Owning an Airbnb can be a great way to make money in real estate. However, the short term rental marketplace is very competitive, which can be intimidating for first time investors. It is becoming increasingly more necessary for novice Airbnb investors to up their game in their investment approach to be able to have an edge over the competition.
We have written this article to help you get the most out of your short term housing investment as a beginner. Here are some of the most important things to take into account when investing in short term rentals.
1. Find an Ideal Location to Invest in
Your success in real estate is largely determined by the location of your investment property. That’s particularly true when it comes to investing in short term housing. Location influences property prices and the potential rate of return.
Therefore, before you think of investing in short-term housing , it’s important that you find the right market. When deciding the best places to invest in short term house rentals, you should look for indicators such as tourism and a strong economy.
Finding the right location to invest in short term housing can be a hard task for beginners as it requires a lot of market research. Fortunately, with short term housing websites like Mashvisor, you can conduct accurate market research in a matter of minutes.
If you are a beginner real estate investor with limited financial resources and are looking for a profitable but affordable investment, Mashvisor can help you narrow your options. First, you can easily find an ideal city to invest in by checking for city-level data on Mashvisor’s real estate blog.
Next, you can use Mashvisor’s heatmap tool to conduct a thorough neighborhood analysis for your city of choice. The real estate heatmap uses color codes to help you locate top-performing neighborhoods in the city with the click of a button. You can narrow down your analysis using filters such as average property price, Airbnb cash on cash return, Airbnb rental income, and Airbnb occupancy rate.
Related: How to Choose the Right Location for Rental Properties
2. Study the Local Short Term Housing Laws
Before you decide to invest in short term housing in a particular area, you should familiarize yourself with the local short term rental laws and regulations. For instance, in some cities, it’s illegal to buy a house for the sole purpose of renting it out on a short-term basis.
Such regulations may not favor your current situation or may significantly affect your potential returns. Ignoring the local laws can also lead to costly legal issues.
3. Find a Profitable Airbnb Investment Property to Purchase
Once you’ve located an area that is profitable, within your budget, and with favorable laws governing short term housing, you can now begin your property search. As you surely know, not all properties can generate a decent return on investment. This is why you need to master the process of finding the right short term housing investments.
Basically, you want to find properties that appeal to your audience and can yield the highest possible rate of return. There are several ways to find rental properties for sale. For instance, you can get them from your network, you can search for “For Sale” signs in the neighborhood, etc. However, as a beginner, the easiest way is to use Mashvisor’s real estate investment tools.
Mashvisor Property Finder uses the latest machine-learning algorithms to help investors find the most suitable investment properties for sale.
For each rental property on the platform, our Airbnb profit calculator will give you a full analysis based on important metrics such as Airbnb income, Airbnb cash on cash return, Airbnb cap rate, and Airbnb occupancy rate. The calculator also provides accurate rental comps that investors can use to determine the right short term rent.
Essentially, Mashvisor’s Airbnb profit calculator eliminates the need for collecting Airbnb data on your own and doing calculations manually using spreadsheets. This is a very tedious and time-intensive process.
4. Make the Property Ready for Guests
Apart from having a good location, the short term rental property should appeal to potential guests. You may need to spend some money and time on repairs and renovations to make the property more livable and to improve curb appeal.
Remember, short term housing doesn’t necessarily have to be a vacation home. You can invest in short term rental corporate housing. Instead of short lease apartments, you can also invest in long term lease Airbnb apartments.
Though weekly apartment rentals are more popular, with the spread of COVID-19, month-to-month apartments have also gained a lot of popularity. For instance, many professionals working from home are now looking for temporary housing in new locations to have a change of environment.
Whatever strategy you pick, the amenities and services you provide should cater to the needs of prospective renters. For example, if you go the corporate housing route, you want them to be fully furnished, with high-speed Wi-Fi, and a dedicated working station.
Furnished short-term rentals are more attractive to guests and allow you to charge more than a typical unfinished rental. You also want to offer better or more amenities than your competitors.
Related: 10 Ways to Have Your Guests Fall in Love With Your Vacation Rental
5. Create an Attractive Airbnb Listing
When it comes to short term housing, how attractive your Airbnb listing is will play a significant role in your success as a host. Keep in mind that most guests will judge your property by the listing. Naturally, it should look like a safe, clean, and attractive place to stay.
Therefore, invest in professional photos. High-quality photos need to be taken from the right angles and with ideal lighting. This may be hard to achieve on your own unless you are an experienced photographer. Moreover, you need to have a well-written title and description. You can gain some insight on how to write them by checking other similar Airbnb listings that are doing well.
6. Consider Hiring Professional Airbnb Property Management
Short term housing is an active investment and usually needs more hands-on management than traditional rentals. You need to respond quickly to booking inquiries, manage check-ins and check-outs, clean the space in between bookings and do routine maintenance.
As you can see, all these responsibilities are time-consuming, to say the least. If you don’t have enough time, you may compromise on the quality of your customer service. This will, in turn, lead to poor reviews and lower rankings on Airbnb.
If you don’t have time to take on management tasks yourself, consider hiring an Airbnb property management company to do it on your behalf. But first, be sure to run the numbers to see how property management costs affect your potential cash flow and rate of return.
The Bottom Line
If you are looking for a profitable way to make money with real estate, you should definitely consider investing in short term housing. However, as a beginner, you’ll need to put in the work in order to have any edge over the competition.
By following the tips we’ve shared in this article, you’ll be able to maximize your profits and build a good foundation for your real estate career. Be sure to use Mashvisor’s real estate investment tools to find profitable real estate deals.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.