Real estate investors always look for Airbnb for sale because of its viability. Airbnb homes for sale offer excellent return potential.
Table of Contents
- The Complete Guide to Finding the Right Airbnb for Sale
- How to Find the Right Airbnb for Sale
- Wrapping Up
If you’re an investor and you’re in the market for Airbnb properties for sale, there are certain things you need to know first before purchasing income properties.
In this blog, we will talk about the hows and whys of vacation rental investing and where to find the most profitable Airbnb properties in the country.
The Complete Guide to Finding the Right Airbnb for Sale
When getting into the rental property business, finding the right property matters. Certain factors come into play when looking for an investment property, such as location, tourism, economy, and investor goals, to name a few.
In finding the right Airbnb for sale, one needs to consider how big and how fast the return on investment will be. After all, no investor―beginner or experienced―will waste valuable time and resources on an investment that won’t give them an optimal return. The goal is not just to break even but to actually make a decent enough profit. Investors get into the rental property business in the hopes that it will give them significant cash flow from a somewhat passive income source.
It is why investors are not just out to look for Airbnb for sale but for the right Airbnb property that lines up with their investment goals and criteria.
Why Is Airbnb Worth Investing in?
Since its launch, Airbnb’s grown quite popular among travelers and tourists. It provides guests with more affordable alternatives to expensive hotels and resorts.
Single-family homes and condos, in particular, come with a certain appeal to guests because they give travelers a homier and more comfortable vibe compared to hotels. While the latter does offer certain advantages that appeal to patrons, many travelers nowadays are looking for accommodations that provide them with a more personalized experience.
For instance, the Florida real estate market’s been considered one of the hottest markets in the US for years now, especially where Airbnb is concerned. Airbnb in Miami gets an average of $4,477 in monthly Airbnb income with a cash on cash return of 2.12% and a cap rate of 2.17%.
Airbnb in Orlando Florida may be getting an average monthly income of only $2,611, but it generates higher cash on cash return rate of 2.92% and a cap rate of 3.01%. It is considering that the median property value in Orlando is only $486,404, which is significantly lower compared to Miami’s $1,059,287. With all the attractive figures, Airbnb for sale Florida makes for a viable option for investors even for out-of-state investors.
Because of how well the Florida market is performing, investors always look for condos in Florida to invest in Airbnb Fort Lauderdale, Airbnb Anaheim, and other high-demand locations in the Sunshine State.
As a business, Airbnb or a vacation rental is known to be a very lucrative business worth looking into. Compared to traditional rental properties, short-term rentals generally provide a higher cap rate and cash on cash return, giving owners and investors higher monthly incomes. It will still depend on the location and the owner’s marketing strategy, but when done right, it can generate a positive cash flow for Airbnb hosts and rental property investors.
Related: 7 Reasons to Invest in Florida Vacation Rentals for Sale in 2022
The Pros and Cons of Airbnb Investment
The thing about investing in an Airbnb for sale is that, like any other investment, it comes with certain advantages and disadvantages. But in its case, the pros outweigh the cons. Take a look.
It is more profitable than traditional rental investments. Compared to long-term rentals, vacation rental properties generally tend to be more profitable. There is sufficient data to back up such a statement. Airbnb owners tend to earn up to three times more in hot markets compared to landlords. Location still plays an important role in Airbnb rental’s profitability, but the right marketing strategy is also responsible for the higher profitability.
Airbnb hosts attract a much more diverse tenant base. Landlords are typically forced to deal with clients for longer periods. If they get stuck with a bad client (one who frequently misses payments or one who just suddenly disappears), it will significantly affect their income. It is not the case with Airbnb hosts. While the income is irregular, the diverse clientele is made up of tenants from different backgrounds.
If, say, a guest cancels a booking at the last minute, the cancellation won’t result in the same impact financially. And depending on the salability of the property, a host can easily get another booking to compensate for the cancellation.
It affords owners and hosts greater flexibility. One of the perks of owning a short-term rental property is that it gives owners the flexibility of scheduling bookings and adjusting their Airbnb rates.
The income is irregular compared to long-term rentals. While Airbnb properties may be more lucrative than traditional rentals, one of their pitfalls is income inconsistency. Unlike long-term rentals, where landlords expect to get paid a certain amount on a certain date for a specific period, Airbnb owners take things one day at a time. Their occupancy and nightly rates vary depending on the time of year. Certain areas perform better during a certain season while others don’t and vice versa.
