With the nature of modern work in flux and inflation running high, it's not a shock that people want more than one way to bring in an income. Just in 2022, just over 5 million businesses were launched.
For some, these were full-time ventures, such as restaurants. For others, it was a part-time side hustle like making a real estate investment. One of the more popular options: invest in Airbnb properties.
Of course, the right property can prove profitable, but picking the wrong property could cost you a lot for very little gain. If you're in the market for an Airbnb property, keep reading for some tips to help you pick the right one.
One of the key considerations you must make is the property type. A good Airbnb property is the one that will make you the most. Unfortunately, no one property type works best in all places.
A small house might work best in a small city with a local attraction that runs events on a regular basis or has a strong seasonal appeal. In a major urban center, you'd probably want to focus on small properties, such as a small apartment or even a condo.
The next thing you must consider is the property location. You want a property that is close to the things that people want to visit. In a big city, you often have your pick of local attractions that will draw in visitors. Of course, you also need a property in a decent neighborhood.
If you're picking a property in a place that lives and dies based on summer tourism for the local bay, you'll find yourself more limited. You want something close to the bay, but that can also mean higher upfront costs.
Let's say that you see an Airbnb for sale. Before you sink your money into it, you must consider its overall rental potential. If it's in a seasonal location, can you reasonably charge enough during that season to pay for the property for the rest of year. Think in terms of utilities, taxes, and mortgage payments.
Something else you must consider is how much, if any, renovation the property will require before you add it to your property portfolio. If the place needs a lot of work, it'll take you that much longer to recoup your initial investment. A property that costs a bit more, but needs less work, may ultimately be a better investment for you.
How to Invest in Airbnb Property
There are several things you must keep in mind when you invest in Airbnb property. The property type matters, because some property types do better in different locations. You must consider the location, both in terms of the neighborhood and its proximity to desirable tourist locations.
You must weigh the rental potential in terms of how often you can realistically rent the property and if that will cover your costs. Don't forget about the renovations. Renovations drive up costs and slow down recouping your investment.
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