Short-Term Rentals Real Estate Investing: How to Invest in Airbnb

With the strength of e-commerce today, more applications and methods of trade in real estate are emerging and becoming preferred methods for real estate investing. Airbnb rental properties have come to constitute a big share of this. In recent years, Airbnb has permeated many global markets and become one of the most preferred methods for short-term rental booking. Airbnb is an online marketplace that enables people to lease or rent short-term accommodation. An Airbnb investment property can be a holiday cottage, an apartment, or even a hostel.

Are you interested in renting out on Airbnb but not sure how to invest in Airbnb? Well, you have landed in the right place.

This guide on how to invest in Airbnb will help you understand more about the following:

  • What is Airbnb is and why you should/shouldn’t invest in an Airbnb investment property
  • Regulations governing Airbnb. Where is Airbnb legal?
  • Airbnb management (costs)
  • Airbnb reviews
  • Most profitable Airbnb cities

Related: 10 Tips for Beginner Real Estate Investors: Making Money With Airbnb

How to Invest in Airbnb: What Is Airbnb and Why Should You Invest in it?

Founded in 2008, Airbnb is an American company that operates an online marketplace to match renters with landlords. Since its launch, the company has attracted tourists and landlords from all over the world. Today, Airbnb helps about six million visitors a year to find a rental property. Additionally, the company currently has over 800,000 properties in 34,000 cities across 90 different countries.

Investing in Airbnb is a fruitful experience for both renters and landlords. For renters, usually tourists, they get to live in a homey atmosphere while getting immersed in the culture. Rates, moreover, have reported to be much lower than those of hotels, and Airbnb reviews have concluded their viability as a vacation rental option. Benefits for landlords, on the other hand, are abundant. Landlords get to know about cultures and traditions without having to leave their home. Not to neglect the quick cash and high cash on cash return you are expected to enjoy when you are an Airbnb host. Below we offer tips on how to invest in Airbnb.

How to Invest in Airbnb: Important Regulations to Follow

When you are preparing to rent out your home on Airbnb, ensure to understand clearly local city and state laws pertaining to Airbnb rentals. Although regulations for long-term renting are scarce, those for short-term rentals are burdensome. In some states and cities, more rigid laws and regulations are applied to Airbnb rentals. New York and San Francisco, for example, have now drafted laws forbidding rentals for less than 30 days when the host is absent. Although rentals over a very short period of time can be very profitable, breaking the law is yet more costly.

Related: What Is an Airbnb Investment Property and How to Make Money With It?

If you decide to rent on Airbnb, we encourage that you rent your property for a minimum of 30 days. It is crucial that you clearly assess where Airbnb is legal and what regulations govern Airbnb in your area before you invest in this modern real estate investing method.

How to Invest in Airbnb: Consider Costs

Often times, new landlords end up with a negative cash flow because they had forgotten to enumerate all costs associated with renting out the house. Not accounting for electricity in your costs, for example, can significantly off balance your profit and possibly leave you incurring losses. It is then your duty to understand the costs and cogently account for all expenses associated. Some of the costs that you should consider in your calculations are:

  • Monthly payment (if paying for the apartment through a loan);
  • HOA dues that fluctuate around $500/month, depending on the location;
  • Airbnb cleaning fee of about $50 per booking;
  • Supplies estimated at $150 to include complementary treats and snacks; and
  • Utilities (internet, power, and cable TV) of about $200.

Did you know that now you can use an investment property calculator to do the calculations for you? An investment property calculator is a tool to assess the viability of an Airbnb investment property opportunity. The tool generates automatic calculations and predictive outcomes as it enumerates investment cost assumptions. Fore more information about the investment property calculator or if you would like to try it out, check out Mashvisor.

How to Invest in Airbnb: Finally, Airbnb Reviews. They Are as Important as a Positive Cash Flow

Airbnb users assess the livability of properties as well as the nature of Airbnb hosts and Airbnb guests through reviews; these reviews can bring you a lot of renters or destroy you rental career. Bad reviews are detrimental to your Airbnb career because once a bad review is posted, it will stay there forever. This is unfortunate for Airbnb hosts who had a tough week and could not meet the standards they had initially set. Beware because as little as one bad review can force you to lower rates in order to attract hosts back.

How to Invest in Airbnb: Most Profitable Airbnb Cities

Are you still wondering how to invest in Airbnb? Do you have a better idea where Airbnb is legal and could be legal? Are you looking for Airbnb opportunities with the most return on investment? If you are, explore below the most profitable Airbnb cities.

Austin, TX

Today, Airbnb rental properties in Austin are more preferred than any other hotel experience. In fact, in 2015, hotel revenues in Austin dropped by almost about 10%. Moreover, demand for Airbnb in 2018 in Austin is bound to continue rising. More real estate investors are now looking for Airbnb properties for sale in the area. Don’t worry about finding Airbnb guests, because Austin is transforming into a millennial city with thousands moving to it each year.

Related: The Expert Guide on How to Invest in Airbnb

Las Vegas, NV

Investing in Airbnb in Las Vegas can be very profitable, especially with the high number of tourists whether domestic or international who continue to flow into the city every year. Although a transient lodging tax is imposed on Airbnb hosts, the high return on investment outweighs such fees. If you are looking to make quick cash through Airbnb, we encourage you to further look into Las Vegas.

Looking for Airbnb rental properties? Mashvisor can help you find an Airbnb investment property in no time. Click here to get started.

Nashville, TN

Two advantages that play for Nashville are the steady stream of visitors coming into the city every year, thus funneling demand for short-term rentals, and the lower cost of living that has made starting an Airbnb more affordable. Moreover, government officials have established legal framework for short-term rentals maximizing benefits for Airbnb hosts. Hooray!

If you want to make quick cash when you are away while keeping your house lively, we recommend that you look into Airbnb as an investment opportunity. Ensure to study local and state regulations clearly, and enumerate all costs associated in order to enjoy a successful investment with higher returns.

For more information about Airbnb investing, visit Mashvisor.

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