As we enter the summer season, it tends to dawn on a lot of people that there may be a great real estate investing opportunity in vacation home rentals.
Just as that smart idea pops into investor’s heads, it is quickly chased away by real estate skeptics who scoff at the idea of Airbnb investments and the like.
With all of the news of strict Airbnb regulations by city or even horror stories about short term tenants tearing apart vacation home rentals with wild parties, a real estate investor might start to think twice about this investment strategy. And the question “Can you really make money in real estate with vacation home rentals?” is born.
Can You Really Make Money in Real Estate with Vacation Home Rentals?
Yes, anyone can make money with vacation home rentals. There are even some Airbnb hosts out there who are making a whopping $1 million a year with their vacation home rentals! That sounds unrealistic, we know. But you can aim to make a decent rental income to cover rental property expenses and put money into your wallet.
Become a millionaire with vacation home rentals. To start looking for and analyzing the best Airbnb investment properties in your city and neighborhood of choice, click here.
Not only are those million dollar real estate investors living, breathing proof that you can make money in real estate with vacation home rentals, but just take a look at the many homeowners who have done the same. LearnAirbnb reports that a large number of Airbnb hosts were saved from foreclosures over the years across many US real estate markets thanks to the rental income generated from Airbnb real estate investments.
The reason speculation might still exist is because Airbnb real estate investing is a kind of science. It’s a delicate process that some people fail to adhere to. They become the “cautionary tales” of vacation home rentals.
Well, Mashvisor is here to guide you away from being just another cautionary tale in the Airbnb real estate investing business. We want to show you why so many real estate investors are fighting to make Airbnb legal and lift restrictions in certain cities and states. They wouldn’t go through all of that pain and effort if it wasn’t for the fact that vacation home rentals do make you money.
How to Make Money in Real Estate with Vacation Home Rentals
Vacation home rentals do require a certain finesse in order to break the bank. It all starts with finding the best place to buy a vacation home rental.
The Best Place to Buy a Vacation Home Rental
The first step to making money in real estate with vacation home rental properties is finding the location. You probably saw this coming from a mile away, but that’s only because the location really is the biggest factor in whether or not a vacation rental property makes money.
You could have the loveliest little investment property on your hands and even be the most dedicated short term rental property landlord, but if the real estate market doesn’t attract Airbnb guests, you’re out of luck.
A location that will allow your vacation home rental property to make money is one that attracts tourists. Better yet, it attracts tourists year round, increasing the chances that your Airbnb rental property will be booked. If the tourist scene is a healthy one, other key factors (like a great economy) are sure to exist in that real estate market as well.
How about investing in Southern Cali vacation home rentals? Read: The Best Places to Invest in Vacation Homes in Southern California
The Real Estate Market’s Return on Investment
While studying the ability of a real estate market to attract tourists is key, it isn’t tangible evidence to let you know that vacation home rentals will make money there. This is where the arguments against vacation home rentals could win. Luckily, you’re a real estate investor who has the return on investment numbers to back up your decision to invest in vacation home rentals.
Looking at the return on investment of a real estate market and choosing the best neighborhood to invest in real estate is the way to make money with vacation home rentals. Of course, this means looking at things like the Airbnb rental income, cash on cash return, cap rate, and Airbnb occupancy rate. Essentially, you narrow in on the best place to buy a vacation home by looking at the Airbnb-specific return on investment.
We’ve found 8 great places for you! Take a look: The 8 Best Places to Invest in Real Estate for High Airbnb Rental Income in 2018
Thankfully, this kind of data is readily available because of real estate analytics. There are different online platforms and real estate investment tools that can provide you with these.
We’re one of them! Check us out here.
The Best Rental Property for Vacation Homes
Some of those cautionary tales were born in the best places to buy a vacation home. That’s because those real estate investors may have found a great real estate market, but not a great investment property to rent out on Airbnb. The choice of the investment property is why we hear those stories of success and the stories of failure.
The investment property should be one that will attract Airbnb guests. For example, the specific location of the investment property plays a huge role in the Airbnb rental income you’ll bring in. Airbnb guests will want to be “smack-dab in the middle” of the city centers they visit or pulled away from it all if it is a resort-like area.
Beyond that, the type of investment property can depend on a lot of things. This requires you to know what kind of Airbnb guests the real estate market attracts. For example, if your Airbnb guests are looking for a real getaway, they may prefer to have a whole single family home to themselves. If your Airbnb guest is a younger demographic, they may enjoy smaller apartments or condos or even enjoy a single family home where the other rooms are rented out to tenants (more Airbnb rental income for you!).
The Rental Property’s Return on Investment
Just as you have to figure out the return on investment for a specific real estate market, you’d have to do the same for an individual investment property. This means, based on your investment property financing, figure out how much Airbnb rental income will be cash flow and what the cash on cash return and cap rate look like.
The best real estate investment tool for this investment property analysis? An Airbnb profit calculator.
The Airbnb Profit Calculator
An Airbnb profit calculator is a tool that uses real estate analytics to allow the real estate investor to make the ultimate investment decisions. Finding the best place to buy a vacation home? You can do that with the Airbnb profit calculator as it shows you all of the needed return on investment metrics we mentioned you need to make money in real estate with short term rentals.
Mashvisor’s Airbnb profit calculator (also known as an investment property calculator) takes it a step further by showing you the optimal rental strategy for each location. In this way, you can avoid real estate markets where an Airbnb investment property is not the best choice.
What more could an Airbnb investor want? To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.
Once you find the exact neighborhood with an Airbnb profit calculator, the real estate investment tool allows you to also find an investment property using similar metrics.
Learn more about this amazing tool: The Airbnb Profit Calculator: The Ultimate Real Estate Investment Tool
Airbnb Property Management
Finally, the last piece of the puzzle: Airbnb property management. Simply owning an Airbnb investment property doesn’t drive revenue. You have two choices to make money with vacation home rentals:
- Be a dedicated landlord of short term rentals
- Opt for professional Airbnb property management
If you’re ambitious and choose the landlord route, know it will take a lot of hard work- dealing with booking, tenant turnover, key exchanges, answering questions, etc. Short term rental landlords really have to be on top of everything. There are ways to make owning an Airbnb investment property easier, of course, and plenty of great landlord tips out there to guide you. Just know that your ability to be an outstanding landlord will affect how much money you make with vacation home rentals.
Or go the easier, yet more expensive route, of hiring professional Airbnb property management. Choose a company you can trust by interviewing them and setting clear goals for your vacation home rental property.
While no one is saying it is the easiest thing in the world to make money in real estate with vacation home rentals, it can be done. And it can be very rewarding.