The 4 Steps of Airbnb Market Research

Diving headfirst into the world of real estate can be intimidating. But Airbnb real estate investing is one strategy that is gaining a lot of popularity among beginner investors. This is because owning an Airbnb investment property is a great way to get started since it provides endless opportunities for making money.

However, before buying an Airbnb rental property, you need to conduct proper Airbnb market research. Through Airbnb market research, you will be able to understand the short-term rental market and find the best investment property that will help you achieve your financial goals.

Here are the steps you need to consider when conducting Airbnb market research:

1. Identify a Good City to Invest In

The first step of the Airbnb market research process is to find a good city for an Airbnb investment. Location is the most important factor in real estate investing since it will determine your return on investment. The best cities for Airbnb investment are typically popular travel destinations enjoyed by tourists or business travelers. A good city for real estate investing should also have a strong economy, shopping centers, good transportation, and other essential amenities.

You should also consider the Airbnb trends in the cities. Some cities receive tourists in certain seasons alone. This means that you will experience vacancies during off-seasons. Will you be able to afford these vacancies? You also want to examine the economics of the city. Steady growth in the tourism sector is an indication that there will be Airbnb growth in the city.

Finally, you need to check out the return on investment data for a particular city. Are Airbnb rentals making money there? To find profitable Airbnb locations, you can look at the Airbnb statistics by city. So, where can you find reliable city data? On Mashvisor’s blog! Be sure to visit our blog to access the latest Airbnb analytics for major cities in the United States. In our location analysis articles, you’ll get the following for different US cities:

• Airbnb Occupancy Rate Data
• Average Airbnb Rental Incomes
• Average Cash on Cash Returns and Cap Rates

With this information, step 1 of your Airbnb market research will be complete and you’ll have a profitable city or two in mind. But there’s still one major factor to check out: Airbnb regulations.

2. Study the Airbnb Regulations of the City

Airbnb regulations have tightened in many areas around the United States. So, after choosing a suitable city, the next step in your Airbnb market research is to study the short-term rental regulations of the city.

Since Airbnb regulations usually vary from city to city, you need to know whether those of your selected city will allow you to achieve your investment goals. For instance, are you allowed to operate a non-owner occupied Airbnb rental in the area? What are the policies concerning Airbnb guests? What are the tax regulations? By having a good understanding of the local Airbnb regulations, you will be able to assess how they are going to affect you and you’ll avoid getting into trouble with the law.

There are some cities with very stringent regulations against Airbnb use. Such cities may not be good for Airbnb real estate investing. Cities with flexible Airbnb regulations are more desirable locations to invest in. You can approach your local city council to learn about your city’s regulations regarding Airbnb.

Related: 5 Cities Where Airbnb Is Illegal in 2019

3. Conduct a Neighborhood Analysis

After finding a good city to invest in, the next step in Airbnb market research is to find the best neighborhood in the city. Neighborhoods within a city may have different investment potential. While one neighborhood may be the most popular tourist destination, another may fail to be visited by even a single tourist the entire year. Therefore, you need to assess the neighborhoods and find one with the best Airbnb investment opportunities.

A good neighborhood for Airbnb real estate investing is one that appeals to tourists. Tourists are looking to stay in close proximity to attractive sites and other popular places such as beaches, game parks, city centers, etc.

To find a profitable neighborhood, you can quickly perform neighborhood analysis using Mashvisor’s Airbnb Heatmap. With this tool, you can find a profitable neighborhood in the city of your choice by using filters like listing price, Airbnb rental income, Airbnb cash on cash return, and average Airbnb occupancy rate.

Related: Neighborhood Analysis in Real Estate Investing

You can then use Mashvisor’s Property Finder to identify Airbnb properties in your neighborhood of choice that match your search criteria and budget.

4. Conduct Comparative Market Analysis 

By now, you have identified a few Airbnb rental properties in your neighborhood of choice. The next step of Airbnb market research is to perform comparative market analysis. This is a form of Airbnb investment analysis that involves finding the value of a rental property by looking at a few Airbnb rental properties in the area that are similar to the one you are interested in (real estate comps).

But why are real estate comps important to Airbnb market research? Well, through real estate comps, investors are not only able to avoid bad real estate deals and purchasing overpriced properties, but they can also gain an understanding of how similar properties are doing in the local real estate market. Rental comps can help you check out local rental rates, for example, before ever making the purchase. And you need to check the rental rates of comparable Airbnb properties in the area before eventually setting your prices. So, where do you find these comps? The search for real estate comps can be quite time-consuming. However, you can use Mashvisor’s Airbnb profit calculator to quickly get comps for every listing on the platform.

Related: Comparative Market Analysis: The Fastest Way to Get it Done

The Bottom Line

Learning how to perform Airbnb market research is the first step to finding a profitable investment property. Similar to buying traditional investment properties, acquiring an Airbnb rental property also requires the same amount of thorough research. Through market research, real estate investors are able to get critical data which helps them to select the best property, set competitive rates, and even market the property. There are many options to choose from and you need to find the best one. Be sure to use Mashvisor’s tools in your Airbnb market research to automatically find profitable investment opportunities and reduce investment risk.

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