Over the past few years, Airbnb investing has emerged as one of the most effective real estate investment strategies. The Airbnb platform has made short term rentals more profitable than ever and the increasing demand for these properties continues to drive rental income growth. But is investing in an Airbnb investment property a good idea?
And what kind of Airbnb return on investment can real estate investors expect? In this article, we will explore the viability of owning an Airbnb investment. Moreover, we will detail the ins and outs of operating an Airbnb rental property.
US Housing Market: Airbnb Trends
Figuring out whether or not an Airbnb investment is a good idea is predicated on identifying the trends that will dominate the real estate market next year. Here is what the market for Airbnb rentals will look like.
1. Family Traveling Will Continue to Rise
One of the most encouraging trends that have dominated the real estate market in recent years is the rise in family holidays. An increasing number of people are opting to travel with young children. Consequently, the demand for spacious rental properties has skyrocketed. This trend is expected to continue. A real estate investor can capitalize on this by investing in a large rental property that can accommodate a family.
2. Pet-Friendly Rental Properties Are Slowly Becoming the Norm
Not too long ago, most landlords tended to shy away from allowing pets into their income properties. However, the competitive nature of Airbnb investing has prompted many of them to alter their stance. The number of pet-friendly rental properties on Airbnb continues to increase on a yearly basis.
Real estate investors who want to stay competitive in this landscape should consider making their properties pet-friendly as well as removing any restrictions on pet owners.
3. Glamping Has Never Been More Popular
Glamping refers to a style of camping that features a wide array of amenities. This style of camping has become extremely popular with millennials and Gen X-ers. In fact, listings of luxurious tents have become more common on Airbnb. Those who are interested in less conventional approaches to Airbnb real estate investing can generate a decent return on investment if they go with this Airbnb strategy.
You might want to invest in Joshua Tree vacation rentals if you want to offer accommodation for glamping!
4. Airbnb Rentals Will Surpass Traditional Hotels
Ever since the emergence of Airbnb, the most consistent trend in real estate has been the increased demand for short term rentals. As a matter of fact, it will likely be the year where Airbnb listings finally surpass hotel room availability. Property investors who get in right now will reap the benefits of one of the most notable upward trends in the history of the real estate market.
In light of these US housing market trends, most investors should be asking this simple question: is Airbnb a good investment? The answer is an emphatic yes. All indicators point to a strong bullish rally in the short term rentals market. This is without a doubt the ideal time to invest in Airbnb.
How to Get Started in Airbnb Investing
After going over the expected trends, the next step is to outline a guide on how to become an Airbnb investor. Here is how you can start in a few simple steps.
1. Be Aware of Local Airbnb Regulations
One of the common mistakes of Airbnb investing is neglecting to check local Airbnb laws. As it is the case with previous years, Airbnb regulations will vary from one location to another. For example, in the Los Angeles real estate market, non-owner occupied rentals were completely outlawed. In the Phoenix housing market, you can rent out an entire property on Airbnb and it doesn’t have to be your primary residence!
Before picking a location to invest in, make sure that you have a firm grasp of how short term rentals are regulated in the area. Opt for locations that have Airbnb-friendly laws and avoid those that come with unnecessary expenses such as a high Hotel Occupancy Tax.
Related: 5 Cities Where Airbnb Is Illegal
2. Find Airbnb Properties for Sale
The most important step of Airbnb investing is finding a property that boasts the ideal features. Thanks to various advanced tools, buying property for Airbnb has become a fairly easy process. In fact, you can find one such tool right here on Mashvisor! The Property Finder will help you identify investment properties that are perfectly suited for a short term rental strategy in just a few minutes.
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3. Use an Airbnb Profit Calculator to Zero In on the Perfect Property
With the advent of data analysis tools, Airbnb analytics have become an integral part of Airbnb investing. Thanks to this, even investors with a basic understanding of the real estate market are able to accurately assess the value of rental properties as well as estimate their ability to generate positive cash flow.
An Airbnb Profit Calculator allows you to determine everything from Airbnb occupancy rate and cash on cash return to cap rate and expected rental income. If you’re planning on using an Airbnb Profit Calculator, then look no further than the tools Mashvisor puts at your disposal.
4. Manage Your Expenses
Airbnb investing comes with several expenses that you need to manage carefully. Between the initial cost of acquisition and furnishing expenses, the overall expenditure of having an Airbnb property up and running can be significant. This is why it is important to plan ahead by setting a budget that factors in all potential costs.
5. Think Outside the Box When Marketing Your Airbnb
As we have mentioned above, the Airbnb platform is intensely competitive. Real estate investors are constantly coming up with clever ways to stay ahead of the curve. Needless to say, making your listing stand out requires more than just a basic approach to marketing. Consider extending your marketing efforts to other platforms such as Instagram in order to maximize your reach.
Related: 4 Tips to Improve Your Airbnb Marketing Strategy
The Bottom Line on Airbnb Investing
Short term rentals are in the midst of an upward trend with no signs of slowing down anytime soon. Airbnb investing is therefore highly recommended given the trends that are expected to shape the real estate market for the foreseeable future.
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