In the last decade the world of real estate investing was turned upside down as buying an Airbnb investment property outstripped all other real estate investment strategies.
The reason for this is simple: In the vast majority of US housing markets, investing in a vacation home brings a higher return than investing in a traditional rental property.
However, beginner real estate investors find it hard to locate profitable Airbnb investment opportunities, especially when competing with more experienced investors in hot markets. What they need is access to the best real estate investment app to find money-making short term rental properties quickly and efficiently.
In this article, we will show you how to use the Mashvisor real estate investment software platform to buy a top-performing Airbnb investment property in five easy steps:
1. Choose a Top Market for Airbnb Rentals
As everyone in the real estate business knows, location location location are the three most important factors for the success of any rental property investment, including a vacation home. So, the first step to buying a profitable Airbnb income property is finding out the best markets for this rental strategy where property prices are within your budget as a real estate investor.
The best place to start this quest is the Mashvisor real estate investing blog. You can search through the posts in the Airbnb Rentals and Top Locations blog categories to see which US real estate markets offer the highest return on investment for this strategy. These include both cities and neighborhoods within the major markets.
For each recommended location, you will have access to the average Airbnb income, Airbnb occupancy rate, and cash on cash return or cap rate as well as the median property price and the average price per square foot.
Importantly, skeptical real estate investors can rest assured that all Airbnb data presented in our blogs as well as anywhere else on the Mashvisor real estate investment app is accurate and reliable. Mashvisor obtains real estate data directly from the MLS and Airbnb.com in addition to other publicly available sources.
This means that our Airbnb analysis is based on the actual performance of real Airbnb listings over the past twelve months. To confirm accuracy, the Mashvisor Data Team compares and verifies the analysis results with Airbnb hosts in the area on a regular basis.
A good place to begin your market search with a quick reference is 10 Best Places for Buying a Vacation Home in 2020. It’s worth mentioning that buying an Airbnb investment property is legal in the locations mentioned in this article as well as any other blog on the Mashvisor real estate investment app at the time of writing and publishing.
2. Select the Best Neighborhood for Short Term Rental Properties With the Best Real Estate Investment App Tools
After you have chosen a few US housing markets to focus on, it is time to delve into a detailed neighborhood analysis to select the top area for investing in Airbnb. To begin with, you should use the Mashvisor heatmap. This real estate investment software tool provides a color-coded visual representation of the best and worst neighborhoods in any US city or town based on a few different indicators. Those relevant to Airbnb hosts include:
- Listing price
- Airbnb income
- Airbnb occupancy rate
- Airbnb cash on cash return
When looking at the Airbnb map of the Dallas real estate market below, just remember that red means low values, and green means high values. Based on the neighborhood-level rental analysis conducted by the heatmap on the Mashvisor real estate investment app, you can choose a few areas which generate the highest return on investment in terms of Airbnb cash on cash return, while still offering affordable property prices.
Mashvisor’s Heatmap: Airbnb Cash on Cash Return Neighborhood Analysis of the Dallas Real Estate Market
By clicking on the neighborhood names in the circles on the heatmap, you can go to the neighborhood page on our real estate investment app. As shown in the example below, Southeast Dallas is one of the best areas to invest in Airbnb in the Dallas housing market in 2020.
Mashvisor’s Neighborhood Analysis: Southeast Dallas
There you will find a quick but comprehensive summary of all the important metrics which you need in order to make an informed, data-based, and ultimately profitable real estate investing decision. In the top section of the page, a future Airbnb host will find:
- The average Airbnb rental income
- The average Airbnb occupancy rate
- The average cash on cash return
- The number of Airbnb listings (these are not Airbnb for sale properties but actual Airbnb rental listings on which the neighborhood analysis is based)
- The number of investment properties for sale (to know what competition to expect from other real estate investors and homebuyers)
- The optimal rental strategy (to confirm that an Airbnb investment property will bring a higher profitability than a traditional rental)
Moreover, real estate investors get immediate access to all available Airbnb listings in the area. This will save them lots of time and effort as real estate market analysis typically takes three months. The list of existing Airbnb investment properties helps future hosts evaluate what Airbnb income they can expect to generate in this neighborhood in each month of the year.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today and enjoy 15% off for life.
3. Find an Airbnb Investment Property With a High Return
The next step in the process of buying a top Airbnb investment property with the help of the Mashvisor real estate investment app is the most exciting one: namely, finding and analyzing the investment potential of available real estate listings.
The vast majority of these properties include MLS listings, but there are also some foreclosures, short sales, and bank-owned homes. With an Expert Plan subscription, you even get access to off market properties which frequently sell for below market value and face less competition from other real estate investors.
On the Mashvisor real estate software platform, you can conduct Airbnb investment property search based on all your requirements.
