How to Find the Most Profitable Airbnb Rental Properties Using Predictive Analytics
Daniela Andreevska, Marketing Director at Mashvisor, is our guest writer for this article.
Investing in rental properties is a great way to make money. It is a lower-risk strategy with a high potential return. When you use your property for short-term rental, you can make even more.
But your success depends on the property you buy and its location. How do you find top performing Airbnb rental properties? One smart way is to use predictive analytics.
What Is Predictive Analytics In Real Estate?
The old way to research property is to simply look at “comps” – comparable sales in the same market. But if you look at past data alone, you don’t get a complete picture.
For example, suppose your Las Vegas Airbnb rental made $20K profit over the last four years. You’d think you should invest in more area properties, right?
Not so fast!
Las Vegas has new rules for investment properties as rentals. Not knowing that could be a costly mistake.
Predictive analytics uses past and present data. It also analyzes trends. This gives you more reliable predictions about real estate markets. Now you can make better decisions about investing in specific rental properties.
How to Choose the Best Neighborhood
Finding a city you like isn’t enough. You must choose a neighborhood that works with your rental strategy. You’ll want to look for the things most important to you and find out if your target neighborhood matches up. For example, you might want to know:
- the median property price
- the average monthly rental income
- the average occupancy rate for short-term rentals
- the average Airbnb cash on cash return
Where do you go to find that information? And who has time to research dozens of neighborhoods in cities like LA or Miami? Isn’t there an easier way?
Websites like Mashvisor have simplified the process. Their tools take your input and provide a birds-eye view of an entire city, down to the neighborhood. In seconds, you get a color-coded map to see the best investment locations.
How to Find Top Performing Properties for Renting Out on Airbnb
You can buy a bad investment property even in a great market. It’s a good neighborhood, but is renting out on Airbnb profitable there? Once again, you must do some extensive research.
You’ll need to compare similar properties. Are your selected properties priced fairly? For each and every property, you’ll want to learn:
- the expenses associated with buying it, fixing it, managing it, and renting it out
- the nightly rate you can charge
- the Airbnb occupancy rate to expect
- the monthly rental income you will make
- your return on investment
Using traditional methods, you risk that your data isn’t current or reliable. Plus, this process could take weeks or months! By then, the top performing properties are long gone.
But thanks to new technology, you can find the most profitable Airbnb properties in any neighborhood in a matter of minutes. The latest tools are much more accurate and dependable. They can look at thousands of properties to compare. And the tools get better with more use!
How to Pick the Very Best Investment Property
After you’ve decided on properties that look like a good fit, you’ll want to dig deeper. Predictive analytics tools look at:
- the listing price
- the one-time startup costs of buying the Airbnb rental and preparing it for guests
- the recurring expenses that come with owning a short-term rental property
- the occupancy rate for a particular property
- the nightly rate based on similar properties in the area
- the monthly rental income you may expect
- the cash flow
Once analyzed, you’ll get an estimate of the profitability for each property. You’ll be able to make better decisions about where to invest – and avoid risk.
The Bottom Line
Predictive analytics isn’t just some new tech toy. It is a must-have feature for investing in real estate. It gives you a competitive edge as you search for great markets.
This technology helps you find the best places to own Airbnb properties. And it does so quickly. To top it off, your personal preferences are always a part of the equation!
If you’re looking for investment property, check out predictive analytics tools to give you the best information – before you buy.
Interested in trying Mashvisor tools? PassiveAirbnb readers can use promo code MASHAFF25 for a 25% discount on their first subscription to any Mashvisor plan. Click here (<< — this is an affiliate link. We get a small percentage of your purchase, but you don’t pay a penny more!) to sign up now!
Daniela Andreevska is the Marketing Director at Mashvisor, a real estate analytics tool which helps real estate investors quickly find Airbnb investment properties. A research process that’s usually 3 months now can take 15 minutes. We provide all the real estate information in easy to understand visualizations.