29 Oct 5 Best and Worst Airbnb Locations for Rental Arbitrage in 2019
Market research is the key to finding a profitable location for Airbnb rental arbitrage. AirDNA listed its findings for 2019 here. They use the following formula to determine the best Airbnb Arbitrage locations:
Monthly Rent – Average Monthly RevPAR (from past 12 months) = Monthly Arbitrage Potential.
The rent data is from Zumper and looks at 2-bedroom rentals only. You could use Zillow or other real estate sites to look for comparable properties.
To do your own study, this article shows step-by-step how to use AirDNA as a research tool.
5 Worst Markets to Rent and Sublease:
- Scottsdale Arizona: predicted monthly rental profit -$403
- Irving, Texas: predicted monthly rental profit -$399
- Chandler Arizona: predicted monthly rental profit -$263
- Laredo, Texas: predicted monthly rental profit -$230
- Oakland, TX: predicted monthly rental profit -$89
5 Best Markets To Rent And Sublease:
- Boston, Massachusetts, predicted monthly profit: $2588
- Honolulu, Hawaii, predicted monthly profit: $2542
- Nashville, Tennessee, predicted monthly profit: $2190
- Corpus Christi, Texas, predicted monthly profit: $1620
- Detroit, Michigan, predicted monthly profit: $1475
Please note: A city may look like it has great investment. But you have to look at individual neighborhoods as well. A city may be popular but has less desirable neighborhoods. Or, a city that seems like a bad risk, may in fact, be an up-and-coming rental market.
Our list has changed significantly since we first published this in 2017. The legislation on short term rentals is changing in many states. Potential profitability of a city is only one factor to consider.
Short-term Rental Rules Are Changing
In touristy locations like Honolulu, lawmakers are proposing rules that restrict short-term rentals. But Honolulu has high, year-round demand for tourists. That can make the returns worth the risk.
Boston, Nashville and Honolulu are in the top five markets for one-bedroom rentals. But all three are subject to changing regulations. Regulations in Boston make it difficult to run a short-term rental in certain areas, unless you’re the owner.
Despite efforts to regulate short-term rentals, Airbnb rental arbitrage is still fair game in cities like Detroit. Meanwhile, regulations in Corpus Christi aren’t enforced and the city is looking to create a legal pathway.
How accurate is the AirDNA data?
I rented my first unit February 6, 2017. By December 2017, my unit made close to $47,500.00. At that time, I calculated that I would make another $4,300, for a total of $51.8K for the year. The final number from 2018 (whole year) for this 1-bedroom was $50,499.86. So I was a little bit off.
When we compare this number to the AirDNA’s predicted revenue, it’s a little more than 5k off. So this prediction is about 90% accurate. 90% seems good to me! There are a couple of other things to consider. For example, my average daily rate is lower, but my occupancy rate is higher.
Subscribe to AirDNA’s Investment Explorer to further investigate markets. Then you can see the results of over 100,000 individual rental properties. You also get summaries for specific zip codes and past trends. These tools help you to analyze neighborhoods so you can choose the most profitable for Airbnb rental arbitrage. And that in turn shows you the best possible ROI for your budget and preferences.
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