In the past few years, Airbnb real estate investing has been the investment strategy. The home-sharing service has grown significantly nationwide. The growth has come with an increased number of users and real estate investors hoping to invest in Airbnb. The real question though is: Is Airbnb worth the investment? 100% yes!
However, when the COVID-19 pandemic hit the world in 2020, Airbnb investment property owners suffered a major setback as the tourism industry closed its doors.
Fortunately, two years after the onset of the global health crisis, we are now on our road to economic recovery. Most states are open to tourists again, and many Americans are now ready to travel to make up for the long months in lockdown. In general, we can expect the Airbnb rental market to quickly recover and thrive in 2022. In fact, this is the best year to consider investing in the short-term rental market.
Is Airbnb a Good Investment?
If you want to earn a passive income while building equity in real estate property, buying an Airbnb investment is generally a good idea. While vacation rentals are essentially a seasonal business, many real estate investors have made a lot of money when they invest in the right short-term rental properties.
There are several factors that can make an Airbnb property a good investment. If you’re a new investor planning to invest in vacation rentals this year, it’s important to find the best cities for Airbnb investment 2022 to ensure a successful short-term rental business.
Here are four things that you need to consider when finding a good Airbnb investment:
1. Location
Where you invest is the most crucial factor that can either make or break your investment. When deciding where to buy Airbnb investment property, make sure to find a location that is generally safe for visitors and is close to most tourist destinations.
2. Tourist attractions
If you are wondering why is Airbnb a good investment, popular tourist destinations are the main reason why. The kind of market you plan to cater to can help you decide which is the best location to choose. For instance, if you prefer to accommodate families with kids, you may choose an income property that’s close to beaches, theme parks, or museums. If you want to cater to the adventurous youth, you can choose a location that’s close to nature parks.
3. Seasonality
Consider also the seasonality of the attractions. If you choose a vacation rental property near a snowy mountain, your business will peak during the winter. If you choose a beach property, your vacation rental will attract more tourists during the summer. It’s also best to find a balance and invest in a property that can accommodate visitors no matter what the season. This way, you will have fewer vacancies and generate a good cash flow.
4. Amenities
Most visitors prefer to stay in a place that is near basic amenities, such as dining, shopping centers, and public transportation. You may also opt to choose a location that has a high walk score as this is most favorable to visitors. A place with a high walk score means that it is generally walkable and you don’t need a car to get to important places.
Why You Should Buy an Airbnb Investment Property in 2022
As mentioned, the tourism industry is gradually going back to normal after the pandemic hit it hard a couple of years ago. Because of this, the short-term rental market started to flourish once again in the middle of last year, and it is expected to continue to thrive all throughout 2022.
1. It’s a profitable real estate investment
This one is pretty obvious, but that’s what real estate investors strive to achieve at the end of the day, isn’t it?
Depending on your rental occupancy rate and area, it can even be more profitable than traditional investments. Airbnb rentals allow you to charge more per night when you average it against traditional rental properties.
For an accurate estimate of how much you could be making with an Airbnb rental strategy, check out Mashvisor’s heatmap. Search for a city or neighborhood and you’ll get the average Airbnb rental income, cash on cash return, and average Airbnb occupancy rate for any area in the US housing market.
2. Your Airbnb investment can be a good personal vacation home
Airbnb is a good investment because it serves dual purposes. When you’re not renting out your Airbnb, you can use it as your own vacation rental home when you go on vacation or business. This can be especially beneficial when your Airbnb rental property is out of state. If you need your short-term rental property for personal use, simply block the dates on Airbnb, and you should be ready to go.
3. You’ll be exposed to different cultural experiences
You experience numerous cultures when you become an Airbnb host. You get to hear many stories from travelers and meet all kinds of people. Some real estate investors like to personally check in with their Airbnb guests, and even pass by the rental property to make sure all is well with their guests.
If, on the other hand, you like to keep to yourself, you can also do just that. In this case, consider installing digital locks, and print out a “property instructions” paper. Be sure to communicate all necessary information with guests well before the date of the stay.
4. You can earn passive income from an Airbnb rental property
If you invest in Airbnb, you have the choice to make it an active real estate investment or a passive real estate investment. If you want the above-mentioned benefit of cultural experiences, then learn how to become an Airbnb host yourself. If you wish to know how to passively invest in Airbnb, the answer is simple: hire a professional. Just be sure to work out the costs beforehand to ensure you still end up with positive cash flow.
