Here’s what you need to do to succeed when renting out a house on Airbnb!
In the real estate investing business, property investors can make money from rental properties by renting them out either the traditional way or on Airbnb. The main difference between these rental strategies is that traditional rentals are rented out to long-term tenants (more than 1 year) while, on the other hand, an Airbnb rental is rented out to short-term tenants (less than 6 months). Before a real estate investor can decide which rental strategy is the best for the investment property, a few factors have to be taken into account.
If you’re a real estate investor and you believe that renting out a house on Airbnb is the optimal rental strategy for you to make money from real estate investing, keep reading to learn 5 tips that help Airbnb hosts reach the top!
#1 Pick the Right Location for Renting Out a House on Airbnb
Location, location, location! This is absolutely the first tip given to a beginner real estate investor. To succeed in real estate investing, the location of your investment property has to be favorable for the chosen rental strategy. Some housing markets yield a higher return on investment for a traditional rental than an Airbnb rental, while others are more profitable for investing in Airbnb. If you’re renting out a house on Airbnb, what should you look for in a real estate market to decide if it’s a good location?
Short answer: demand for Airbnb rentals! Successful property investors always look for housing markets with high demand for their rental strategy of choice. Areas with high demand for Airbnb rentals are typically those with a strong tourism industry where travelers and tourists prefer staying in rentals over expensive hotel suites. Thus, Airbnb occupancy rate is higher in such locations, meaning more guests which should be your goal when renting out a house on Airbnb.
In real estate investing, higher occupancy rate also allows property investors to charge more for rent. Thus, renting out a house on Airbnb in such locations will generate high Airbnb rental income and yield a good return on investment.
Mashvisor provides a real estate investor with Airbnb data such as cash on cash return, cap rate, rental income, and occupancy rate to help them find the best Airbnb rentals in any city and neighborhood. To start looking for and analyzing the best investment properties, click here!
#2 Optimize Your Listing and Increase Bookings
You might be renting out a house on Airbnb in a good location, but you’ve noticed that other Airbnb rentals in the area are getting more bookings. How come? Well, the other Airbnb listings could be ranking higher than yours. Making money from Airbnb rentals does not work by simply listing investment properties and waiting for bookings – property investors have to market the investment property!
In order for an Airbnb investment property to appear at the top of the search results, there are a number of things Airbnb hosts can do. First, don’t limit yourself to Airbnb and share your listing on other websites and social media platforms like Google+, Facebook, and Twitter. In fact, social media is a powerful tool these days, used as a marketing machine for those renting out a house on Airbnb. Through social media, Airbnb hosts can facilitate promotion and create more visibility.
Another tactic to optimize your listing when renting out a house on Airbnb is to write a great rental property description. Many property investors tend to underestimate this factor. However, it actually makes a difference in the number of bookings you can convert. A great investment property description is well-written, specific, clear, and focuses on something that guests will find desirable. Finally, Airbnb hosts should use pictures that make a great first impression to increase bookings.
#3 Provide Extra Amenities / Services
First and foremost, a real estate investor should always provide guests with basics like quality toiletry, fresh towels, clean rooms, etc. These are a must when renting out a house on Airbnb! Furthermore, successful Airbnb hosts make sure that their guests have a memorable experience. Make sure everything is in good working condition and create a comfortable environment so guests can enjoy their stay. Providing a little extra will also go a long way. It might surprise you how little amenities like a fancy espresso machine or a washing machine make big differences when following this rental strategy.
Keep in mind that if you’re renting out a house on Airbnb, you need to provide your guests with customer service. Successful Airbnb hosts assure their guests that they can reach out to them whenever needed, quick responses and returns to their phone calls, and that they’re open to communication. Another tip is to inform them about local activities or restaurants that they might find interesting and enjoyable during their stay. The more value the Airbnb rental property has to offer, the easier it becomes for the real estate investor to get referrals, repeat clients, and positive reviews.
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#4 Take Guests’ Reviews Seriously When Renting Out a House on Airbnb
One thing that you shouldn’t do when renting out a house on Airbnb is ignore your guests’ reviews! Successful property investors owning Airbnb investment properties understand how valuable their guests’ opinions are. People are more likely to book a rental property when they see reviews from previous guests as they ease away their concerns and further encourage them to click the “Book” button.
Therefore, another way of improving your rental property’s listing is through asking guests to leave feedback and reviews when they leave. You might get a negative review, but a savvy real estate investor uses this to his/her advantage! For example, say you’re renting out a house on Airbnb and a guest left a comment that your Airbnb rental was unclean when he/she arrived. You’re now aware of the situation and should make sure to improve it so that the next guest doesn’t face the same problem when renting your investment property.
#5 Use the Airbnb Profit Calculator
A smart real estate investor makes use of the many real estate investing tools to succeed in the business. If you’re renting out a house on Airbnb, then using the Airbnb profit calculator is a must. This is a type of rental property calculator but is specialized in providing information regarding short-term rentals. Just like the rental property calculator, this real estate investing tool provides property investors with information regarding the cap rate, cash on cash return, Airbnb occupancy rate and the potential Airbnb rental income of various investment properties in a certain location. This allows Airbnb hosts to determine how profitable their Airbnb rentals are and whether or not they can expect a good return on investment following this rental strategy.
The short-term rental market is a competitive one and is growing more and more every day. Thus, if you’re a real estate investor thinking of making money through renting out a house on Airbnb, you should first determine whether this is the optimal rental strategy in your location. Work on marketing your Airbnb rental to optimize your listing, provide guests with a memorable experience, don’t ignore their reviews, and use the Airbnb profit calculator to guarantee a successful real estate investing career.
Remember to sign up to Mashvisor and use our Airbnb profit calculator and property finder tool to analyze and find the best investment properties and Airbnb rentals in any city or neighborhood across the US housing market! To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.