When it comes to investing in real estate for short-term rentals, like Airbnb, numbers and statistics matter. If you’re an investor and you’re seriously considering becoming an Airbnb host, part of your due diligence is to look for the updated and most accurate Airbnb stats in your prospective market.
Important Airbnb Stats and Other Things Real Estate Investors Need to Know
Airbnb demand has since it was established in 2008. It has become a popular staple in the short-term rental market and has grown into a huge empire around the world. It has democratized real estate to the point that anyone who has a spare bedroom can make some extra cash by renting it out to transients. Millions of home and property owners worldwide have jumped on the bandwagon. And although the coronavirus pandemic hit it hard and made bookings go down 85%, it pressed on and overcame the challenges brought by the health crisis. As travel restrictions were eased, the number of bookings has started picking up and is steadily regaining its lost momentum.
At present, there are at least 150 million Airbnb guests and users in nearly 8 million properties listed on Airbnb that are run by 4 million hosts. In just 12 short years, Airbnb has become a billion-dollar industry with millions benefiting from it.
With huge numbers like that, it comes as no surprise that serious real estate investors are setting their sights on rental properties to turn into Airbnb properties.
What is Airbnb Investing?
It is no secret to investors today that there is a lot of money to be made from rental properties. The Airbnb listings growth is a huge indicator of how profitable the business is. And seeing how lucrative an industry it is, investors want to get a piece of that action.
By this, we can define Airbnb investing as a strategy where investors purchase real estate properties for the sole purpose of having them listed on Airbnb. Unlike traditional rentals, an Airbnb investment strategy generates greater income for the property owners, especially in markets where the occupancy rate is very high. These Airbnb rental stats can be accessed on online platforms that gather, organize, and analyze all sorts of Airbnb stats to give investors a more comprehensive understanding of the local markets they are considering.
One such platform that gives investors a holistic insight into short-term rental property data is Mashvisor. From Airbnb growth statistics to potential ROI per market, investors have access to all the necessary data they need to make the best possible real estate investment decisions.
Check out Mashvisor to sign up for a 7-day free trial and see how easy property location and data analysis can be.
Why Should Investors Consider Airbnb Investing?
With billions of dollars under its name, millions of properties listed, and hundreds of millions of users, it would be a folly for an investor to reject the idea of Airbnb investing without looking at the benefits it offers. Here are just a few of them:
Airbnb and other short-term rental platforms have increased in popularity over the past decade. This simply means that property owners have more opportunities to generate a good and steady source of passive income. While buying a property is not exactly cheap, an Airbnb return on investment comes at a faster rate compared to renting out a house long-term.
More lucrative compared to traditional rentals
Since owners can charge guests more per night, an Airbnb rental can generate a bigger profit compared to a traditional long-term rental. Considering the pandemic and how it affected the industry in 2020, Airbnb launched monthly stays without the annual rental agreement as part of its efforts in helping hosts and property owners stay afloat during the worldwide crisis. In fact, despite the pandemic, the average nightly rate in the US in 2020 went over $200.
According to Airbnb stats by city, the top 10 cities with the highest gross revenues in 2020 are:
- Los Angeles, California – $199,310,099
- Paris, France – $196,580,195
- San Diego, California – $186,245,421
- New York City, New York – $175,838,796
- Kissimmee, Florida – $146,486,070
- Sydney, Australia – $133,529,933
- Austin, Texas – $101,826,943
- Big Bear Lake, California – $99,568,556
- Las Vegas, Nevada – $95,260,438
- Miami, Florida – $91,681,796
Can be used for their own purposes
Whoever said you can’t mix business with pleasure? Owning an Airbnb rental property doesn’t exactly mean that it should be used exclusively for that purpose. Owners have the privilege of using their properties as vacation homes is one of the perks of running an Airbnb rental business. Of course, personal agenda should never get in the way of business but owners can block off certain dates on their business calendar so they can use their properties for when they take their much-needed and well-deserved vacays.
More diverse tenant portfolio
While traditional rentals provide some sense of greater stability where monthly income is involved, ending up with a bad tenant (one who doesn’t make payments on time or is terrible at home maintenance) can be quite a headache to landlords.
On the other hand, vacation rentals, like Airbnb, give property owners a more diverse set of tenants. While each renter contributes only a part of your income, short-term rentals reduce the overall long-term effects of bad tenant issues. As long as the occupancy is high, you can make up to four times what one would normally make from traditional rentals.
Greater control over the property
One of the best things about Airbnb rentals is the sense of control it gives property owners and investors. Property maintenance is made easier as issues that require attention are easily and immediately spotted with each transition and turnover. Inspections done after each guest’s stay is concluded allow hosts to identify repairs and updates that need to be made and address them promptly.
Owners and hosts also have greater flexibility with pricing as they can easily but reasonably adjust their listing prices whenever they want. Plus, this also gives hosts the chance to target a specific type of clientele of their choosing, unlike most landlords who are mostly left with no choice but to market their homes to a wider and much more general population.
