If you are looking to take advantage of the popularity of short-term rentals and buy a property to rent out on Airbnb then you need to know what to look for. Of course, the property needs to be comfortable, but there are a lot of essentials that you need to consider before buying the property. If you make a mistake and buy the wrong property your investment will not bear fruit.
This is no different than any other type of real estate investment since there is always a set of criteria you need to look for in order to be successful. In this article, we will go over several of the keys when it comes to finding the right property for an Airbnb investment.
It goes without saying that location is important when buying a property. Yet, it is a little more complex a factor when you are considering buying an Airbnb property. For instance, they often say that you should buy the worst house in the best neighborhood when looking for a house. But, if that neighborhood doesn’t get any tourists because it is too far away from the sights then it doesn’t matter how nice it is.
The key is to look at neighborhoods that tourists would be interested in. You should find a property that is close to the amenities that a short-term traveler will need. Public transportation, restaurants, and entertainment are just a few of the things the area should have before you buy.
There are also business travelers so look into areas that are near convention centers. An area like that may not be a great place to invest if you are looking for long-term tenants due to traffic and noise issues. But, for an Airbnb that targets business travelers, it’s perfect.
2) Type of Property
The type of property should also fit the traveler and area. For instance, if the tourists that are coming to the area are mostly families, then you will want to have a large condo or small house with enough rooms for everybody. On the flip side of that, if the area attracts a lot of backpackers then a small studio apartment is ideal.
Think about who is traveling to the area and what their needs are before you buy. If you buy the wrong type of property you will likely have it empty most of the year.
3) The Right Price Points
Any investment needs to have a good profit margin. When you are looking to buy a property for investing in Airbnb it is important to know the costs and what you can expect to charge so you know if it is going to give you a profit margin that makes the investment worth it.
Take the time to research what the same type of property is getting in that area so you can guess what you can charge. Then note how many nights are full in the properties so you can guess how much you could make per month.
Then you can add up the expenses you’ll pay in a mortgage, insurance, taxes, and others. Subtract this number from the expected income and you have the profit margin.