Did you know the average Airbnb investor rakes in $924 each month? We’re confident we can speak on behalf of everyone when we say we’d all enjoy an extra $900 in our wallets.
If this interests you, you’re in luck, because we’ve created a handy guide that’ll help you find the perfect Airbnb investment property. Let’s dive on in!
What’s an Airbnb Investment Property?
Before delving into the nitty-gritty of this guide, we need to answer the question above.
Put simply, Airbnb is a platform that allows property owners to offer short-term rentals.
You can offer any of the following living situations:
- Spare rooms,
- Shared rooms,
- Dedicated vacation rentals,
You get the idea!
This online marketplace enables guests to search accommodation for them to stay in while they’re taking a trip.
Consequently, Airbnb has become an excellent way for people to invest in real estate and make a sound return.
So, what makes a good investment?
1. Consider Starting Small
Like any other business, always start small and work your way up.
This allows you to get to grips with the business model without risking vast amounts of money.
Perhaps start by renting out your spare room, and then move onto purchasing a small apartment or house?
2. You Need to Have Enough Time
If you want to ensure your investment’s a success, you need to allow yourself ample time to maintain your project.
When you’re an Airbnb host, you don’t just buy and rent out your property. You’re heavily invested in property management. For example, you’ll need to handle all of the below tasks:
- Cleaning the property in between guests,
- Fixing repairs,
- Replenishing any supplies (especially if you’ve advertised them in your Airbnb listing),
Obviously, you can opt to hire a professional property management service; this frees up your time a bit. However, you’ll still have to communicate with them to ensure you’re offering the best service possible to your guests.
It’s not just the practical side of things; you also need to offer excellent customer service. By this we mean, being friendly to your guests and happily answering any questions and concerns they may have.
High-quality customer service works wonders for helping you stand out from the crowd, and can make all the difference when your guests leave a review.
3. Get Competitive
The Airbnb marketplace is incredibly competitive, which makes your choice of property imperative.
Not only are you competing with generic real estate investors, but also regular people wanting to let out a spare room!
Top Tip: think about how you can offer a unique service to make your property stand out from the crowd.
People don’t just want a trip; they want an experience. You should also consider this when describing your property in your listing.
4. Obey The Law
Every state and country has their own laws regarding Airbnb investments. As part of your research phase, explore all the necessary local statutes and regulations.
This is essential for success. You might be surprised to hear that there’s still plenty of states and countries that don’t permit Airbnb rentals.
If you’re not operating legally, the consequence can be disastrous.
5. Location. Location. Location.
Location is key.
If you’re in the middle of choosing an Airbnb investment, then the location is everything. It’s imperative to your success.
Select an area that naturally attracts both holidaymakers and business travelers. In addition to this, the location should also boast a safe and secure neighborhood.
Ideally, you want to select somewhere with excellent public transportation links, say an airport or train station. This can massively influence how attractive your property is to potential guests.
You should also consider how easy the property is for you to access. As previously said, you’ll need to be an active investor, which usually requires you to visit the property frequently.
Will you have to consider things like international vehicle shipping? If so, you’ll have to factor things like this into your budget. This leads us excellently to our next point…
6. Set a Budget
When picking any investment opportunity, you need to establish a realistic budget.
This doesn’t just refer to your initial outlay. You’ll also need to familiarize yourself with your monthly investment costs. This is essential for setting your nightly rate.
Set up a spreadsheet highlighting every aspect of your outgoings and estimated profits. Once you’ve listed everything, stick to your budget to ensure a positive return.
Top Tip: As tempting as it is, don’t fall into the trap of setting extortionate rates. This may negatively impact your occupancy rates, and hence your income.
Things to Consider:
When drafting your budget, consider the following expenses:
- The wear and tear of your furnishings and general repairs
- Internet bills
- Utility bills (gas, water, electric, etc.)
- Cable bills
You may also want to put money aside each month so you can eventually purchase amenities that command higher rates. For example, a pool, a hot tub, air conditioning, etc. Features like these are usually sound investments.
Did You Enjoy This Article?
If you found this feature on Airbnb investment property interesting, we’re confident you’ll love the other articles published on our rent blog.
Over there we discuss everything from the kinds of tenants you want to avoid to how to rank higher in Airbnb listings. Enjoy!