While all of these things may seem great, investing in Airbnb rental properties also has some drawbacks, like:
- Higher expenses and maintenance costs. Since renter turnover is far more frequent in short-term rentals like Airbnb, property wear and tear is significantly higher as well. To provide guests with exceptional services and experience, owners should address any and all issues. On top of that, hosts also have to maintain certain hotel-like standards to entice more guests and garner more bookings.
- Local rules and regulations for Airbnb and short-term rentals. Each state, county, and city have different sets of rules and regulations regarding short-term rental properties.
- Inconsistent income. Unlike traditional rentals where owners can expect a fixed amount monthly, Airbnb rental income varies depending on the season making your cash flow very inconsistent.
- Building a good rep. Starting an Airbnb rental business will be a bit more challenging as finding guests may prove harder when you don’t have five-star ratings yet. To increase their chances of getting more bookings, owners have to be more creative with their listings and more intentional with their marketing.
- More legwork. It is the owner’s responsibility to ensure that his or her property is up to standard and is in excellent condition. This means making daily rounds and constantly checking in with guests.
This is why investors should always perform extensive due diligence if they want to enter this line of business. They need to check the numbers and do the math to see if a property or market is worth investing in based on their goals.
For this reason, investors should know which Airbnb stats truly matter so they know if their investment will give them a good return and turn in a handsome profit.
What Should Investors Look for?
For real estate investors who are serious about getting into the Airbnb rental business, here are the things that they should look for:
Market-Level Data Analytics
Important Airbnb stats can be divided into three main categories. These are Real Estate Market Data, Neighborhood Data Analytics, and Property-Level Airbnb Data Analytics. Let’s go over each one of them in greater detail.
Real Estate Market Data
Location is the name of the game where Airbnb rentals are concerned. Investors should be aware of the real estate market in the county, city, or neighborhood they are considering. Location can make or break the business venture. It determines whether the investment will give owners good returns. It indicates how much a property is, what the limitations and regulations are on short-term rental properties, and other related Airbnb demographics and stats.
Airbnb stats by city are crucial numbers that investors should know, especially since various laws and legislations are passed in different cities to regulate Airbnb operations.
Neighborhood Data Analytics
While it’s important for Airbnb investors to locate the right city, it’s equally important to find the right neighborhood to invest in. Cities are made up of different zones that offer different pros and cons for rental properties. Each neighborhood offers investors different potentials and returns. For instance, neighborhoods that have access to business centers, tourist attractions, and learning institutions are more likely to attract guests while those that are in far-flung or remote places will not have the same success rate.
Neighborhood analytics may be a bit trickier but fortunately, technology has made it a lot easier, thanks to Mashvisor’s Heatmap analysis tool. This specific tool helps investors analyze multiple neighborhood data in a specific real estate market. It shows investors the different listing prices, rental income, ROIs, and Airbnb occupancy rate.
Important Stats to Note
These are some of the most important Airbnb stats every investor should know before deciding to go all-in:
- Number of Airbnb listings. This data states the number of active Airbnb listings in a particular area. This gives investors an idea of how successful a certain market is for the business as well as how much competition he or she has.
- Airbnb Costs and Fees. On top of the property price, these include the other expenses in starting and managing the business. Property maintenance, utilities, taxes, property insurance, and marketing are just some of the few expenses Airbnb business operators incur regularly. When setting nightly rates, all of these costs need to be taken into account.
- Airbnb Daily Rates. This is the average amount that hosts charge per night. This number is based on the actual performance data of Airbnb rentals, also known as Airbnb Rental Comparables or Airbnb Rental Comps.
- Airbnb Monthly Income. This is the average monthly income an Airbnb property makes monthly in a given city. This is also based on Airbnb Rental Comps.
- Airbnb Cash Flow. This represents the amount left from the rental income after the expenses have been subtracted.
- Airbnb Occupancy Rate. This stat determines the ratio of the number of days a property is occupied over the total number of days it is listed on the Airbnb platform. It shows if there is a great demand for vacation homes in a particular city.
- Airbnb Cash on Cash Return. When computing an Airbnb return on investment, this stat is one of two very important metrics used. This is the ratio of the net operating income (NOI) to the property’s purchase price or current market value. This is the average cap rate generated by Airbnb properties in a city.
- Airbnb Rental Comps. This is a compilation of actual Airbnb performance data in a given city. These comparative Airbnb stats are highly useful when analyzing rental properties in the market that are similar to yours. Having access to this makes setting nightly rates and determining the property’s value easier and faster.
Property-Level Airbnb Data Analytics
At this point, you’ve probably narrowed down your choices to a few select neighborhoods. It’s now time to hunt down the property that best suits your investment profile and goals. By taking note of the important stats mentioned above, investors can now make their computations and see if the math checks out.
This process is made easier by the Airbnb Profit Calculator, also found on Mashvisor. This feature is specifically designed to help both first-time and experienced investors to locate the best properties suited to their profiles and goals.
The bottom line is this: gathering and analyzing Airbnb stats are essential in getting into this line of business. For real estate investors who are keen on starting an Airbnb business, Mashvisor can help make the process faster and more convenient for you. To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.