As a beginner real estate investor who’s looking to buy a rental property, which type of rental property should you go for: Airbnb rentals or traditional rentals?
Rental properties are the most popular type of investment made by beginner real estate investors.
However, in today’s real estate market, there are two very popular types of rental properties to choose from: Airbnb rentals and traditional rentals.
Since both rental strategies have their own advantages and disadvantages, and the process of investing in each can be very different, it is important for any beginner real estate investor to do some research and understand which rental strategy suits them best.
While Airbnb rentals have a higher potential for profits, their management can be a major challenge, and there are several legal issues that should be researched before investing in them. Traditional rentals, on the other hand, are less risky and more stable in their performance, but they have a lower potential for growth.
So, how can you decide on the optimal rental strategy to use?
While it is possible to do all the research and calculations on your own to figure out the better rental strategy to use, there is an online tool that can do all of the daunting work for you and provide you with traditional and Airbnb data and analytics that you can base your decision on.
Mashvisor’s Rental Property Analytics Platform
Mashvisor is a real estate analytics platform that specializes in providing services for beginner investors and focuses on rental properties in particular.
As a real estate analytics platform, Mashvisor gathers massive amounts of data from several data sources, such as the hundreds of MLS’s and other listing websites such as Zillow, Trulia, Redfin, and of course Airbnb.
The data that Mashvisor gathers includes the historical data for each property that is listed for sale, which includes the property’s historical prices and deals, historical rental income, and historical occupancy rates.
By using predictive analytics, the platform is able to analyze this historical data to come up with future predictions about the rental income that each property is projected to generate.
Related: The Beginner’s Guide to Rental Property Analysis
Coupled with a number of other tools and features, the platform allows the user to analyze each property that is listed for sale to see its expected returns for both rental strategies.
So, whether you’re trying to purchase traditional or Airbnb rentals, Mashvisor can help you locate the perfect property to invest in based on your own search criteria and investment goals, and you can learn much more about each rental strategy and what makes it better or worse for each property or market.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Airbnb Rentals vs. Traditional Rentals
When trying to decide between traditional and Airbnb rentals, there are a few things to take into consideration:
- The location
- Rental property management
- The return on investment
- Occupancy rates
Location
In terms of location, Mashvisor offers you market insights and analytics for every city or neighborhood. This allows you to see the number of Airbnb rentals or traditional rentals in that area as well as the amount of rental income that each type is producing.
However, it is always important to do some research on each area before investing in Airbnb rentals there. This is because some areas have legal restrictions that can greatly hinder the performance of an Airbnb rental and reduce its profitability.
Generally, you want to skip searching in areas where there are many legal issues for Airbnb rentals.
Related: Don’t Invest in Short-Term Rentals Here: The Places with the Worst Airbnb Legal Issues
Rental Property Management
The rental property management, on the other hand, is another disadvantage that Airbnb rentals have. These rentals usually require a lot of work and property management to run them. You need to tend to your tenants and handle a high turnover rate on the property, including the maintenance and cleaning, which makes it a very time and effort-consuming investment.
For this reason, Mashvisor provides you with the analytics for each Airbnb rental while taking into consideration the cost of hiring a rental property management company, which typically costs between 8% – 12% of your monthly rental income.
Return on Investment
This brings us to the return on investment. The best part about using Mashvisor to determine the rental strategy that you want to use is that the platform provides you with all the analytics and calculations that you need to decide on the most profitable strategy for each investment property.
Every property that is listed on the platform will be analyzed as a traditional as well as an Airbnb rental, and the return on investment metrics are provided for both.
The two main metrics used to calculate the return on investment for rental properties are the cap rate and the cash on cash return. Both of these metrics will be pre-calculated for every property and for both rental strategies when you’re using Mashvisor, which allows you to easily learn the amount of return on investment that you should expect from investing in the property.
Related: How to Calculate the Rate of Return on a Rental Property
Occupancy Rates
Finally, the platform will also provide you with occupancy rate data for each rental property. This is especially useful when looking for Airbnb rentals, as the occupancy rate is one of the most important metrics to include in your calculations due to the volatile and seasonal nature and performance of Airbnb rentals.
Bottom Line
Whether you’re a beginner or an experienced real estate investor, if you’re investing in rental properties then you should definitely consider using Mashvisor.
Mashvisor can help you turn three months of research into 15 minutes with the use of predictive analytics and machine-learning algorithms. From doing a real estate market analysis, to accessing rental comps, to analyzing each property, to finding Airbnb rentals and traditional rentals in your market. Mashvisor is an all-purpose toolkit that covers all the needs of rental property investors.
Also, check out Mashvisor’s other tools, such as the Property Finder or the Heat Map to see how we can help you make faster and smarter investment decisions and become a professional-grade real estate investor with the use of technology.
To start your 7-day free trial with Mashvisor and subscribe to our services with a 15% discount after, click here.