An accurate Airbnb market research will require the right Airbnb research tool. Which one among all the research tools online should you use?
Table of Contents
- The Importance of Market Research for Short-Term Rental Investing
- How to Do Market Research for Airbnb in 4 Steps
- Airbnb vs Long Term Rentals: Which One Is Better?
Diving headfirst into the world of real estate can be intimidating. But investing in short-term rentals, like Airbnb real estate investing, is gaining a lot of popularity among beginner investors. It is because owning an Airbnb investment property is a great way to get started since it provides endless opportunities for making money.
However, you must conduct proper Airbnb market research before buying an Airbnb rental property. Through Airbnb market research, you can better understand the short-term rental market and find the best investment property to help you achieve your financial goals.
To do it, you need to understand why market research is important and how you can do it with the right Airbnb research tool.
In this article, we will discuss the basics of Airbnb market research so you can make wiser decisions moving forward. We will talk about the benefits of conducting market research and teach you how to do it with the help of real estate website Mashvisor.
Let’s get started.
The Importance of Market Research for Short-Term Rental Investing
As far as investing in real estate properties is concerned, you will need to put a good strategy in place to ensure you get a good return on your investment. It can only be achieved if you can access vital market information and data.
It is why due diligence is essential in real estate investing, especially if you plan to invest in short-term rental properties. In most markets, short-term rentals are more profitable investments than long-term rental properties. But just because that’s the generalization doesn’t mean it already applies to your location of choice.
As an investor, you need to do your homework so you can achieve greater chances of success. Investing in an Airbnb property may seem lucrative and financially rewarding, but it still depends on the market it’s in.
It is often said that location matters in real estate investing. For this reason, as an investor, you should know the market conditions before you look for potential Airbnb properties. A better understanding of and insight into the market you’re considering will help you make more objective decisions.
At the end of the day, your decision will significantly impact your investment. And it is not something that should be taken lightly.
Now let’s talk about how to do proper Airbnb market research and what tools you can use to spot the investment property that’s right for you.
How to Do Market Research for Airbnb in 4 Steps
Doing Airbnb market research is the best way to increase your investment’s chances of success. Airbnb market research can tell you what to expect from the future of your Airbnb rental property and how that property is expected to perform compared to similar properties around it.
Of course, it means that you will need to gather large amounts of data for comparison and analysis. Luckily, you can get Airbnb data from Airbnb’s website since they provide a lot of data for public viewing.
Additionally, Airbnb’s platform keeps track of each property’s historical performance and even provides an analysis based on that performance tracking. However, if you’re looking for how to research Airbnb markets, you will find multiple Airbnb market research tools online that can help you.
Mashvisor’s Airbnb market research tool, for example, gathers data from the platform to provide market research for short-term rental properties around the US. It does so through an easy-to-use interactive tool.
But how exactly do you conduct market research for Airbnb?
Here is how to conduct 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 significantly influence 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 a huge influx of tourists during certain seasons. It means that you will experience vacancies during the off-season. 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?
Mashvisor: Your One-Stop-Shop for Airbnb Market Research
Mashvisor is a real estate platform that specializes in data analytics to help rental property investors make the best decisions. Launched in 2015, Mashvisor helps real estate investors find the best deals in the most profitable rental markets across the US.
As a real estate investment tool, Mashvisor provides its users with access to a massive database that covers almost every area of the US housing market. It also offers investors and users tools that they can use to make accurate and realistic investment property analyses.
When you sign up for Mashvisor’s services, you can access the latest tools and Airbnb analytics for major cities in the United States. You will find the following for different US cities with Mashvisor:
- Airbnb Occupancy Rate Data
- Average Airbnb Rental Incomes
- Average Cash on Cash Returns and Cap Rates
With the above information, the first step 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 your rental business in the long run. It will also help you avoid getting into trouble with the law in the future.
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.
To learn more about short-term regulations in different US cities, click here.
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 offer different investment return potentials. While one neighborhood may be the most popular tourist destination, another may not get as much tourist traffic in an 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 one of Mashvisor’s most popular tools, the Airbnb Heatmap. With the heatmap 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.
Mashvisor’s Real Estate Heatmap
You can then use Mashvisor’s Property Finder tool to identify Airbnb properties in your neighborhood of choice that match your search criteria and budget.
4. Conduct Comparative Market Analysis
By now, you’ve identified a few Airbnb rental properties in your neighborhood of choice. The next step of Airbnb market research is to perform a comparative market analysis.
