Jumping into an Airbnb venture can be exciting, allowing you to be your own boss while tapping into the growing popularity of short-term rentals. But before you do so, it’s important to conduct some solid market research in order to get the lay of the land and spot those golden opportunities for the best possible return on investment.
What criteria should you be looking at exactly when doing so? Here are three key ways to gauge the earning potential of your Airbnb investment.
- Explore market insights
First, take time to research the demand for short-term rentals in your area, looking at how often places get booked and what property types resonate with guests. This insider info is your ticket to setting the right prices, picking fantastic property features, and making your listing stand out.
When researching, be sure to consider the following factors in particular:
- Occupancy rates: Get a feel for how often similar properties in your neighbourhood are booked. This will help you understand the demand and earning potential in your area.
- Attractions and events: Identify special events, festivals, or attractions that bring visitors to the area. These factors can seriously affect how often your place gets booked, especially during specific seasons.
- Guest preferences: Figure out what kind of Airbnb guests are looking for. A fully equipped kitchen, a cosy living space, and high-speed Wi-Fi are often musts.
- Crunch those numbers
If you’re thinking of turning your property into an Airbnb money-maker, you’ve got to determine if it will actually be a profitable gig or not.
In order to do so, we recommend trying out Airbnb’s What’s My Place Worth calculator. This free tool considers elements like your property type, location, amenities, and availability to give you an estimate of how much you might earn during a specific period. Better yet, there are country-specific tools too, such as this vacation rental calculator from Frank Porter for Dubai — one of the world’s top Airbnb destinations. Tailored for local nuances in the City of Gold, it fine-tunes Airbnb estimates, simplifying decisions and boosting hosts’ success in a highly competitive rental market.
However, before celebrating the profit potential of your Airbnb, carefully compare the income you could generate from renting with the costs you will likely incur. This means assessing factors like mortgage payments, utility bills, cleaning fees, and any other costs related to managing the property — which we explore below.
- Assess start up-costs
Starting an Airbnb business isn’t just about throwing open the doors and letting people in, and you’ll need to create an inviting space that makes guests feel right at home. This means investing in furniture, décor, and maybe even a few renovations.
To make your place a home away from home for your guests, invest wisely in its surroundings. These initial expenses go a long way in enhancing your listing’s appeal, influencing guest satisfaction and encouraging those coveted five-star reviews. And if your property needs a bit of sprucing up to meet Airbnb standards, those costs need to be accounted for too.
Don’t forget about professional photography, either. Stunning photos can make your listing stand out from the crowd and could even attract up to 20% more bookings.