Hundreds of millions of people have used Airbnb when staying short-term in new areas. That number continues to trickle upwards as hotels progressively become mired by fees and Airbnb works to better ensure customer safety.
With Airbnb’s star on the rise, more investors are taking the prospect of adding a short-term rental property to their portfolios seriously. If you have cash, we recommend that you get educated on what makes for the best Airbnb property and follow suit.
To help you do that, we break down eight factors to look for when deciding on a location for your Airbnb.
1. Safe Neighborhood
The most important thing for guests that are looking to book a short-term rental property is safety.
Is a guest going to feel comfortable in an area? Do they have to worry about going out late in the evening?
If the area of your property makes it so people are going to have to exercise extra caution while on vacation or during a business trip, you can expect that the amount you’ll be able to charge will be significantly less than if your property was located in a good neighborhood.
For the sake of your guests and the sake of your investment, always prioritize buying in a safe area over all other factors.
2. Feasible Property Taxes
Property taxes are something that many inexperienced investors overlook when they’re buying an investment property. That, unfortunately, can wreak havoc on their ability to generate returns.
Depending on where your Airbnb is located, you’ll pay variable taxes each year on the value of your purchased home. A good Airbnb investment has low property taxes that you can easily bake into your rental rate so you don’t have to worry about being short at the end of the year.
3. A Steady Influx of Tourism
Airbnb locations that exist in non-tourist areas are limited to appealing to business travelers and family members visiting locals. While there is a chance that those two demographics can keep your investment working, chances are, you’ll want to cash in on tourism, if possible.
To that end, if it’s feasible to purchase an Airbnb in an area that’s frequented by tourists, do it. There may be additional taxes levied against property owners in these areas, but you might find that those taxes pale in comparison to the additional income you’ll generate.
4. Easy Public Transit Access
Travelers in new areas love being able to access public transit rather than needing to rent a car and navigate unfamiliar streets. If you can advertise in your Airbnb listing that attractions are easily accessible via bus or train, expect your vacancy rates to drop significantly.
5. Things to Do in Walking Distance
Even better than having easy access to public transit is having easy access to attractions via walking. If you can purchase an Airbnb that’s within 15-minutes or so of where most tourists want to be, you can charge a premium and expect low vacancy rates year-round.
Just be sure that the premium you pay for a central property is worth the additional income that you’re projecting from increased demand. It may turn out that a house that’s 30-minutes away from city center with good transit connections is worth more than one that’s 15-minutes away but boasts a much larger price tag.
6. Future Development Prospects
To nab the best Airbnb investment, consider talking to city officials to see if planned developments are coming to a community that might improve local property values.
By buying an Airbnb prior to positive developments, you might be able to bag a great price and see your property’s value skyrocket shortly thereafter.
7. Investigate How Many Short-Term Rentals Are in the Area
The more short-term rental properties that exist in your Airbnb’s community, the more competition you’ll have to thwart in order to score bookings.
In a perfect world, you’d enter a market where there’s demand for short-term rentals and that demand hasn’t been fully met yet. That way, you can cash in until other investors get privy to the opportunity that exists. By the time that happens, your rental property will already enjoy a positive reputation in the area that could keep you at the top of the market for the foreseeable future.
8. Make Sure That Short-Term Rentals Aren’t Prohibited
We’ve heard horror stories where people pour their life savings into buying the best Airbnb rental property that they can, only to be barred from renting it out.
Several HOA agreements prohibit short-term rentals. Even if your home is not located in an HOA area, some communities have charters that restrict Airbnb operations.
Ensure that your property will be able to operate for its intended purpose before buying. If needed, have an attorney double-check what’s feasible.
Buying the Best Airbnb Today Could Mean Significant Returns Tomorrow
Airbnb is becoming America’s favorite way to lodge when away from home. You can cash in on that trend by purchasing a well-situated investment property that checks all of the boxes for short-term renters.
As we’ve mentioned already, when making large purchases like Airbnb investments, it’s imperative that you do your diligence to ensure that your property’s value vs its potential rent rates makes renting a viable investment.
With a little bit of research and a dash of luck, we’re confident that you’ll love your life as a best Airbnb property owner. If you need additional advice as you move down that path, consider checking out more relevant content on our blog!