Airbnb is quickly becoming the most popular option for travelers looking for a place to stay. Airbnb has given many homeowners and investors a golden opportunity to make money on the side or even a full-time income. Some are using their own home with an extra room while others are investing specifically to rent out on Airbnb.
If you fall into the latter group, you will need to know what goes into investing in the right property for Airbnb. Although it isn’t rocket science, there are some key factors to understand before buying. Without the right strategy, you will have a property that doesn’t bring in much income. In this article, we will go over several things to know before buying a property for Airbnb.
1. Pick the right location
It’s a well-known fact that the most important factor in real estate is location. This is especially true for Airbnb properties, but the criteria for what makes a good location differ from other properties.
The key is to understand the needs of the travelers who are staying in Airbnbs in that area. Most travelers are tourists, so being close to tourist attractions is ideal. It could prove difficult to buy an affordable property within walking distance of tourist sites, however.
To get around this, look for certain amenities in an area that can still give guests access to what they are looking for. For instance, make sure that there is transportation nearby that can easily get them to the tourist area if they are outside of the city. The area should also have restaurants and coffee shops nearby. An example would be getting a property in the Savannah GA suburbs that are still close to where the tourists want to be.
2. Property size
The size of the property needs to be in line with the type of travelers you are likely to get as guests. This means you must identify who is predominantly staying in the area. If the area has a lot of family activities, then a property with multiple bedrooms is ideal.
If there are mainly business travelers, then a one bedroom with some space for work will be popular.
Take some time to research what the other properties listed in the area are like, as that is what guests are looking for.
3. Know the numbers
Making a profit is difficult when you don’t know your numbers. Before buying, do some research into the nightly prices for the type of property that you have as well as the amenities you offer. Try to also find out how many nights per month the other properties are generally booked.
Once you have that information, you can figure out how much of a profit you can make once you deduct the mortgage, insurance, utilities, and Airbnb fees. This information should be used to determine if the property you have your eye on will make a profit for you.
The season will also dictate how much you can and should charge. If the location is popular during certain times of the year, then you can raise the rates during that time.
4. Look for opportunities to add value
The ideal property should be able to give you a chance to add some value so you can charge more. For instance, if you notice that many of the properties available to rent in your area don’t have parking spaces, look for one to buy that does. This is a feature that people are willing to pay extra for.
This also applies to the ability to upgrade the property itself. For instance, if there is a small yard then you can set up a grill or outdoor kitchen so guests can enjoy eating outside.
Inside the property, look for properties that have spacious bathrooms so you can convert the shower to a steam shower. This is a luxury feature that only a few people expect in an Airbnb and will prove popular with people looking to relax after a long day of sightseeing.
5. Zoning laws
One of the most important things for a property to have is the ability to be used for commercial purposes. Some areas don’t allow Airbnb or even hotels to operate. It is really important to understand the zoning laws of the location where you plan to buy. If you think you hit the jackpot since there are no other listings in this prime location, then it could be because none are allowed to be there.
Contact the local zoning board and ask them directly if it is allowed to run an Airbnb or other short term rental in that area before buying.
6. Growth potential
Keep your eyes open for areas that are becoming trendy or are set for development. You could find some real diamonds in the rough by doing so since if you buy low and the area experiences a growth spurt the asking rates can be high and give you some nice profits.
For example, if there is a neighborhood that seems rough around the edges but you notice some hip coffee shops opening up or people beginning to remodel houses then this is a sign that it will become a deisred location.
Also, make sure to stay up to date with city planning meetings. It’s at these meetings where you may learn about development plans that will bring more people to the city. If a convention center is bing planned, or they are
