When you plan on buying an Airbnb investment property, you want to make sure that this investment is going to be successful. However, how can you ever be sure? The answer is doing research. Doing that manually, however, is not an option because such procedures typically take a lot of time and effort. Let alone the chance of making a mistake in the computations. Thus, the only solution left is to use a real estate tool to help us in the process. A very useful tool is the Airbnb profit calculator which presents the top results from comparative data analysis. That is also the topic of this blog. So, what is an Airbnb profit calculator and how to use it? Keep on reading to find out.
#1 What Is an Airbnb Profit Calculator?
An Airbnb profit calculator is the same as the investment property calculator that is used to provide a predictive analysis for a property you are interested in buying. Moreover, it is a real estate tool that is used by many investors to calculate the return on investment and other real estate metrics. However, when you have chosen to buy an Airbnb investment property as your optimal rental strategy, make sure to use the Airbnb profit calculator and not investment property calculator. This is due to the fact that the specialized tool can provide you with more detailed and precise information. What you need to do to be a successful real estate investor is to use the tool. Moreover, the calculator is also used to estimate the most profitable locations before investing in Airbnb. Are you curious to know even more about the Airbnb profit calculator? Make sure to not skip this blog: “The Guide to Using an Airbnb Profit Calculator.”
#2 What Does an Airbnb Profit Calculator Calculate?
An Airbnb profit calculator will provide you with the most important metrics of selected investment properties. However, if you are not familiar with them, this is your chance to learn what they mean. To ensure avoiding a mistake in the computations of these metrics, always use the Airbnb Profit Calculator! In order to answer why, make sure to read “The Airbnb Profitability Calculator: The Best Friend of the Short-Term Rentals Investor”
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Cash Flow
Well, it is easy to calculate the cash flow. Basically, you need to deduct the expenses associated with the property from the rent you get from your tenants. In the end, you may have either a positive cash flow or a negative cash flow. Paying attention to the cash flow is important as it shows if a particular Airbnb investment property has a potential for success.
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Airbnb Cap Rate
This is a metric that is used to determine the return on investment of a short term rental property. The formula of Airbnb cap rate is easy to remember. All you need to do is to divide the net operating income (NOI) by the current market value of the property. The difference in this calculation from the Airbnb cash on cash return is that you do the calculations regardless of the financing strategy. Thus, you will need to include all the money that is involved.
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Airbnb Cash on Cash Return
The cash on cash return is another real estate metric. It helps to determine the rate of return that an investment property will have. The difference from the Airbnb cap rate is that this method takes into account your financing strategy for purchasing the property. So, such a metric takes into consideration the cash with which you purchased the property. Moreover, it does not take into account the amount of money borrowed through a mortgage or any other type of loan. It will indicate the return based solely on the cash you have invested.
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Airbnb Rental Income
Another thing that the Airbnb profit calculator will include in its predictive analysis is the Airbnb rental income. Knowing the potential Airbnb rental income will help you to understand if you want to invest in a particular short term rental property or not. Moreover, it would help you with a comparative data analysis in order to choose the best property. However, you should know that when you buy a property, you may get different numbers than the estimated ones.
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Airbnb Occupancy Rate
Another important indicator for you is knowing what the potential Airbnb occupancy rate is. So when you are comparing various Airbnb properties you should aim for the property with a higher occupancy rate. Do not worry, the Airbnb profit calculator will provide you with that information. Moreover, in its predictive analysis, the tool also uses the data of previous Airbnb occupancy rates. That is not everything that the Airbnb profit calculator provides. The median property price and the return on investment (ROI) are also calculated.
There are more things to consider when buying the Airbnb property, but what are they? To find out, make sure you read: “Four Things to Consider Before Purchasing an Airbnb Investment Property.”
#3 What Is the Benefit of Using Mashvisor’s Airbnb Profit Calculator?
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Location
In order to make a fortune with your optimal rental strategy, you should select the most profitable location for your short term rentals. Mashvisor’s Airbnb profit calculator will estimate if the selected location will be profitable and suggest if you should proceed with buying an investment or search for a new area.
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Potential Rental Income
With Mashvisor’s Airbnb profit calculator, you will be able to know what income to expect from your Airbnb investment property. You should understand how much money you will make if you follow these steps. First, you should conduct real estate market analysis in order to know what the median property price is. Hence, you will be able to indicate your potential rental income. Second, based on the comparative data you will be able to have a better sense of the value of your property as well as the amount of money you could charge your tenants.
Have you decided you want to invest in short term rentals? Start looking for and analyzing the best short term investment properties in your city and neighborhood of choice, click here.
