By The Hospitable Team
If you’re looking for a source of passive (or mostly passive) income, buying a vacation rental property and renting it out short-term might be an excellent option. Buying a property for Airbnb could be a profitable investment. But you should treat it as a business, provide a fantastic experience for guests, and buy Airbnb property in a favorable location.
And if you want to be a really successful Airbnb host and maximize your profits, there are many factors to consider, starting with the property itself. It’s important to pick it wisely, so we’ve created this guide to help you make the best possible decisions. Here you’ll find a list of the most important steps you need to follow when finding and buying Airbnb property in your area.
Buying Airbnb Property: Choose an Attractive Location
Two metrics are critical to your return on investment with Airbnb rentals: the occupancy rate and the average daily rate in your neighborhood. They show how profitable a particular location is for renting property short term.
The more guests you have and the fewer days a month your rental property stays vacant, the more money you can make. So you should assess both metrics at both the city level and neighborhood level.
So how do you choose the best place to buy Airbnb property? The best places to look for when buying a house for Airbnb are cities that enjoy a large number of visitors, for example, popular travel destinations. Now the most visited states are Florida, California, Nevada, Texas, and New York.
And if you don’t want to hire a property manager, your first thought might have been to choose a location that’s not too far from the place where you live. Then you’d be able to stay up-to-date with rental property maintenance and other hosting duties.
Another approach would be to hire a cleaning team and a co-host to help you keep your property guest-ready and enjoy the remote hosting. Then you can use property management software like Hospitable.com to work with your team from anywhere with stunning efficiency.
Team management for short-term rental hosts
Check Out Airbnb Laws and Regulations before Buying House for Airbnb
This is one of the first things you should do when considering buying apartments to rent out. Make sure you’re aware of your desired city’s local laws and regulations. Keep in mind that in many places across the US, local authorities have started imposing strict regulations restricting and sometimes even prohibiting Airbnb rentals.
You should check out local government websites and the Chamber of Commerce website. You can also find information about legal requirements for around 100 cities and counties on the Airbnb website. You should find out:
- Whether it’s legal to host in your desired city
- What requirements you need to meet to be a host
- What taxes and fees do you have to pay
- What number of bookings is allowed
Buying a Vacation Rental Property: Choose the Most Appropriate Type
The best type of property to invest in on Airbnb is one that gives more income and a higher occupancy rate. But it all depends on the chosen location and your target guests. For example, if you want to buy Airbnb property in a busy city, you’d probably want to invest in a small apartment or condo. Then your Airbnb rental would more likely attract business travelers.
And if you decide to buy property in a resort location, for example, on a beach or in the mountains, a smarter choice would be a single-family home that offers more privacy. That’s because such a location is more likely to attract young couples, small families, or groups.
How to Buy an Airbnb Property
First, you should decide on your budget. The best approach is to invest in a property that you can comfortably afford, so you should consider all your savings, regular sources of income, and ongoing expenses.
You should also consider hidden expenses, such as property tax, insurance, furniture, etc., when setting a maximum price you can afford without risking defaulting your mortgage payments. Altogether these expenses can add up to several thousand dollars. Moreover, you should distinguish the equipment for a personal-use home and a rental space. Our free guide on setting up an apartment for a short-term rental will help you save money and nerves.
Once you know how much you can spend on buying your Airbnb rental, you can start searching for properties. You should use all possible sources such as online listing websites, the real estate sections of local newspapers, “For Sale” sales in the neighborhood, friends, and acquaintances. Actively look for foreclosures, bank-owned, and off markets properties because they can bring you a significantly higher ROI due to the low price you’ll have to pay for them.
After you identify several properties that match your budget and other search criteria, you should perform a careful analysis. First, do a comparative market analysis. Find a few properties that are similar to those you’ve selected and are located in close proximity. Check out their prices and find differences between them and the selected properties. This way, you’ll be able to establish the fair market value of your Airbnb rental and be sure that you don’t overpay for it.
Then you need to perform an investment property analysis and analyze each property you’re considering. Estimate the monthly rental income that you can expect to get from your Airbnb rental property based on the average occupancy rate in the market and the predominant daily rate. Make sure your short-term rental property will yield a positive cash flow and high ROI.
Now you can buy your investment property with confidence. If you have no previous experience, you may consider hiring a real estate agent to help you negotiate the best possible price and close the deal quickly.
Buying Apartments to Rent Out: Where Can You List Your Property?
You should furnish and decorate your property to ensure it’s in good shape for renting it short-term and then create a listing on Airbnb. It’s important to choose an attractive Airbnb name for your rental, create an attention-grabbing description, and provide high-quality photos.
But Airbnb isn’t the only platform where you can market your vacation rental property. You’ll reach more travelers and make more money if you list your rental on Vrbo, Booking.com, and other OTA platforms and get bookings from your guests directly on your website.
Even if you have no coding skills, you can quickly build a fully functional direct booking website with Hospitable.com. Our system will ensure your calendars and pricing stay synced across all your channels and will take care of automated communication with your guests.
Get a direct booking website within minutes!
Airbnb short-term rentals provide a higher ROI than traditional long-term rentals, so investing in Airbnb properties is one of the best ways to make money. But it’s important to do solid research on the local market, local rules and regulations and use the best practices to market your listings. Hopefully, our tips on how to buy an Airbnb property will help you get a better idea of the process and choose a profitable rental property to invest in.
Have more questions about hosting on Airbnb? Check out our blog post on Airbnb FAQ for New Hosts to find answers to the most common questions.
In the past decade, short-term rentals have become a more profitable strategy for most markets worldwide than renting property long term. If you plan to buy a short-term rental property in the US, you will be interested in this article, prepared together with Mashvisor.
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