Investing in a Airbnb Rental Property is a big decision that one must make at the right time. However, not everyone has a knack for finding the right deals, knowing when and where to invest and acquire to earn the maximum profit possible. Nevertheless, it is significant that you do the requisite research and find areas where your savings or funds can not only be salvaged but at least doubled or tripled over time.
Among the multiple options available is that of turnkey vacation rentals. These are renovated spaces (apartments or homes) that can be purchased or rented immediately upon acquisition. Over time, this investment method has gained the popularity that it needed such that it is now included in one of the greater business opportunities or investments out there.
In this article, we will provide you 10 different locations which are fantastic for Airbnb Rentals. To understand which locations are best meant for this particular investment, there are a few metrics that can be used to gauge the extent to which things may pan out.
Things to Consider
These factors include the following:
- Rental demand: the number of times rentals are booked within a year. This metric signifies the relative demand for travel in respective markets through a combination of yearly occupancy and amount of listings growth rate.
- Revenue Growth: the growth of revenue with relative comparison to the previous month. Through a calculation that observes the year-on-year change in revenue from the property about the number of bookings received in corresponding periods.
- Investability or ROI Potential: the comparison of home prices through platforms like Zillow – of which the monthly mortgage cost is compared to the average income of full-time, short-term rentals on Airbnb and Vrbo.
Evaluating a Short Term Rental Market
Previously, how investment areas were valued was slightly different, and the areas would normally have been very different. However, with the global pandemic and the ruthless onslaught of the coronavirus, things have changed significantly. These reasons include:
- In the rural spaces, drive-to-markets have observed an unprecedented rise in demand for rentals in the short run with restricted air travel.
- Travel built around businesses, specifically in urban centers, has seen a significant drop due to peoples' preferences to remain home and safe rather than risk their health.
- Due to remote working and schooling, there is a blurry line now between living and traveling, which has led to a fall in demand.
- Because of the weariness surrounding the coronavirus, there has been a drop in the total number of hosts and listings, which makes a wider numerical revenue amount for each owner.
Top Cities for Airbnb Rental Property Investment
As per the report by Airdna, these are some of the best places to invest as of 2020:
- Castroville, California
- Slade, Kentucky
- Cherry Log, Georgia
- Shenandoah, Virginia
- Athens, New York
- Apollo Beach, Florida
- Stanton, Kentucky
- Kerhonkson, New York
- Two Harbors, Minnesota
- Gerton, North Carolina
With regard to mid sized markets, the areas are mentioned below:
- Yucca Valley, California
- Ridgedale, Missouri
- Fairplay, Colorado
- Orderville, Utah
- Luray, Virginia
- Morganton, Georgia
- Satellite Beach, Florida
- Kingston, New York
- Joshua Tree, California
- Mineral Bluff, Georgia
Finally, with reference to large markets, these are the best places to invest in:
- Palm Springs, California
- La Quinta, California
- Sevierville, Tennessee
- South Lake Tahoe, California
- Gatlinburg, Tennessee
- Pigeon Forge, Tennessee
- Saint Augustine, Florida
- Gulf Shores, Alabama
- Bradenton Beach, Florida
- Panama City Beach, Florida
Mistakes to Avoid
People who are new to the property business, especially short term rentals, may not be aware of the common mistakes they may make. This section apprises you of the mistakes you must avoid at all costs to ensure that your dental procedure and property purchase process go by smoothly. Here are some of those mistakes:
- Investment upon appreciation: Many people feel that land may never lose value and may only appreciate it with time. However, this is not the case. Due to several circumstances, your rental may lose value, and if you were basing your judgment purely upon the assumption of appreciation, you might be in for an extreme shock. Therefore, consider other reasons behind the property than just the fact that it is bound to appreciate over the years as that may not be a viable probability.
- Vague contracts: In any contract that you get into, you must clear all ambiguities, and if there is anything you are unsure about, you must make sure that you ask for clarifications before you get into something this serious. Any partnerships or lease agreements, the smallest of details that you may feel are not as significant, it is recommended that you go through the contract, pinpoint these details, and then sign once you are clear about everything.
- Investing in multiple properties: While it is okay to invest in multiple properties over time, as a beginner, it may be difficult for you to juggle between too many priorities. Hence, we recommend starting slow and adding to the portfolio one at a time until you are more experienced and have a professional team in place. Having too many properties may cause you headaches and end up with you failing to provide the service that Airbnb and VRBO guests require, leading to lower customer satisfaction and perhaps a loss incurred due to your negligence.
Airbnb Investment Properties are a big commitment which you should only make if you are completely sure about it. Many people are taken in by the wind or peer pressure and end up making these decisions in haste. Suppose you are someone who truly wishes to keep up the investment prospects going and would like to benefit from it accordingly. In that case, it is best to consult various sources and people with experience before you even think about choosing to invest in any location.
In any instance, properties are extremely expensive. Even if they are meant for renting purposes, the returns may not be as immediately available as one may like them to be. Therefore, keeping in mind the many possibilities that may arise and the various challenges that the new norm has brought up, unprecedented and unexpected, make the decision but have the requisite backlog of substance and information to support your decision.
However, once you have decided to get into this business and have purchased a property, do not hesitate or regret it in any way. Own it and lead from the front. Do not let others discourage or mislead you because you can be prone to peoples' opinions if you are doubtful, even in the least bit. Just stay calm, do your research and let fate lead your way.