It requires a more hands-on approach to management. Contrary to popular belief that rental property owners just sit pretty on their porches sipping piña colada all day, renting out a property entails hard work. Airbnb properties require owners to be more hands-on as they need to ensure the daily operations are going smoothly. It can mean anything from answering messages and inquiries to property maintenance to managing guest transitions.
Airbnb hosts and rental property owners might get confused when tax season comes. When tax season comes, reporting Airbnb income can be quite confusing for hosts and owners. They need to be familiar with the differences between income tax and lodging taxes, plus they also need to know what Schedule E and Schedule C are. For this reason, we recommend working with a tax specialist to address any Airbnb tax-related issues so owners can file accordingly to avoid penalties and fines.
Related: Tax Season 2022: Guide for Real Estate Investors
How to Find the Right Airbnb for Sale
When it comes to finding the right Airbnb property for sale, an investor is faced with two main options:
- Buy an investment property to use as an Airbnb business; or
- Buy an existing Airbnb business for sale.
Each of them offers distinct advantages and disadvantages, but ultimately, it will depend on the investor which option works for them.
Buying an investment property to convert into a vacation rental unit will entail making some upgrades on the property, registering the business, acquiring different permits and licenses to operate, marketing the rental property, and other related start-up tasks.
But on the flip side, an investor and aspiring Airbnb host can remodel the property to their own preference and come up with a management system that is more aligned with the investment goals.
On the other hand, buying an existing Airbnb rental that’s fully operational allows investors to avoid all the major legwork associated with getting a business off the ground.
However, one of the downsides of buying an already existing short-term rental business is it might be a fixer-upper in dire need of some updates and renovations. The operations might be disrupted if the investor decides to make major improvements to the rental property. The business’s momentum will be stopped to accommodate the property upgrades.
Ultimately, it will be up to the rental property investor how he or she wants to go about it.
Now, as far as buying rental properties is concerned, one of the best and easiest ways to do it is to go to a real estate website. Mashvisor, in particular, is a great real estate online platform that has already helped countless investors acquire rental properties in the most financially rewarding markets.
One of Mashvisor’s specialties is helping investors find the right income properties for starting a rental property business like a traditional or vacation rental.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.
How Does One Find the Right Airbnb for Sale?
For investors who are in the market to buy Airbnb for sale, the main concern is how do they find the right income properties that align with their investment goals and criteria?
One, investors can do it the conventional way of physically going through the city to look for potential Airbnb properties. Some investors are probably thinking, “It’s not that hard to look for an Airbnb for sale near me.” There might be some truth to that statement, but anyone who’s ever said, “I can easily find a vacation rental business for sale near me,” knows the opposite is true. It takes a lot of hard work, time, and money to spot investment opportunities.
Investing in Airbnb requires one to identify certain metrics that determine a property’s profitability. The ROI for such properties is usually determined by two factors: cap rate and cash on cash return. And while the two metrics seem synonymous, they are quite different.
The capitalization rate is used to calculate returns if an all-cash transaction is (or will be) used in purchasing the property. It means that an investor buys a property in cold cash. On the other hand, cash on cash return takes into account the method of financing since not all investors can afford to purchase a property in cash.
Cap Rate Formula: Net Operating Income/ Current Market Value of the Property
Cash on Cash Return Formula: Net Operating Income/ Total Amount of Cash Invested
That being said, we recommend that investors look at cash on cash return in determining an investment property’s worth. In most cases, the difference between the two is only a mere 0.10% in favor of cap rates.
Related: Where Can You Get the Most Reliable Airbnb Data by City in 2022?
