Do you want to invest in real estate in 2022? Are you wondering whether short-term rentals are still profitable this year? Do you want to find tools that will help you make data-based and informed business decisions?
If the answer to all these questions is “Yes”, you’ve come to the right place. Owning a vacation rental business has become one of the best ways of making money in real estate. The best way to determine whether your vacation rental is going to be profitable is by using the vacation rental calculator.
Let’s gain a deeper insight into what this crucial tool is, why you need it and where to get the best vacation rental calculator in 2022.
What Is a Vacation Rental Calculator
A vacation rental calculator is a tool developed to help new short-term rental investors, as well as experienced ones, search for and find highly profitable vacation rental properties. The tool is also referred to as an investment property calculator or Airbnb profit calculator.
Investors can use the tool to run real estate market analysis and investment property analysis. You can carry out these functions to over hundreds of thousands of MLS listings and off-market properties. You can even manually input properties of your choice and check the profit potential of each investment.
The good news is that the data you get from the Airbnb profit calculator comes from the Airbnb site itself. You don’t have to spend weeks on end compiling data and trying to analyze copious information on spreadsheets. You can find all the key data and analytics you need to make data-based Airbnb decisions within minutes using the vacation rental calculator.
Why Do You Need The Vacation Rental Calculator?
Now that we’ve looked at what an Airbnb profit calculator is, let’s look at some of the vital things this important tool does for you. As an investor, you’ll find this tool extremely helpful since it has a lot of things for you. Remember your goal is to buy a profitable Airbnb property with a high return on investment.
Let’s break down some of the real estate investing aspects you can use the tool to find.
Find the Best Location for Vacation Rentals
Any savvy real estate investor will tell you that location is one of the core factors that determine your real estate investment’s profitability. That’s why carrying out market research is important before making the major decision to buy a vacation rental property.
However, analyzing a market manually is near-impossible. It can take months to compile and analyze data. Don’t forget the real estate market is dynamic, meaning various aspects may have changed by the time you’re done.
This is why you need the Airbnb calculator. It will save you time and money by showing you the best neighborhoods to buy property for short-term rental business in any market in the US. As an investor, if you want to target the right property for your investment, you ought to start at the very top.
Use the heatmap to identify areas with the highest ranking, which are marked by the color green. The lowest-ranking areas are marked with red. Yellow and orange show neutral neighborhoods. In short, green areas are the most ideal for properties suitable for the Airbnb business.
Carry Out Comparative Market Analysis
Market analysis isn’t just about finding one specific neighborhood to invest in. You want to know whether you’re paying the right price since the purchase price is one of the factors that’s used to calculate the rate of return, the other being rental income.
Comparative market analysis for an uninitiated real estate investor can be grueling and even take many months to complete. Using an Airbnb profit calculator, you can be done in a matter of minutes. This tool will list real estate comps for you so that you don’t pay more than the market value.
Find the Right Property
Once you’ve identified the most suitable location and neighborhood, it’s now time to find the best property for vacation rentals. In this digital age, you don’t need to drive through neighborhoods looking for “for sale” signs or flip through newspaper pages looking for property ads.
The Airbnb profit calculator has automated the property search process. The tool will show you a list of properties that match your search criteria. Your search criteria are made of the following metrics:
- Property price
- Property type (condos, single-family home, townhouse, or multi-family home)
- Rental income
- Occupancy rate
We’ll talk about these metrics, and many others, later. For now, let’s focus on why you need the vacation rental calculator.
Carry Out Investment Property Analysis
All the metrics used on the Airbnb profit calculator are pulled from reliable vacation rentals data platforms to ensure the results are accurate. They’re based on reliable rental comps and Airbnb data so you can be confident in the results.
The tool helps you to access a comprehensive report that includes all the important numbers and indicators that you’ll need to maximize your investment.
Sometimes, you might also have some reasons to believe that the property might perform differently. This could be based on your own experience as an Airbnb host or something that’s happened to another investor in the same neighborhood.
Luckily, with the vacation rental calculator, you can adjust or change any value that you see that could be different based on your analysis. The calculator will then immediately adjust all the numbers.
Using the data generated, you can then compare different investment properties and decide which one will be most profitable.
What Data Can You Get From the Airbnb Calculator?
The Mashvisor Airbnb Calculator provides real estate investors with a wide range of Airbnb data and analytics. Let’s look at the crucial numbers and figures that the tool generates for you.
Airbnb Property Price
First, the vacation rental calculator will show you how much the potential investment properties are listed. While these figures aren’t the final selling price, they give you a rough idea of how much you can expect to spend on the property.
Real estate prices can always be negotiated to a more favorable price for all parties. If you want to get the best at the negotiating table, make sure to work with a top-performing real estate agent.
Pay special attention to the buying price, since, as we mentioned before, it’s one of the crucial factors that determine your property’s profitability.
