Buying Airbnb investment properties is one of the many popular real estate investment strategies this year. Investing in short-term rentals is a smart way to quickly make money in real estate and generate positive cash flow. However, like any other type of investment strategy, you need to have the right amount of knowledge to begin. As for Airbnb investments, you not only need to have prior knowledge of real estate investing but also how to become a successful Airbnb host.
In this article, we will give you all the real estate tips for buyers looking for Airbnb investment properties so that when the time comes to purchase, you will know exactly what to look for.
Real estate tips for buyers: Research the local real estate market
When you know what your local real estate market looks like and in what direction it’s headed towards, you can determine whether or not investing in Airbnb rentals will make you a profit. You need to understand your local market in terms of home prices, demographics and what type of attractions and amenities it provides.
Real estate tips for buyers: Get approved for a loan
Investment property financing can be a real pain in the butt for many investors. If you plan on taking a mortgage loan to finance your Airbnb rental then make sure to get pre-approved so that you know exactly how much you can afford to spend.
Real estate tips for buyers: Find out the potential costs of renovations
You always want to keep in mind that people choose Airbnb rentals as an alternative to pricey hotels. This means that your goal should be to provide living quarters that are equal to hotel accommodations. You might want to consider renovations in order to bring your Airbnb property up to the level of quality that is suitable for your guests.
Real estate tips for buyers: Be aware of Airbnb regulations
Each city has its own laws and regulations for short-term rentals. Some cities have really strict Airbnb regulations that must be followed by every Airbnb host. Before you think about buying an Airbnb investment property, familiarize yourself with your area’s short-term rental regulations. Some areas may require that you have a permit or business license to rent out your property through Airbnb. Other areas restrict the number of days you’re allowed to rent out.
Real estate tips for buyers: Finding an Airbnb property
The first question that buyers ask is WHERE and HOW can I find an Airbnb rental property. Location is the key factor to determining the success or failure for your investment property. That is why it is vital that you know exactly how and where to search. The most commonly sought out places for Airbnb rentals are areas that are close to public amenities like shopping centers, public transportations, and business centers. Additionally, Airbnb rentals are known to be popular in tourist destinations where people like to come and enjoy a nice weekend or summer break. So chase the areas that are most desired by people and that are high in demand for short-term rentals.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
The second part of the question is HOW can I find an Airbnb rental property. There are numerous real estate investmenting websites that will make your property search process easier. Mashvisor, for example, has all the necessary real estate investment tools to help you find Airbnb properties in a matter of minutes. We provide real estate market analysis for markets and neighborhoods all over the US. We have an array of different tools like our property finder tool, heatmap analysis tool, investment property calculator, Airbnb profit calculator and much more! Mashvisor will give you access to real estate listings in your city/cities of choice and will allow you to view each area’s data. You can see how well a certain property performs in terms of Airbnb occupancy rate, cash on cash return, cap rate and Airbnb rental income.
To learn more about our product, click here.
Real estate tips for buyers: Consider foreclosed homes
Among the highly recommended real estate tips for buyers looking for Airbnb investment properties, is to go after foreclosed homes. One person’s nightmare may be another person’s dream. It’s sad to say that foreclosed homes are a great investment opportunity since foreclosures are hard on every person experiencing them. However, that’s how life in real estate works.
Foreclosed homes are generally very cheap properties that are sold below market value. The property is put for sale by the bank after the homeowner fails to pay the mortgage. That is why the bank usually sells the property by offering discounts to the buyer. With a little touch-up and renovations, you can have an Airbnb investment property that you bought at a good deal!
Real estate tips for buyers: Property management
Let’s say you found the right location and the right type of Airbnb investment property, did you take into consideration property management? You need to manage and maintain the property between guests. This can be a very hectic job since you will always have guests coming in and out of your property. Guests want clean sheets, fresh towels, pillows and blankets and kitchen supplies. Providing the best quality of life for your guest can drastically affect your Airbnb rating and reviews. Having bad reviews can leave you staring at a vacant property and lower your Airbnb occupancy rate.
If you feel like managing the property is too much to handle, you can consider hiring professional property management to do the job for you. However, that option comes with a price to pay. Most professional property management companies are quite pricey.
Real estate tips for buyers: How to become a successful host
Investing your time in your real estate investment properties is the key to making it in real estate no matter what types of property you own. As an Airbnb host, you are responsible for your guests and your guests’ needs. In addition to providing their needs, you need to keep your property clean and well equipped and reply to emails always. Being present and showing your commitment towards your guest will pay off greatly and create a good reputation for your property. When a guest leaves your Airbnb satisfied, they will recommend your property to others and this will boost your Airbnb occupancy rate.
Get to know your neighbors
It’s always a good gesture when you put your neighbors in the picture by telling them that different people will be renting out your place. Create a good relationship with your neighbors and get to know them. This is smart because when you have a good relationship with them, they can inform you of any unusual activities going on in your property.
Top cities for buying Airbnb investment properties in 2018
Below are the top performing cities for buying Airbnb investment properties in 2018 according to Mashvisor’s rental property calculator. Now that you have a clear idea of what to consider when buying Airbnb rentals, you can check out these cities and guarantee that you will have a profitable Airbnb investment.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
#1: Sonoma, CA
- Median Property Price: $1,355,975
- Airbnb Rental Income: $7,257
- Airbnb Cash on Cash Return: 5.27%
- Airbnb Cap Rate: 5.27%
- Airbnb Occupancy Rate: 59.86%
#2: Key West, FL
- Median Property Price: $948,095
- Airbnb Rental Income: $7,659
- Airbnb Cash on Cash Return: 5.22%
- Airbnb Cap Rate: 5.22%
- Airbnb Occupancy Rate: 66.78%
#3: Memphis, TN
- Median Property Price: $189,100
- Airbnb Rental Income: $2,210
- Airbnb Cash on Cash Return: 10.2%
- Airbnb Cap Rate: 10.2%
- Airbnb Occupancy Rate: 46.7%
The bottom line
The real estate tips for buyers looking for Airbnb investment properties mentioned above should help any real estate investors thinking about Airbnb make smart investment decisions. Make sure you check out the hottest real estate markets for Airbnb rentals and let your successful career as a real estate investor begin.