Top Airbnb Rental Markets With High Cash on Cash Returns
According to Mashvisor’s latest data, the following locations are the ones with the best cash on cash return rates for Airbnb properties, arranged from the highest to the lowest:
1. State College, PA
- Median Property Price: $603,649
- Average Price per Square Foot: $248
- Days on Market: 198
- Number of Airbnb Listings: 269
- Monthly Airbnb Rental Income: $7,842
- Airbnb Cash on Cash Return: 8.68%
- Airbnb Cap Rate: 8.80%
- Airbnb Daily Rate: $494
- Airbnb Occupancy Rate: 52%
- Walk Score: 94
2. Bushkill, PA
- Median Property Price: $333,500
- Average Price per Square Foot: $158
- Days on Market: 50
- Number of Airbnb Listings: 109
- Monthly Airbnb Rental Income: $4,327
- Airbnb Cash on Cash Return: 8.05%
- Airbnb Cap Rate: 8.26%
- Airbnb Daily Rate: $329
- Airbnb Occupancy Rate: 52%
- Walk Score: 0
3. Coachella, CA
- Median Property Price: $373,889
- Average Price per Square Foot: $261
- Days on Market: 113
- Number of Airbnb Listings: 111
- Monthly Airbnb Rental Income: $4,677
- Airbnb Cash on Cash Return: 7.91%
- Airbnb Cap Rate: 8.07%
- Airbnb Daily Rate: $597
- Airbnb Occupancy Rate: 38%
- Walk Score: 63
4. Nashville, IN
- Median Property Price: $432,940
- Average Price per Square Foot: $276
- Days on Market: 82
- Number of Airbnb Listings: 156
- Monthly Airbnb Rental Income: $4,639
- Airbnb Cash on Cash Return: 7.86%
- Airbnb Cap Rate: 8.05%
- Airbnb Daily Rate: $276
- Airbnb Occupancy Rate: 59%
- Walk Score: 56
5. Berkeley Springs, WV
- Median Property Price: $406,731
- Average Price per Square Foot: $199
- Days on Market: 74
- Number of Airbnb Listings: 144
- Monthly Airbnb Rental Income: $4,146
- Airbnb Cash on Cash Return: 7.61%
- Airbnb Cap Rate: 7.79%
- Airbnb Daily Rate: $215
- Airbnb Occupancy Rate: 67%
- Walk Score: 5
6. White Settlement, TX
- Median Property Price: $250,505
- Average Price per Square Foot: $173
- Days on Market: 6
- Number of Airbnb Listings: 107
- Monthly Airbnb Rental Income: $3,207
- Airbnb Cash on Cash Return: 7.54%
- Airbnb Cap Rate: 7.80%
- Airbnb Daily Rate: $145
- Airbnb Occupancy Rate: 61%
- Walk Score: 42
7. Wisconsin Dells, WI
- Median Property Price: $277,233
- Average Price per Square Foot: $165
- Days on Market: 33
- Number of Airbnb Listings: 278
- Monthly Airbnb Rental Income: $3,176
- Airbnb Cash on Cash Return: 7.50%
- Airbnb Cap Rate: 7.76%
- Airbnb Daily Rate: $341
- Airbnb Occupancy Rate: 46%
- Walk Score: 69
8. Luray, VA
- Median Property Price: $480,243
- Average Price per Square Foot: $209
- Days on Market: 223
- Number of Airbnb Listings: 212
- Monthly Airbnb Rental Income: $4,562
- Airbnb Cash on Cash Return: 7.44%
- Airbnb Cap Rate: 7.62%
- Airbnb Daily Rate: $272
- Airbnb Occupancy Rate: 60%
- Walk Score: 52
9. Sweetwater, FL
- Median Property Price: $431,111
- Average Price per Square Foot: $353
- Days on Market: 55
- Number of Airbnb Listings: 319
- Monthly Airbnb Rental Income: $4,717
- Airbnb Cash on Cash Return: 7.30%
- Airbnb Cap Rate: 7.46%
- Airbnb Daily Rate: $154
- Airbnb Occupancy Rate: 56%
- Walk Score: 82
10. Broadview, IL
- Median Property Price: $253,900
- Average Price per Square Foot: $211
- Days on Market: 65
- Number of Airbnb Listings: 249
- Monthly Airbnb Rental Income: $3,336
- Airbnb Cash on Cash Return: 7.19%
- Airbnb Cap Rate: 7.42%
- Airbnb Daily Rate: $128
- Airbnb Occupancy Rate: 64%
- Walk Score: 61
Related: How to Find Reliable Airbnb Rental Data in 2022
Finding the right Airbnb for sale is all about recognizing the right investment opportunities at the right time. You cannot just leave things to chance where real estate investments are involved. The smart investor will always perform due diligence to ensure that all bases are covered – from purchase costs to home updates to marketing the vacation rental property to running operations. Everything needs to be calculated, and every contingency needs to be prepared for.
Investors will do well to work with investment tools that will maximize their potential as investment property owners. A website like Mashvisor gives them extra power and confidence to make the right investment decisions that leave very little room for errors and regrets.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.