Mashvisor’s Property Search Tools
The search filters which allow even beginner real investors to make profitable investing decisions include:
- Financing method: cash vs. mortgage
- Minimum cash on cash return
- Minimum cap rate
- Budget range
- Neighborhood
- Minimum and maximum number of bedrooms
- Minimum and maximum number of bathrooms
- Year built
- Size in square feet
- Minimum Airbnb rental income
- Property type: single family home, condo, townhouse, multi family home, or other
- Property status: for sale, pending, or foreclosure
Once you’ve set your preferred values for any or all of these filters, you will get a comprehensive list of all rental properties for sale in this area which meet your expectations. You can easily arrange them in order for different criteria.
The most useful ones for buying an Airbnb investment property are property price, Airbnb rental income, Airbnb cash on cash return, and Airbnb cap rate. In this way, you can see the most profitable short term rental properties right on top of the list.
Another very useful tool for locating money-making Airbnb properties in the Mashvisor real estate investment app is the smart Property Finder.
Mashvisor’s Property Finder
With this tool, investors can search for investment properties for sale based on:
- Distance from their preferred location
- Budget range
- Type of property
- Number of bedrooms
- Number of bathrooms
The Property Finder real estate investment software tool will show you all matching real estate listings in the area, with the most profitable ones for your selected rental strategy on top. This is one of the fastest and most efficient ways to find lucrative Airbnb investment properties in any US housing market.
After you have selected a few properties which match your criteria, the Mashvisor real estate investment app allows you to conduct detailed rental property analysis on them. Clicking on a property’s address takes you to the Airbnb investment property page, where you will find all Airbnb data and analytics that you need to make an intelligent real estate investing decision in a matter of minutes.
In addition to all the basic information regarding the property listing such as price and description, you will find the investment property analysis in the Rental Strategy section.
Mashvisor’s Investment Property Analysis
The most important indicators include:
- Airbnb comparable rental income
- Estimated monthly expenses
- Expected cash flow
- Airbnb cash on cash return
- Airbnb cap rate
- Airbnb occupancy rate as a percentage or number of days
Our Airbnb analytics platform calculates all these values based on the actual performance of Airbnb rental comps in the neighborhood over the last twelve months.
Further down the Airbnb investment property analysis page, you can access a breakdown of the estimated one-time startup costs as well as the recurring monthly expenses.
On the right side of the page, you can use the Mashvisor Mortgage Calculator to set your financing strategy – cash vs. mortgage – in addition to the size of the down payment, the mortgage type, and the loan term.
It is important to keep in mind that all values on the Mashvisor real estate investment app are already customized based on the location and the average values there. Moreover, they reflect the performance of Airbnb rental comps, which you can find in the Rental Comps & Insights section for each individual property.
Nevertheless, all fields are customizable, meaning that real estate investors can adjust them if they have a solid reason to believe that their Airbnb income property will perform in a different way from the rest of the Airbnb listings in the area.
For instance, if you can take marketing your property to the next level, you can set up an Airbnb occupancy rate higher than the average for the neighborhood. All other calculations will be automatically redone and displayed in the relevant fields.
4. Decide on Your Financing Method With a Real Estate Investment Software App
The next step in the process of buying an Airbnb investment property is choosing the optimal financing strategy. One of the worst mistakes which new real estate investors can possibly make is exceeding their budget and risking a default on their mortgage loan, which would eventually lead to a foreclosure. The Mashvisor real estate investment app helps investors overcome this challenge.
First of all, Airbnb hosts can focus on neighborhoods with listings within their budget. In addition, they can filter out investment properties for sale which fall outside their pre-selected price range.
When performing the individual rental property analysis, real estate investors can use the Mortgage Calculator to set up the exact down payment (as a dollar amount or a percentage of the property price), the mortgage type (fixed rate mortgage, interest only mortgage, or adjustable mortgage), the loan term (15 or 30 years), and the interest rate (which is pre-set for the area).
Trying out different combinations of these indicators allows investors to assure buying only positive cash flow properties while remaining within their available budget. This is one of the prerequisites for a high return on investment in real estate.
5. Set Up a Pricing Strategy for Your Airbnb Investment Property
The last step an investor needs to take to invest in Airbnb with high profitability is to put together a smart Airbnb pricing strategy. One of the major benefits of investing in an Airbnb income property rather than a traditional long term rental is the fact that you can adjust the price on a daily basis.
It is crucially important to reflect demand fluctuations by asking for a higher Airbnb daily rate over the weekend and during national holidays and local events while putting a lower price during the low season. This will help you optimize both your Airbnb occupancy rate and Airbnb income, leading to the optimal cash on cash return and cap rate.
You can use the Mashvisor real estate investment app for this purpose as well. Just go to the Rental Comps & Insights section of the Airbnb investment property analysis page to see Airbnb rental comps and their most recent performance. This will give you an excellent idea of the predominant nightly rate for Airbnb listings similar to the property you are planning to buy.
Buying the best Airbnb investment property has become easy with the help of AI real estate investment software tools. Now you know how to find a top-performing short term rental property through the Mashvisor platform. All that’s left is to sign up for a 7-day free trial to start making intelligent real estate investments.
By the way, in case you prefer traditional rental properties to investing in Airbnb, you can use Mashvisor in the same way as described above to locate profitable long term rentals in any US real estate market.