Is there ever a good moment to invest in Airbnb? Probably not, but there have been worse times to invest. During a global pandemic may not be the greatest moment… Is that the case? We wanted to see how the Airbnb investment market was faring in light of COVID. In addition, how the new variation of fear may wreck investors’ huge plans for 2022 and beyond.
This is a frequently requested question: how do I determine when to invest in an Airbnb property? To be honest, you won’t know it’s the best time until it’s gone. That doesn’t help any of us.
Instead, let’s look at what you can foresee and research. Instead of focusing on when to invest, consider how, what, and where to invest. This will give you the highest possibility of your investment prospering. The more you plan ahead of time, the less important the timing of the investment becomes.
Table of Contents
Looking for a Property: Where to Invest in an Airbnb Property
Choosing the correct location is more than half the battle in the Airbnb investing scenario. You could be wasting a lot of money if you don’t put in the effort to discover the right place.
The first step is to determine whether you believe you are competent in maintaining a vacation rental property from afar. If you are, you will require these remote Airbnb administration tools. There is a lot that goes into remote Airbnb management, and having a physical presence is only half of the equation. To check guests in and out, you’ll need everything from a reliable cleaning team to a handyman and a manager.
When determining if a particular site is a viable investment, we consider a few variables. First, we check occupancy rates. First, by year, and then, in slightly more detail, by studying these rates each month. Investing in a place that only receives bookings for three months of the year is not the best investment option. You can make a good living during peak season, but if you don’t get a single booking during the off-season, the investment isn’t worth it.
Let’s talk about dynamic pricing and how using dynamic pricing and revenue management technology like DPGO will improve your occupancy rates noticeably. However, even dynamic pricing cannot generate guests when they do not exist. What it can do is attract the few visitors who come to the area during the historically quieter times.
Second, we consider market supply. If there aren’t many listings in the market, it could signify one of two things: either the market isn’t popular with visitors, or you’ve read these stats during the off-season and hosts have chosen to remove their listings from the market.
Then we look at the Average Daily Rate (ADR). You’ll need to look at this on a regular and annual basis. This will provide you with an overview of the overall health of the short-term rental industry in that specific location. This information will enable you to create a financial road map. It will assist you in determining whether your chosen site is viable or not.
Finally, we look at the Minimum Night Stay regulations. Not only do these provide information about local short-term rental regulations, but they also provide market standards regarding how long guests choose to remain.
Where Can I Find These Insights?
All of these measures (and more) are available for free on the DPGO Markets page. All you have to do is enter the name or postal code of the location you wish to review, and we’ll offer you a variety of market insights for free. This comprises market supply, average daily rate (ADR), average occupancy rate, day of the week price factor, and other factors.
How to Invest Correctly: Rental Arbitrage or Property Purchase?
This is a blog post on investing in a short-term rental property, but we wouldn’t be providing you the full picture if we didn’t show you the alternatives. Rental arbitrage has grown in prominence during the last five years. It’s so popular because it allows business-minded people to profit from the vacation rental market without putting a big amount of funds into property ownership.
Rental arbitrage is the practice of renting a property long-term and then listing it on short-term rental services such as Airbnb or Vrbo. Of course, you’ll need permission from the property owners, and you’ll almost certainly need to get a slew of insurance coverage to ensure that no harm is done to property that you don’t own.
Purchasing your short-term rental property, on the other hand, entails extra risks. However, it also helps you to adjust the appearance and layout of your listing to appeal to your ideal audience. Rental improvements and the selection of Airbnb furnishings enable you to make an enticing listing and, hopefully, a plethora of bookings!
What to Invest in: What Are the Most Profitable Property Types?
We’ve heard a lot in recent months about which kind of properties are the most successful on platforms like Airbnb. While we are data professionals, comparing one listing to another is difficult. There are several aspects of the short-term rental industry that cannot be quantified, and one of them is distinctive attractiveness.
Following the initial relaxation of COVID rules, we saw a significant rise in bookings on Airbnb, and while unique stays were popular, they were not as popular as typical housing categories such as houses and condos. This is most likely owing to the fact that there are fewer of them on the market, but this is also why we cannot compare their popularity to that of apartments and homes.
Unique stays are nice, and they do bring a new draw to short-term rentals, but we believe you’d be more financially served by investing in a house or an apartment, depending on your budget.