Things to Consider When Buying an Airbnb Property
Knowing how to buy an investment property for Airbnb the right way is crucial to your success. For instance, there are rules and regulations that you need to be aware of depending on the city you’re investing in. Also, you need to understand how the vacation rental market performs in your preferred location to ensure that you’re buying a good investment.
Here are some things that you need to understand when buying an Airbnb investment property to ensure you’re making an informed investment decision:
1. 2022 Airbnb Trends
2022 has just started, but the year’s Airbnb trends have already begun to emerge. Keep in mind the following 2022 Airbnb trends when buying and owning an Airbnb investment, and manage your income property accordingly:
- Guests’ expectations are higher for short-term rentals. Airbnb used to be more about a place to stay for a night or two—an experience focused on convenience over aesthetics. Today, it’s more about the trendy Airbnbs that are all over the platform, and everyone from celebrities and influencers to your regular guests, are all looking into more hip Airbnbs to experience something out of the ordinary.
- Pet-friendly Airbnbs are becoming more popular. The fewer restrictions you set for your guests, the better their experience will be. So consider turning your Airbnb rental property into a pet-friendly one to attract and please more guests.
- Airbnb bookings in the US may surpass those of hotels. This is an opportunity for anyone planning to invest in Airbnb in 2022, and another reason why the Airbnb investment strategy is 100% worth it.
If you plan to invest in Airbnb this year, you are heading in the right direction. Make sure to stay up to date on Airbnb trends as we move forward throughout the year, and try to incorporate as much as you can into your own investment property to make money with Airbnb.
2. Legal issues and Airbnb regulations
If there’s one thing to stay on the lookout for when it comes to Airbnb investments, it’s the legal aspects. Laws and regulations for Airbnb vary between one state and another, so make sure you stay up to date on the latest changes to laws and regulations in your area.
3. Airbnb costs
When you invest in Airbnb rental property, you have to bear in mind all the costs that you may incur. When calculating your expected rental profit, you should subtract the cost from the revenue you make.
You’ll have two types of costs:
- Upfront (or one-time) costs – These include the down payment for the investment property, buying furniture (TV, couches, beds, etc.), installing digital locks, and painting the property.
- Recurring costs – These include mortgage payments, restocking food and toiletries, cleaning fees, internet or Wi-Fi, etc.
When possible, try to lower your Airbnb costs, keeping in mind not to jeopardize the quality of the experience you’re offering.
4. Airbnb pricing
When it comes to pricing your Airbnb property, you have to keep a few things in mind. First of all, check the prices of similar and competitor properties in your neighborhood and city (Airbnb comps). Try to set the price within the available range, and only go above if you’re truly providing exceptional experiences in your rental property.
Another thing to consider is dynamic pricing. During the summertime or any seasonal events, Airbnb investors often bump up their prices. When planning out your real estate investment, make sure to use a calendar and mark down the dates where you’d need to increase and decrease the price of your Airbnb rental.
Airbnb also provides an Airbnb pricing tool, a feature on the website that analyzes the market for short-term rental properties and competitor prices, and sets and adjusts the price for you. And while the tool is helpful, users report that it can sometimes underprice a property, reducing your Airbnb profit margin at the end of every month.
How to Find the Best Airbnb Investment Properties in 2022
Finding a profitable Airbnb investment property is not the easiest task, but we’ve got you covered.
When you’re figuring out how to invest in Airbnb, you should start with our Airbnb heatmap, which will show you where the most profitable investments are in an area of your choice thereby helping you to determine the best places to invest in Airbnb.
To find the ideal Airbnb investment, use Mashvisor’s Property Finder – a real estate investment tool you can use to search for properties within a range of criteria and filters that you set based on your needs and your budget. The tool will show you the best investment property listings in your area, based on the Airbnb occupancy rate and Airbnb return on investment (ROI).
Once you find a few good options, use Mashvisor’s Airbnb profit calculator to analyze each one in-depth within minutes using Airbnb data and Airbnb analytics. The Airbnb calculator is a real estate investing tool that grants you access to properties with detailed data on expected Airbnb cash flow, Airbnb cap rate, and Airbnb cash on cash return, among other important indicators in real estate.
2022 will not be the year the home-sharing platform slows down. It’s quite the opposite. So do not wait any longer if you’re planning to invest in Airbnb property.
To start your Airbnb investing journey and access Mashvisor’s tools, sign up for a 7-day free trial today, followed by 15% off for life.