Many investors (and investors to be), are wondering what Airbnb real estate investing is looking like, and what the best income producing assets for the year are. The answer to the latter, to no one’s surprise, is Airbnb rentals.
Airbnb investment properties are a great real estate investment. They generate a high return on investment (ROI) and are very profitable – making them the best income producing asset. We’re here to address the whys and the hows, but first things first… Let’s begin by defining income producing assets.
What Are Income Producing Assets?
Income producing assets, or income generating assets, are assets that make money. They are investments that generate a recurring or periodic revenue stream. Real estate investments are among the most common income producing investments. Income in real estate can be generated on a daily, weekly, monthly or yearly basis, depending on the type of investment.
Related: 10 Best Income Generating Assets
Airbnb Properties: The Best Income Producing Assets
Airbnb investment properties are the best income producing assets for 2020. They’re a great way to make money in real estate and build wealth, and they’re becoming more and more popular among investors. You can buy a rental property and rent out the whole home or individual rooms on the home-sharing website. Or you could be living in the property you’re renting out, but typically, a real estate investor doesn’t.
So why are Airbnb rentals among the best income producing assets?
1) High profit
and that’s what income producing assets are all about at the end of the day, no? In 2019 alone, Airbnb hosts generated millions in Airbnb return on investment. And it is expected that the numbers will rise for Airbnb investing in 2020.
2) Agency
when it comes to choosing tenants, or Airbnb guests. As an Airbnb host, you have the ability to choose whether or not to accept guest requests. And you can do this by reading Airbnb reviews on guests’ profiles through the Airbnb reviews feature. This will decrease the likelihood of getting “problematic” guests or tenants in your short term rental property.
3) Flexibility
when it comes to setting the price (within reason). As an Airbnb investor, you can choose to set the price you think is suitable for your rental property (or room). However, you should be looking at the housing market average for similar rental properties before you set your price, to remain within the range of the average.
If the market average in your area is $80/night, setting the price at $150/night would not make sense unless your Airbnb had something extra and unique to offer to account for the higher rental rate.
4) The Fun Cultural Experiences
Owning an Airbnb investment allows you to meet people from all over the world on a daily basis and fosters cultural exchange. If that’s not your cup of tea, there are ways to minimize contact with Airbnb guests. You can choose to leave instructions on the listing, on a paper in the rental property, and use digital locks.
Airbnb guests do not expect hosts to physically be present to welcome them into the vacation rental property and walk them through everything, but it’s a plus.
5) You Can Invest in Airbnb Rentals Even if You Don’t Have the Time
We can all agree on the fact that owning short term rental properties can be very time-consuming. But you can still hire short term rental property management services for income producing assets. If you don’t have the time or capacity to manage your own Airbnb property, there are professionals who will do it for you. They can take care of anything from bookings, to hiring cleaning services, to tending to guests.
The one catch is the cost of these services, so make sure you account for it when budgeting and sorting out your finances.
How to Find Airbnb Investment Properties
Want to get your hands on the best income producing assets in real estate? There are a few steps to finding Airbnb income properties. Check them out below:
1) Choosing the Right Location
You’re not choosing a location, you’re choosing the right one for income producing assets. This is one of the most important steps when it comes to finding an Airbnb investment property. To begin with, you need to start looking into the top cities and neighborhoods for Airbnb. Consider cities like the Austin real estate market or the Atlanta real estate market. Location in real estate can make or break your investment, so choose the right one.
Most travelers look for convenience, comfort, and amenities – so make sure all (or most) of these are available in any given location.
Your choice of location will also depend on the type of guests you want to cater to. Which brings us to our next point…
2) Defining Your Airbnb Guests
Deciding what guests you will cater to will help you in finding the best location.
If you’re targeting business people, solo travelers, or tourists in general, you want to invest in a property as close to the city center as possible. If you’re targeting family or group travelers, then you may want to invest in a beach house or vacation property.
Understanding what guests are looking for is really important. I remember one time traveling with a big group of friends, and booking an Airbnb 20 minutes away by car from downtown Chicago. We didn’t mind the distance because (a) it was more affordable and (b) the rental property itself was much nicer than many of the ones in the city center and (c) we had a car.
A businessman who’s in Chicago for a meeting would probably not book the same rental property. So again, decide who you’re catering to, and plan accordingly.
3) Finding the Actual Investment Property
No, you don’t have to walk around the neighborhood to buy an Airbnb property. Once you’ve locked a city in mind, you can use a Property Finder tool like the one we have at Mashvisor. Then, check out our Airbnb profit calculator which will aid you in finding properties and running Airbnb analytics for those properties.
Gain access to Airbnb data like Airbnb cash on cash return, expected Airbnb rental income, cap rate, Airbnb occupancy rate, among other important indicators for Airbnb investment properties. We analyze this information using real estate comps and metrics to find the best income producing asset for you.
Related: Airbnb Rental Strategy: A Step-by-Step Guide to Success
So there you have it, the top reasons why Airbnb rentals are your best option for 2020. To start looking for and analyzing the best Airbnb investment properties in your city and neighborhood of choice, click here.