Buying and managing an Airbnb investment property is widely popular because the real estate investor can generate a great profit. However, the high Airbnb rental income does not come that easy. There are many things, which the Airbnb host needs to consider before jumping into investing in short-term rentals.
This type of investment strategy is desired by many beginner investors in the field who simply do not know how to proceed with it. But do not worry, we will help you in becoming a successful Airbnb host. How so?
We will share with you the ultimate beginner’s guide to the Airbnb investment property. We will go over all of the essential aspects of buying and managing a successful Airbnb investment property.
First of all, being a prosperous Airbnb host depends on what type of investor you are/want to become. So, if you want to be a passive investor, this might not be the right strategy for you. Additionally, we will review what type of property management is applicable to an Airbnb investment property.
Further, it is important to also mention what to consider when buying a property to lease as a short-term rental. We will also discuss the Airbnb rental income as well as the monthly investment costs. Last but not least, we will talk about the ways of listing the property on the Airbnb rental market. Let’s get started.
#1 Airbnb Investment Property – The Real Estate Investor
There are two popular strategies when it comes to renting out your investment property. These are, namely, Airbnb and traditional investing. As previously mentioned, Airbnb rentals are the perfect investment strategy for an active investor.
Being an active investor simply means that the landlord is willing to spend a lot of time and effort on the rental property. The active investor is the one constantly maintaining the rental and being there to provide his/her Airbnb guests with the best experience possible. To make their task easier, they use an Airbnb calculator to help with the estimations for short term rental properties.
On the other hand, traditional investing allows the landlord to act as a passive investor. This is due to the fact that in traditional investing, once the property has been leased, the investor does not need to be constantly present to suit his/her tenants.
Additionally, the passive investor receives rental income every month without doing anything in particular. Of course, he/she needs to repair the property if there is a problem. However, Airbnb rentals require a constant maintenance. Make sure to check “The Ultimate Guide to The Airbnb Investment Property” to get more information on the topic.
#2 Airbnb Investment Property – Property Management
High-quality property management is vital for the success of an Airbnb investment property. There is a simple explanation for this phenomenon. Airbnb guests leave ratings and comments about your property, known as Airbnb reviews.
Airbnb reviews are what can attract more visitors to your rental property or simply present it in a negative light and reduce your bookings. That is why the host should always try his/her best in managing the rental property. The basic rules are that you need to invite your Airbnb guests into a clean property. You should make sure that you have provided enough supplies such as clean towels, bedsheets, additional pillows and blankets.
It is advisable to check kitchen supplies and toiletries after each visit and restock if needed. Such supplies are, for instance, toilet paper, paper towels, soap, shampoo, salt, sugar, coffee, etc.
If you want to go the extra mile and have the best Airbnb reviews, you can prepare city maps for your guests, organize some activities, make them breakfast/dinner, etc. Think of creative ways to improve your performance.
This way, you will be able to score high Airbnb occupancy rates. Do you want to learn more about the Airbnb reviews? You can read “Airbnb Reviews Are Your Best Friend and Your Worst Enemy in Airbnb Rentals”.
#3 Airbnb Investment Property – Buying a Property
If you have come this far and you think that an Airbnb investment property is the right real estate investment for you, it is time to talk about the purchase. Buying a property suitable to be a prosperous Airbnb rental is not an easy task. Of course, analytics are important, but there is something more important than analytics- the LOCATION.
In order to generate positive cash flow and have high Airbnb occupancy rates, you should carefully think about the location of your investment property. The location should be attractive to tourists. For example, it can have many interesting places to visit or be the perfect vacation spot.
Another possibility is to invest in a town which holds many business meetings. As people would be coming from different parts of the country/world, they would need a place to stay. Moreover, choose a property in a quiet and safe neighborhood. Make sure that there are supermarkets nearby and accessible public transportation.
If you are interested in learning more about the topic before investing, be sure to read “Four Things to Consider Before Purchasing an Airbnb Investment Property”.
#4 Airbnb Investment Property – Airbnb Rental Income and Monthly Investment Costs
This is pretty simple. In order to generate positive cash flow, your Airbnb rental income (the inflow of money) should be higher than the monthly investment costs (the outflow of money). Please remember, analytics show that not always the hottest destinations bring the highest profit. This is because such places are more expensive.
Consequently, your costs increase as well. As such locations are associated with higher competition as well, you cannot really increase the rent you are charging. Thus, it is harder for the real estate investor to generate positive cash flow from his/her rental property. Another thing to discuss is, of course, how much you charge for rent when listing the property.
#5 Airbnb Investment Property – Listing the Property
When placing your property on the short-term rentals market, you opt for the highest Airbnb occupancy rates possible. In order to achieve them, you need to carefully think about the price you charge per night. It is advisable that you check your competition.
Review other Airbnb rentals in the area, but also check the prices of hotels and motels. Do not set your charging prices very high as it might result in low Airbnb occupancy rates. Further, make sure to find something creative and unique to share, while presenting the rental property.
Mashvisor can provide you with many more useful tips and guides on many real estate topics. To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.