As Airbnb continues to grow year after year, more and more investors are entering the vacation rental market. Investing in Airbnb properties is not the same as renting out a part of your home to make a bit of extra cash. Owning an Airbnb investment means managing a short-term rental business and it must be treated as such. To have a successful real estate investment and truly reap the many benefits of an Airbnb investment strategy, here’s what you need.
1) The Right Tools
An Airbnb investment strategy is no different than any other investment strategy in this regard. You need to run the numbers. Yes, Airbnb real estate investing is known to be quite the profitable strategy, but it needs to be done right. You need to assess the payback of any deal to determine whether or not it’s worth pursuing. The way you do this is by asking simple questions. Is this a strong market for short-term rentals? Is this the right property for an Airbnb investment strategy, or will it make me more money as a long-term rental?
Airbnb analytics will help you answer those questions and make the right decision. We’re talking cash on cash return, cap rate, rental income, and Airbnb occupancy rate data. This is important information any Airbnb investor needs for determining the return on investment for an investment property in a real estate market. The easiest way to get this data is to start out your 14-day free trial with Mashvisor now and use our Airbnb profit calculator. Our calculator will help you quickly determine how profitable an Airbnb investment strategy will be in any US real estate market.
Related: The Airbnb Profitability Calculator: The Best Friend of the Short-Term Rentals Investor
Mashvisor’s Airbnb heatmap will also give you visual cues as to which neighborhoods have the highest and lowest ratings based on your criteria. This way you’ll know exactly where to look and how successful an Airbnb investment strategy is in that location. You can also conduct an Airbnb investment analysis specific to your prospective investment property to know what kind of ROI it will give you. If you want to succeed with an Airbnb rental strategy, doing due diligence with the right tools is important.
2) The Right Pricing Strategy
Beginners, or first-time Airbnb investors, often times get confused on how to price their short-term rentals. When it comes to the Airbnb investment strategy, you need to price against hotels and other Airbnb rentals in the area. A good starting point would be to research the cost of nearby hotels (as they are your competition) so you know how much you should charge your guests. You can also research the market and find out what comps to your Airbnb property are charging. However, no two properties are exactly the same. Pricing can differ based on the number of rooms, the location of the property, the amenities, and more.
Check out this blog to learn how to price your property: How Do I Price My Airbnb Property?
3) Know the Law
Before buying a house for Airbnb in any market, you need to look up how regulated short-term rentals are in that area. The success stories of Airbnb investors in some of the country’s strongest markets don’t come without any road bumps. The boom of this industry has encouraged many investors to switch over to the Airbnb investment strategy. Because of this, non-owner occupied Airbnbs have been popping up in a lot of residential areas, and while this is great for guests searching for local accommodation, the locals themselves sometimes are opposed to them.
This, along with backlash from the hotel industry, has motivated policymakers to start writing up some more strict regulations regarding short-term rentals. So to make sure you won’t be facing any legal issues, read up on local legislation and stay ahead of any restrictions which might make it harder for you to turn over a profit with an Airbnb investment strategy.
Related: 8 Best Cities for Airbnb Investment in 2019
4) Airbnb Property Management
Because short-term rental properties have more guests coming and going, they require attention to maintenance and cleanliness. The upkeep associated with operating an Airbnb isn’t always a walk in the park, but some real estate investors enjoy being a host. However, if you’re running multiple Airbnbs in different locations, it can be difficult to manage them all properly. Not giving each property the diligence it requires can hurt your success rate.
To successfully manage your property with an Airbnb investment strategy, you need to pay attention to hospitality, maintenance, marketing, occupancy, and competition. At this point, it might be worth considering the extra fee of professional property management. Weigh your options and determine what’s more practical for your investment portfolio.
5) Good Reviews
At the end of the day, Airbnb is a business all about hospitality. You want your guests to enjoy their time and leave your rental satisfied with their experience. Airbnb guest reviews are extremely important for the success of your investment property. Why?
People want to know that they’re getting their money’s worth. Are they paying for what was marketed to them? Guest reviews will let them know. If your property has positive reviews of guests commending the hospitability of the host or their overall stay, occupancy rates will be healthy. The better the impression your short-term rental property leaves on guests, the more the reviews. More reviews give your property a higher ranking on the Airbnb website. Before you know it, demand for your rental property will be up. This gives you more leeway to incrementally raise your nightly rates.
Related: What Kind of Airbnb Occupancy Rate Can You Expect?
Don’t stress yourself out. This doesn’t mean every review you receive has to be good in order for you to be successful. A couple of bad reviews won’t hurt your profits with an Airbnb investment strategy. The point here is that you need to definitely assign priority to reviews as they do play a big role.
The Airbnb investment strategy can be very profitable if you put in the work. Are you up for the task? To start searching for Airbnb properties for sale in your city and neighborhood of choice, click here.
