How to Buy Airbnb Property: The Key to Finding the Best One

Investing in Airbnb can be a lucrative venture. But it does come with its risks and nuances. You have to select the right location, understand the legal landscape, and keep many other factors into account that could be either deal makers or deal breakers. That being said, we thought of writing a brief guide for you that highlights all the important considerations that matter when choosing the right Airbnb property.
Let’s jump in!

Buying the Right Airbnb Property Made Simple: Key Considerations

1.Choose the Right Location

STRs are tricky when it comes to choosing a location as it will play an important role in the overall profitability of your property. The property you choose should be located in a place that has an occupancy rate of at least 60%. Means, going for a city with a large number of visitors is going to be the key, whether it’s in the form of tourists or business travelers. Having a close look at the occupancy level of the city, and then of the neighborhood, will make your decision easier. Remember, when it comes to the profitability of real estate, location is one thing you cannot compromise.

2.Keep an Eye on the Laws and Regulations

Ever since short term rental properties have skyrocketed in their popularity, the regulations have got more strict. The reasons are many, including but not limited to its role in contributing to rising rents, over tourism, unregulated properties, and lost tax revenue. Which means the last thing you want as a real estate investor is to break the law and face severe legal consequences.
Therefore, make sure to consult all the resources you can to understand the local laws and regulations thoroughly to avoid getting into legal troubles that could absolutely ruin your rental property business.

3.Choose the Right Property for the Right Purpose

Choosing the right property for the right purpose is as important as anything else. A property meant for families won’t work for corporate stays. The same way, a property meant for corporate stays won’t appeal to families or people who’re just there to chill.
Just to give you an idea, small, apartment-like properties often work best for corporate stays. As for families, a nicely furnished home with a couple of bedrooms will work great.
Remember, you have to be really targeted and calculated when it comes to what type of guests you are catering to. A wrong property for the wrong market could dent your profits and ROI immensely.

4.Set a Definite Budget

Just like anything, your property investment budget should have a cap. In other words, there’s no point in buying a property that costs beyond your capacity. Besides, you don’t want to risk going into default on your mortgage payments (if you have taken a loan).
For that, we recommend taking into account all your sources of income, looking into your expenses, and how much savings you have. In accordance with that, we suggest setting a fixed budget that balances all these things and then sticking to it no matter what.
If you have been in the real estate sector for a little while, you’ll know that no property comes without its own specific expenses, no matter how spectacular it looks. There are always those extra expenses you have to work around. If you go above your budget, then you might buy the property, but you won’t be able to work around those small fixes or hidden expenses needed to turn it into an ideal STR space.
Of course there are options like home equity loans, Airbnb loans, and rental arbitrage available to help you get things going. But we don’t really recommend those as a beginner, or until you have a very solid backup plan and you’re sure about what you are getting into.

5.Hire an Agent

Assuming that you are not an expert in the STR and real estate sector right now, hiring a real estate agent could save you a lot of headache and wrong decisions. As professionals, they know the ins and outs of the local market and always have the best deals in hand to get you reasonably priced properties.
What’s more, you won’t even have to pay anything extra to the agent. The “fees,” as they call it, are primarily paid by the sellers, not the buyers. Which means you get the best deal, you don’t break the bank, and you save yourself from a lot of hassles. Isn’t it the best of all worlds?
However, all being said, make sure to find someone who has some experience with Airbnb rentals. This way, you significantly increase your chances of getting a place in the top neighborhoods, the best property for your needs, and one that complies with all the rules and regulations in place.

6.Don’t Forget the Market Analysis

If you find one good Airbnb property deal in a place, chances are there will be even better deals out there. Even if not, having a look around won’t hurt. And that’s where market analysis jumps in! It basically means thoroughly analyzing all the properties available in close proximity to the one that fits in your criteria.
This is not only necessary if you’re looking for a better deal but also helps you assess the real market value of the property that you’re buying, ultimately saving you from getting ripped off.

7.Analyze the Property

While market analysis is important, property analysis is just as crucial. You don’t want a property that doesn’t yield you a decent net positive cash flow. How do you know whether a property can give you positive cash flow? Well, you can start calculating all the expenses of buying, owning, and maintaining a particular rental property.
If the potential monthly rental income of your property on average surpasses the aforementioned calculations, this means that it is a good investment. Oh, and don’t forget the cap rate. Generally, a cap rate of above 8% is considered good by the experts.

Conclusion

Airbnb rental business or any other venture, your success always hinges on making the right decisions. The goal of this article was just to give you an idea of how you can secure the right property, avoid legal pitfalls, and create a profitable short-term rental business. The rest comes down to your competence and efforts. We hope this piece has been helpful in helping you make the right decision.
We’ll see you with another one!