Rental property investments have continued to grow in popularity. This is because people have gotten a better understanding of the possibilities for profit in the real estate sector.
Generally, short-term rental properties pay out well globally. Unfortunately, not every rental property you buy will give you a return on investment (ROI). Picking a short-term rental property after a good analysis will help you achieve your goals.
Successful short-term rental investors frequently undertake a full short-term rental analysis. That’s what helps them to locate profitable areas to buy a vacation rental property.
If you consider short-term rental investments a time-consuming project, worry not. That’s because a market analysis that’s done within minutes using online tools will make the process easy. They can help you locate profitable deals while minimizing risks.
How to Analyze the Short-Term Rental Market
There’s no denying that the Covid-19 pandemic made times very challenging for investors in the short-term rental market.
The lifting of the lockdowns, however, saw a record of staycation bookings and an unexpected boost in domestic tourism. This trend has continued until today, prompting more people to invest in rental properties for beginners.
In this article, we guide you on how to carry out a proper analysis of the short-term rental market.
Choose the Right Tools
Smart analytical tools will help you save time and money. These tools can be used to:
Evaluate the market
Understand the target market
Find the best listing price for your rental property investment
Some of the popular analytical tools for short-term rental investing are:
Pricelabs. This is a dynamic pricing software used to analyze data from multiple listing platforms. This will help you to optimize your prices and increase bookings.
Airbnb. This software will help you find data-driven insights about the performance of short-term rental properties. You’ll also find out about the demographics, rental demand, and annual revenue in the area.
AllTheRooms. This tool will provide an integrated suite of vacation rental analytics. It provides insights into your property’s current performance, market trends, and growth potential.
Monitoring and interpreting the above data points will give you a good understanding of your passive income rental property.
If it happens that you lack the technical know-how or don’t have the time, reach out to techvestor.com. Their revenue management team will help you in estimating the short-term revenue for your rental property investment. This will be done based on information from tools like AirDNA and other marketing channels.
With metrics like cash-on-cash return, you’ll get an accurate comparison of the profitability of vacation properties.
Consider the Target Market
It’s important that you start by evaluating your target market. Think of how your desired guests will fit into the location and the type of short-term rentals you want to invest in.
Millennials, for instance, prefer unusual accommodations and vacation rentals with a personality. This may be in the heart of a big city or in a remote cabin. These types of clients are less likely to go for a hotel-like experience.
They prefer the small-scale feel of an independently owned business. Also, you’ll most likely find them looking for Instagram photo opportunities when staying somewhere new.
Beach lovers of the older demographic love luxury-style accommodations. They also look for hotel-like conveniences when planning a gateway. You’ll find them looking for beautiful and quiet accommodation next to the beach. They’re also prepared to pay top dollar for a convenient location.
Whatever your target market is in your rental property investment, make sure to keep their preferences in mind. That will help you in making the right final decision.
Find a Good Area to Invest in
Another important aspect when conducting a short-term rental analysis is finding a decent city to invest in. Remember that location is important when it comes to rental property investments. It’s even more important when it comes to Airbnb.
When it comes to how to find investment properties, you must choose an ideal city. The city must have a robust economy and tourism as the key business.
If you’re looking to buy a vacation rental property, note that the success of such a business is heavily reliant on tourism. As such, it’s crucial that the location has a solid transit system. It must also have shopping complexes and other vital facilities.
Additionally, aim to invest in a town that has easy and quick access to major tourist attraction sites. When you think of seasonality trends and the average occupancy rate on short-term rentals, consider the number of people that stay there per month.
You may not afford to rent rooms during off-peak times. That’s if tourists only come during certain times. If you’re looking for a lot of money with Airbnb, for instance, consider looking at short-term rental analytics.
Understand the Local Economy
After figuring out your target market and location, the next step should be getting in touch with an experienced local realtor. That’s how you’ll get all the insights needed to understand the local economy for your rental property investment.
Some of the aspects you’ll need to understand the local economy include:
the average cost of living
projected state of the economy for the years ahead
You’ll also have to assess the viability of your chosen location in terms of its appeal to tourists. Check the statistics to know how many people visit the area during high or low seasons. This will help in ensuring that your short-term rental investment ticks all the boxes a tourist may be looking for.
Some markets will have tighter regulations on passive income such as rental property investment. You may, for instance, realize that some locations have imposed licensing and permit processes that cost both time and money.
Before you start investing in a rental property for beginners, be sure to read up on the local laws affecting short-term rentals. The best way to do this is by searching for a term like “short-term rental laws” in the local market. Always prioritize these searchers on government websites. That way, you’ll get accurate and updated information.
You’ll need a thorough short-term rental analysis to understand the short-term rental market and overall rental property investment in your chosen location. If you’re looking for the best short-term rental analytics platform, a little research will be a good place to start.