A comparative market analysis, or CMA, is a form of Airbnb investment analysis. It involves finding the value of a rental property by looking at a few Airbnb rental properties 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 can avoid bad real estate deals and purchase overpriced properties. Also, 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 comparable properties? The search for real estate comps can be quite time-consuming. However, you can use Mashvisor’s tool, the Airbnb profit calculator, to quickly get comps for every listing on the platform.
Click here to start your 7-day free trial with Mashvisor and enjoy a 15% discount when you subscribe to our services after.
Airbnb vs Long Term Rentals: Which One Is Better?
A common question that beginner real estate investors often ask themselves is, “Should I invest in a long-term rental or a vacation rental property?”
While short-term rentals continue to increase in popularity as investment properties, long-term rentals are still the most common type of real estate property. It means that choosing between the two can be challenging, as each type of rental property comes with its own advantages and disadvantages for investment.
As an investor, if your ultimate goal is to maximize your profits, even if it means taking on more risk, short-term rentals are a better choice in most markets. However, long-term rentals are the best if you’re looking to make a safe investment with steady growth and returns.
With that in mind, it is often advised not to make up your mind until you’ve conducted rental market research to see which type of rental is best in that particular market.
Market Research for Airbnb vs Long Term Rentals
Doing rental market research for rental properties follows the same steps mentioned above, regardless of the type of rental property you want to invest in.
So, when doing Airbnb market research, you can do the same for long-term rentals, as well. It means that you’ll need to gather data from different sources when it comes to long-term rentals.
Alternatively, you can use Mashvisor’s platform and tools to gain access to both types of data, as well as make automatic comparisons between the two in your Airbnb market research tool.
The biggest difference between doing rental market research for Airbnb vs long-term rentals is that the occupancy rates can fluctuate much more in Airbnb properties. However, other factors can also influence the decision-making process.
For example, when researching a market for Airbnb properties, you’ll need to choose your location based on the area’s tourist attractions. For long-term rentals, however, you will instead want to be on the lookout for family-friendly amenities, such as schools and pharmacies.
Additionally, long-term rentals experience a relatively stable occupancy rate year-round.
Airbnb rentals, on the other hand, are known for being seasonal. It means that short-term rentals can see very high demand in certain seasons and no demand at all in other seasons. So, if you decide to invest in an Airbnb rental, it’s important to keep the above differences in mind while doing rental market research.
If you find a long-term rental that looks like a prime investment property, it may be in your best interest to divert from your plan and seize the new opportunity if you’re comfortable with it.
Property Management
One of the most important differences between Airbnb and long-term rentals relates to rental property management.
Simply put, long-term rentals only require a fraction of the rental property management that short-term rentals need. It is because:
- Airbnb rentals have a high turnover rate.
- Short-term guests are less likely to take good care of the property.
As an Airbnb host, you can expect guests to be checking in and out of your property on a weekly or daily basis. Every time a guest checks in or out, it is your responsibility to collect the rent and the keys and make sure that no serious damage is done to the property.
Additionally, since short-term guests feel less attached to properties that they’re only spending a few days in, they will often neglect taking good care of the property. Worse, they may leave it in a messy state.
Luckily, rental property management services are available anywhere in the US. Although they come at a considerable cost of around 5%-10% of your monthly rental income, the services they provide can save you a ton of time and effort.
The Bottom Line
Investing in short-term rentals like an Airbnb property is quite profitable if you do your homework. We cannot stress enough how important due diligence is in rental property investing.
Learning how to perform Airbnb market research is the first step in the due diligence process to finding a profitable investment property. Similar to buying long-term investment properties, acquiring an Airbnb rental property also requires the same amount of thorough research.
With thorough and extensive market research using the best Airbnb research tools, real estate investors are able to get critical data. It helps them select the best property, set competitive rates, and even market the property.
As far as real estate investment tools go, there are many options to choose from. However, not all of them are created equal. If you want to increase your chances of landing the best possible investment deals, you need to find the best one.
Be sure to use Mashvisor’s tools in your Airbnb market research to find profitable investment opportunities and reduce investment risk automatically.
Its database will give you the accurate and relevant information you need to make your ROI projections as realistic as possible. The database is regularly updated, so you can confidently use all the information you find on the site to your advantage.
Mashvisor’s tools, like the real estate heatmap and Property Finder, will help you to find the best neighborhoods to invest in. On top of helping you do the math, its investment property calculator can also point you to the right markets that align with your investment goals and needs.