Airbnb Rental Income
Airbnb rental income is a crucial metric for short-term real estate investors looking to create a sustainable business. Mashvisor’s revenue estimator provides a rough estimate of the revenue you can expect to make from any property listed on the platform or any off-market property whose address you enter.
The Airbnb rental income figure is based on other crucial figures, such as occupancy rate and daily rate of comparable vacation rental listings in the neighborhood, known as Airbnb rental comps.
Besides calculating Airbnb cash flow and return on investment, investors can also use this data to set their pricing strategy. The good thing is that our vacation rental estimator also provides the income potential if you decide to use the property as a traditional rental. You can then decide whether it’s more profitable to rent it out as a traditional rental or Airbnb.
Airbnb Occupancy Rate
Short-term rental bookings rates are dynamic depending on the season, which is usually unique to every individual market. As such, knowing the occupancy rate is crucial for anyone who wants to find out the profitability of any short-term rental property.
The higher the occupancy rate, the more revenue the property can generate every month. High Airbnb income ensures that you’re still comfortable during the off-peak periods so that you can avoid running into any financial issues.
The Airbnb calculator provides Airbnb occupancy rates based on the performance of comparable rental properties in that neighborhood.
Airbnb Startup Costs and Monthly Expenses
Spending money on any investment is a must. This is why it’s important to have an estimate of how much money you should expect to spend before making an investment. Expenses are also important when calculating expected cash flow and return on investment.
Our vacation rental calculator provides you with the one-time costs, as well as the recurring expenses that you can expect to pay. All these numbers are sourced from the current rates in the local real estate market.
Here is a breakdown of the startup costs and monthly expenses you can get on the Airbnb profit estimator:
- Closing costs
- Furniture and appliances
- Repair estimates
- Property insurance
- Rental property tax
- Property management fees
- Cleaning fees
- Property maintenance
- HOA expenses (if you buy a condo)
Typically, an Airbnb owner has more costs than a traditional rental owner. Some of the expenses may not be included in the expenses estimate. Of course, with our Airbnb profit estimator, you can adjust the expenses estimate as you deem fit by adding any other custom costs.
Airbnb Cash Flow
Airbnb cash flow refers to the difference between the rental income and Airbnb expenses. If you’re new to short-term rental investment, we recommend that you focus on positive cash flow properties. A positive income Airbnb rental will settle all the monthly expenses, leave you with a good profit and create a decent monthly income stream.
This is why you need to conduct a cash flow analysis before you invest in any property. The cash flow calculator provides you with readily calculated cash flow estimates for any property you want to analyze.
Airbnb Cash on Cash Return
The Airbnb profit calculator provides you with an estimate of how much you can actually expect to make from your short-term rental. The two main metrics when calculating the return on investment for rental properties are cash on cash return and cap rate.
Cash on cash return takes into account the total amount of money you’ve invested in the property. The short-term rental estimator calculates the cash on cash return by taking into account the cash down payment you made while buying the property, as well as other expenses, such as the closing costs.
As such, it’s always important to get the cash on cash return calculation before investing in any property, especially if you’re getting financing for the investment.
Airbnb Cap Rate
This is another return on investment metric. Investors can use the cap rate to quickly compare the profitability of investment opportunities, without factoring in the financing method. In short, the cap rate estimation assumes that you financed the investment 100% yourself.
The cap rate calculation allows you to get an idea of what your short-term rental property is worth and how profitable it is compared to its market value.
Before investing in a short-term rental, you should know that your financing method will have a huge impact on your return on investment and cash flow. If you want to establish whether your financing method will give you a good cash flow, our vacation rental calculator comes with an in-built mortgage calculator.
You simply enter the mortgage details and the tool shows you how the size of each down payment, the loan type, and the interest rates affect your Airbnb cash on cash return and cash flow.
What Will the Airbnb Profit Calculator Not Tell You?
The Mashvisor vacation rental calculator is a useful tool. However, not every tool can claim perfection. There is one crucial aspect of Airbnb investment that you need to take care of by yourself. This is knowing whether Airbnb investment is legal or illegal in your preferred real estate market.
Many cities across the US have imposed major restrictions on Airbnb rentals. Others have made non-owner-occupied Airbnbs illegal. These locations include major tourist destinations, such as New York, Los Angeles, Las Vegas, Santa Monica, and San Francisco.
Where Can You Find the Best Airbnb Calculator?
Mashvisor provides you with the best Airbnb profit estimator by applying machine learning algorithms and big data to provide you with accurate calculations. It has all the features and works with all the metrics described above to help you find the most profitable short-term properties to invest in.
Probably the most unique thing about the calculator is that it not only benefits short-term rental investors but long-term rental investors as well. So, if at any point in your journey you decide to switch from the short-term rental strategy to long-term investing, the calculator will still be instrumental in your journey.
Join the league of smart real estate investors who use AI and predictive analytics for their business. Sign up for a 7-day free trial to start using the Mashvisor vacation rental calculator today.