Should you consider Airbnb real estate investing in 2019? Airbnb and similar short-term rental sites have changed the real estate investing game. Fast forward 10 years after it was founded in 2008, Airbnb continues to grow at a rapid pace, attracting hosts and guests from all over the world. Today, more and more property investors in the US housing market are investing in short-term rental properties as money-making machines.
The Rise of Airbnb Real Estate Investing
How Airbnb works is simple – the platform allows anyone to turn an extra space in their home into an asset that will help pay their rent. So, you can host a traveler in a spare bedroom, or a family can rent out their house as a vacation short-term rental to tourists while they’re out of town. The company makes money by charging a percentage of the booking cost as a service fee from both the host (3%) and the guests (0-20%). Today, Forbes estimates that Airbnb is worth at least $38 billion!
The financial benefits of short-term rentals are not only appealing to the average person, but also to professional property investors who don’t live in the house or apartment they’re renting out on Airbnb. If you’re interested in getting on board with Airbnb real estate investing, it’s best to understand the different trends that affect this investment strategy.
These trends show a real estate investor where to invest in Airbnb, what type of investment property to rent out, and how to market a listing for a higher occupancy rate. Understanding Airbnb trends for 2018 will also give you an idea of what you can expect from Airbnb real estate investing in 2019. After conducting thorough research on the matter, here’s what we’ve found which we believe every Airbnb real estate investor in the US housing market needs to know.
Big Cities Are Still the Most Booked
Global hotspots are a major travel destination and, thus, it only makes sense that they rank on the top of Airbnb’s most-booked list. Big cities like New York, San Francisco, and Los Angeles are no strangers to Airbnb. Listing your vacation short-term rental property on Airbnb in these cities will guarantee you an attractive rental income and high Airbnb occupancy rate. Before buying an investment property in a big city, however, you must keep in mind their laws and regulations regarding short-term rentals (some of which are stricter than others, which is discussed in more detail below).
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Smaller Vacation Spots Are Gaining More Popularity
Though big cities are topping lists for the most bookings, smaller cities are catching up. In fact, according to the Airbnb trends report, mid-western cities in the US housing market are seeing some of the strongest growth. For example, bookings have increased by 256% in Indianapolis, IN and 254% in Columbus, OH! This growth was mainly driven by booming downtown districts buzzing with restaurants, nightlife, and local arts.
In addition, vacation rental properties in Miami and Orlando, FL have some of the highest return on investment in the country. Another Airbnb real estate investing trend is the increasing popularity of small towns that offer ample nature lodging in close proximity to popular national parks, such as Whitefish, MT (242%). Renting out a house on Airbnb here as a short-term vacation rental will surely bring good returns.
Whitefish, MT
Thinking of starting an Airbnb real estate investing business? Here are the Best Places to Invest in Real Estate Short-Term Vacation Rentals in 2018!
Renters Look for Unconventional Accommodation
Beyond the standard apartments and rooms for rent, demand has been strongest for non-traditional homes over the last year. Studies have shown that millennial travelers in the US are booking more alternative lodging options. Booking for Airbnb rental properties has increased for RVs by 133%, yurts by 155%, and nature lodges by a whopping 700% this year! Travelers are also more interested in vacation short-term rentals that are close to national parks, mountains, and outdoor activities.
Did you know that one of Airbnb’s most desired listing is a tree house in Atlanta, GA? This Secluded Intown Treehouse has more than 300,000 site visits per month and is Airbnb’s #1 most wished-for listing worldwide!
Secluded Intown Treehouse, Atlanta
The Focus Is Still on Experience
To stand out from other Airbnb real estate investors, invest in providing your guests with the best experience! Offering guests activities hosted by locals is now driving bookings. In fact, Airbnb’s co-founder, Brian Chesky, said that 3 in 4 millennials would rather buy an experience than a physical good. He also shared that “Airbnb is about so much more than just renting space. It’s about people and experiences. You’re not getting a room, you’re getting a sense of belonging.”
Therefore, a key to profiting the most from Airbnb real estate investing and guaranteeing future success in 2019 is to offer guests experiences. Activities like a photography workshop, local cooking class, crafts, and cocktail tastings are the biggest attractions for Airbnb guests. Research also shows that demand for outdoor experiences is going to grow into next year.
Strict Regulations in Some Cities
Like we said before, property investors must check laws and regulations regarding short-term rentals in the city they wish to invest in. In some cities of the US housing market, renting out on Airbnb is illegal. Other cities, on the other hand, enforce restrictions that have the potential to affect your profits and return on investment. In San Francisco, for example, Airbnb rental properties are allowed only if the host is a full-time resident, is registered with the city, and rentals are capped at 90 days.
The rise of Airbnb real estate investing among professional investors has also caused a backlash from residents who believe it is raising rents and who dislike seeing strangers in their neighborhoods every night. Over the years, though, Airbnb has done well to push regulations to make short-term renting easier. The best places to invest in Airbnb short-term rental properties are those which are Airbnb friendly.
The Bottom Line
These are the main trends to expect in 2019 regarding Airbnb real estate investing. Overall, renting out for the short-term remains a profitable investment in the US housing market. Property investors need to take a few things into consideration, though, so make sure you have a business plan set before jumping into the Airbnb rental market next year.
To find the best investment properties for sale that you can buy to rent out on Airbnb in the city of your choice, sign up with Mashvisor and make use of the investment tools we offer! To start your 7-day free trial with Mashvisor and subscribe to our services with a 15% discount after, click here.