property, you also need to choose the optimal rental strategy for the property and its location. Essentially, there are two types of real estate investment strategies for rentals. These are, namely, the traditional rentals, also known as long term rentals and the short term rentals, more popularly known as Airbnb rentals.
The traditional rentals are more suitable for real estate markets which have tenants looking for, let’s say, lasting accommodation. Long term rentals are successful in cities with young families or places which offer job opportunities. The benefit of traditional rentals is that once occupied, they generate a relatively steady inflow of rental income.
On the other hand, short term rentals are associated with higher profit per night. The biggest obstacle is that the Airbnb host should be very involved in the process. This is due to the fact that the landlord needs to find Airbnb guests for his/her property every few days. Additionally, the Airbnb host needs to be available at all times in order to provide his/her Airbnb guests with the best experience. This is the only way to get good ratings and attract new visitors. Additionally, he/she needs to clean and maintain the property after every short term tenant. This includes restocking the needed supplies. That is why short term rentals might be among the best real estate investment strategies but are not suitable for every real estate investor.
#2 When Are Short Term Rentals One of the Best Real Estate Investment Strategies?
In order to make the best real estate investments out of Airbnb rentals, you need to take a couple of variables into account. First of all comes the location. Short term rentals are successful in areas which attract tourists or travelers for business meetings. Make sure that the location fits with this investment strategy. Additionally, the Airbnb rentals should be in a safe and calm neighborhood. Last but not least, they need to have access to public transportation, supermarkets, etc. An additional thing that the Airbnb host needs to do, as already described, is maintaining the property and providing the best experience for their Airbnb guests. For example, you might leave a tourists’ guide and maps for your tenants. You might also organize for them a tour around the city or prepare them a meal. Additionally, you would need to provide them with fresh and clean towels. You would also need to restock the toiletries as well as the kitchen supplies. This includes refilling toilet paper, paper towels, shampoos, soap, coffee, salt, sugar, spices, etc. You can probably see that buying a rental property of this kind involves a lot of effort. So before considering this real estate investing strategy, think about it carefully.
#3 How to Find the Best Short Term Rentals? Use the Rental Property Calculator.
How to make money in real estate? Choose one of best real estate investment strategies and the best short term rentals. Using a rental property calculator is a sure way of finding the best real estate investments. A rental property calculator is an online tool which helps you in performing investment property analysis quickly and accurately. The tool computes various real estate metrics such as cap rate, cash on cash return, return on investment, etc. Mashvisor’s rental property calculator shows you Airbnb occupancy rate as well as potential rental income. In addition, Mashvisor’s helper presents you with insightful information about the investment property itself as well as its surrounding areas. This is of key importance when trying to find the best short term rentals. It is also advisable to perform real estate market analysis and explore the market in depth before financing a rental property.
Last but not least, do not forget that the best short term rental properties are not necessarily in the hottest real estate markets. This is due to the fact that such markets are typically more expensive and, thus, the profit you generate is lower. Our advice is: choose a profitable and suitable real estate market for short term rentals. Further, use Mashvisor’s rental property calculator to find and buy the best properties. Of course, the way you present and manage your Airbnb rental is crucial. So, put forth a lot of effort if you want it to be successful.
Are you interested in learning more about different real estate investment strategies, such as long term rentals, for instance? Go ahead and sign up for Mashvisor!