Find out how much can you make with Airbnb with the power of AI!
Thinking of renting out your home on Airbnb? You’re not alone. This short-term rental site and others like it have grown rapidly over the last decade. Real estate investors are turning to Airbnb as one of the best investment strategies and many have made a fortune off of it. As a matter of fact, Airbnb hosts make nearly three times as much as other workers in the sharing economy according to a report from Priceonomics.
Of course, renting out a vacation property for the short-term can seem nerve-wracking, especially if you’re a beginner in the rental market. Priceonomics also reported that “Airbnb earnings can range drastically, with some hosts making more than $10,000 per month, while others make less than $200.” For these reasons, some real estate investors are not sure if buying an investment property to rent out on Airbnb is actually a profitable investment.
However, with the power of AI, a new tool can help you better predict how much can you make with Airbnb to see if this rental strategy will yield a good return on investment. Introducing the Airbnb Profit Calculator! If this is your first time hearing about this tool for real estate investors, keep reading this blog post to learn all about it.
What Is an Airbnb Profit Calculator?
The Airbnb Profit Calculator (also known as the Short-Term Rental Calculator) is a real estate tool that’ll give you an accurate rental rate for your Airbnb rental property (and much more) to have a better sense for how much you could make. If you’ve already heard of the Investment Property Calculator, then you won’t have a hard time understanding the basics of the Airbnb Profit Calculator.
Related: Investment Property Calculator: A Must Have Tool for REI
In a nutshell, this real estate tool gives property investors the ability to analyze the profitability of a certain property before making the purchase to determine if it’s a smart investment. You can find an Investment Property Calculator right here on Mashvisor.
What’s special about our calculator is that it also functions as an Airbnb Short-Term Rental Calculator as well! This is because Mashvisor uses real estate data and predictive analytics to estimate the ROI of a rental property as a traditional rental AND as an Airbnb rental.
Here’s how our calculator works. First, you insert all of the one-time startup costs and assumed recurring costs associated with a rental property (purchase price, expected rental income, expected monthly expenses, etc.) You can use the estimates given which are gathered from reliable data sources for initial property analysis. However, entering your own values can help to achieve even more accuracy.
Then, our tool does automatic calculations and gives estimations of what return on investment you can expect from this property as a traditional rental and as an Airbnb rental. So basically, you’ll find out which is the optimal rental strategy for making the highest profits off of your investment property.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
If you find that renting out on Airbnb is the optimal strategy, you can use this tool as a Short-Term Rental Calculator to further learn how much can you make with Airbnb. Here’s how.
Data Provided by the Airbnb Rental Calculator
With Mashvisor’s Airbnb profit calculator, you can get the following data:
1) Cash Flow
Cash flow is simply the monthly rental income minus monthly rental expenses. In the real estate investing business, successful investors always aim to invest in positive cash flow rental properties – these are the most profitable and allow for a high ROI. You can easily see whether an Airbnb rental will be a positive or negative cash flow property with the Airbnb Profit Calculator.
After plugging in all the expenses for your income property and your expected rental income, this calculator will show you an estimate of your potential cash flow. That way, you’ll see how much can you make with Airbnb before you even list it for rent and make sure you won’t end up making a bad investment decision.
2) Airbnb Cap Rate
The capitalization (cap) rate is a key metric for estimating the return on investment of a rental property, whether traditional or Airbnb. This is basically the return property investors can expect to receive when comparing the annual (net) rental income to the property’s market value. So basically, if you bought a $200,000 rental property that is making you $15,000 a year, you’ll have a cap rate of 7.5%.
Related: What Is Cap Rate in Real Estate Investing? A Simple Guide
With the Short-Term Rental Calculator, you can forget about doing these calculations. With this tool, you’ll have the cap rate percentage readily calculated for you! This allows real estate investors and Airbnb hosts to analyze the rental property’s profitability and decide if it has a good cap rate.
Not only that, but you’ll also be able to see the cap rate on the neighborhood level to find out if you’re investing in a good location that’ll allow you to have a successful Airbnb rental property.
Click here to start analyzing and comparing investment properties in your city and neighborhood of choice based on cap rate (and other metrics)!
3) Airbnb Cash on Cash Return
Just like the cap rate, the cash on cash return is a real estate metric used to estimate the ROI. However, this metric shows you the returns you can expect based on the rental income compared to how much money you actually invest in the rental property.
For example, say you’ve bought the same $200,000 property. However, you’ve used a mortgage to pay for it. If you put 20% down and made a net rental income of $15,000, you’ll have a cash on cash return of 37.5%.
Note: This is just a simple example for establishing the difference between cap rate and cash on cash return. For more details, read Real Estate Investing 101: How to Calculate Cash on Cash Return.
With an Airbnb Short-Term Rental Calculator, you can find the cash on cash return for the property and the housing market. This is important to know because the location will affect how much can you make with Airbnb. Thus, with this tool, you’ll ensure not only investing in the right Airbnb rental property but in the right location where Airbnb is the optimal rental strategy as well!
4) Airbnb Occupancy Rate
Many Airbnb hosts believe success comes when your property has a high occupancy rate. This, in fact, is true as you can’t make a good rental income if your short-term rental property is not even occupied. Thus, you should look to invest in a location with a high occupancy rate because it’ll positively affect how much can you make with Airbnb.
A higher Airbnb occupancy rate means a higher demand for your investment property, which in turn translates into higher rental income and positive cash flow.
With the Airbnb profit calculator, you don’t need to worry about searching for this data as it’ll have the occupancy rate readily estimated. In effect, this allows property investors to find the best places to invest in short-term rentals with high occupancy rates for a successful Airbnb investment!
Why Airbnb Hosts Need to Know These Metrics
Wondering why you as an Airbnb host need to know all this data? Well, there are 3 things you can do with the information that a Short-Term Rental Calculator provides:
- Analyze the real estate market to make sure you’re investing in the best location for an Airbnb investment
- Analyze the investment property itself to assure it’ll bring you the profits you’re aiming for
- Set the right rental rate that’ll ensure you’re making the most as an Airbnb host
These 3 things are important to do because they’ll determine how much can you make with Airbnb! With the Airbnb Profit Calculator, property investors use accurate, up-to-date data to guarantee that they make the right investment decisions. So, if you’re looking to rent out an investment property on Airbnb, sign up with Mashvisor to get your hands on our Investment Property Calculator – the ultimate tool for both traditional and Airbnb real estate investors!
Click here to start your 7-day free trial with Mashvisor and subscribe to our services with a 15% discount after!