Airbnb Daily Rate And Airbnb Occupancy Rate
As a real estate investor looking to make money by buying a vacation home, you must ensure you calculate the Airbnb return on investment in the area youre looking at investing in.
Finding accurate and reliable Airbnb data is an arduous task. This is why Mashvisor brings you industry-leading data, analytics, and insight directly from Airbnb based on the actual performance of all Airbnb listings in your area of interest. This analysis is unlike anything else in the real estate industry. For every property within the US that youd like analysis on, we will provide you with the insight you need to make your investment decision.
There are many factors to bear in mind to determine an Airbnb return on investment. Two of these factors rank high above the others: Airbnb occupancy rate and the Airbnb daily rate. These two factors help you analyze the Airbnb return on investment to aid your decision.
If youre looking to make a substantial income, some locations have high Airbnb daily rates and occupancy rates.
Bryson City North Carolina
Small-town charm meets laidback mountain vibes in Bryson City, a place that still feels a bit undiscovered. This North Carolina neighbor to the Great Smoky Mountains is a quieter alternative to Sevierville and other Eastern Tennessee hotspots that border the tourist-heavy national park.
With a population of just 1,300, Bryson City has an arts-centric, walkable downtown with local bookstores, murals, galleries, and breweries. The Tuckasegee River also cuts through downtown, and is a spot to kayak, paddleboard, or fly fish.
The average listing price for homes in Bryson City sits right around $195,000, making it an ideal consideration for new vacation rental investors. Plus, our RES team says smaller cabins have the potential to perform well here, which means homebuyers can turn a hideaway cabin into a short-term rental gem.
If inventory is limited in Bryson City, our RES team also recommends checking out nearby Maggie Valley, a special spot where the Smoky and Blue Ridge Mountains meet.
Top 25 Best Places To Buy A Vacation Home
Our Top 25 Best Places to Buy a Vacation Home report has always sought to help potential vacation home buyers make informed decisions on where to purchase a vacation property. While we are living in a different environment in 2020, and not all destinations on our list are operating as usual, our unmatched market data remains unchanged if youre looking to maximize return on your investment. We manage more than 25,000 vacation rentals in North America, and with local teams in each market we serve, were tuned into the insights that make each destination unique.
Whether youre looking to buy your first vacation home or your fifth, whether its an investment or for family fun, read on for our 2020 list of the 25 best places to buy a vacation home. From destinations nestled in the mountains to the sunniest spots on the countrys shorelines, youre sure to find some vacation home inspiration in unexpected places. Interested in taking the next step? Get in touch with our real estate experts, who can help you assess your goals for vacation rental ownership and find the perfect destination for you.
We’ve also released a new version of this report for 2021read it here.
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Lower Risk Of Rent Defaults & Evictions
Long-term tenants can be a nightmare. From not bothering to pay the rent to trashing your property, dealing with bad tenants often drives landlords to sell and never look back.
As a vacation rental owner, you collect the rent upfront. If their payment fails, so does their booking.
That means you dont have to worry about landlord migraines like having to evict bad tenants.
There are a few exceptions. If your guests stay longer than a month or two, they may gain squatters rights, forcing you to formally evict them if they refuse to vacate. But that kind of bad behavior proves blessedly rare in the vacation rental industry.
Be Prepared For Company
The old adage about owning a vacation home often comes true. You may find yourself entertaining more friends and relatives than you knew you had after you close on your vacation home.
Be prepared to embrace an open door policy or set limitations on guest visits and have a polite way of saying no at the ready. Also give thought to the size of appliances such as a refrigerator, barbecue grill or washer/dryer and stocking the pantry with regards to accommodating lots of company.
Also Check: Free Vacation Rental Listing Sites
Calculate Your Expected Income And Expenses
You can proceed to dig a little deeper if your selected market shows an inherent demand and the numbers you crunched indicated a good promise of consistent positive cash flow.
While rental income will certainly be contingent on the area you buy in, most landlords should expect to set the weekly rental rate at 10 to 20 percent higher than your expected monthly mortgage payments. Its worth noting, however, that in todays market, landlords in high-demand areas could get away with asking for even more . Remember, you want to make money each month, but you dont want to scare away prospective tenants you have to find an agreeable middle-ground.
In addition to adjusting your income to cover more than your expected mortgage, make sure to factor in the inevitable down-times that your property is likely to face. After all, most vacation rentals are seasonal. While you can expect strong demand during high seasons, the demand needs to be lucrative enough to offset less busy months. I recommend factoring in at least a 25 percent vacancy rate to account for those times that the property is more than likely to sit empty. Whats more, you need to account for various other fees: condo fees, HOA fees, routine maintenance, etc.
At this point, you should have a good idea of how much you could expect the property to fetch in rental income and the expenses that will ensue. Provided the remaining balance works in your favor, you may have a deal on your hands.
Make Sure The House And Location Make A Good Rental
Your idea of the perfect vacation may mean going to a place with no television, no cellphone and no sight of your neighbor’s fence. But that’s generally not what people who rent vacation homes want. If you’re really going to work to rent out the property, make sure it’s well suited for vacationers.
You need to be on the beach. Not near the beach. You need a house with lots of cots and sleeper sofas so it can bed down as large a group as possible.
Ideally, the home will be in the thick of things. Keep in mind that not all people enjoy tracing their way through winding roads. Think of your vacationer as someone who wants to find the house, park the car and never get in the car again for the entire week or weekend. They want to walk to the beach, walk to the store and walk to the trailhead.
These types of properties generally cost more, but they make better rentals.
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Pay Attention To Seasons
When deciding where to buy a vacation home, pay attention to the seasons. If you are renting it out, understand when the high season months are, and when you can expect less demand.
For example, if you buy a property in a beach setting, the high season will be during the warmest months. These high season or high demand months should produce the most consistent rental income. On the other hand, during off seasons, expect less consistent rental income and be prepared for the lulls throughout the year.
How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
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How To Buy A Vacation Home In 5 Steps
1 Jun 2018
By on 23 Mar 2018
The dollars and cents that go into moving vary greatly depending on a number of factors.
Turn your getaway daydreams into reality this guide will walk you through it, step by step.
Dream of owning a vacation home but find the idea of buying one too intimidating? Its actually easier than you may think.
Heres a guide to help you analyze your options.
Buy An Existing Home Instead Of Land
The idea of building a house to suit your dreams is very appealing. However, in resort areas, it can quickly turn into a nightmare.
To build a house from the ground up, you may have to deal with coastal authorities, local building restrictions, aggressive homeowners associations and sketchy contractors who work for beer money — if they feel like it.
Coastal commissions in some states are so controlling that they define which plants you can grow. In ritzy resort areas, homeowners associations won’t even let you paint your deck unless you use a contractor on an approved list.
Granted, not all resort areas come with these caveats, but the process of building a house rarely comes in under budget. If you want to keep your costs under control, stick with a house that’s already there.
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Best Vacation Rental Markets 2021
The qualifications used to determine the best places to buy vacation rental property are, at the very least, subjective. If for nothing else, people choose to vacation in many different parts of the world for many different reasons. What one person may deem the perfect vacation rental, another may completely disregard. However, a few market factors can help investors take a more objective approach in determining the best vacation rental markets. This includes looking at statistics on property price, average rental income, occupancy rates, and cash on cash returns.
According to an analysis by Mashvisor, data released from Airbnb is also crucial in determining the potential success of a vacation rental marketas it remains one of the most popular platforms for short term rentals. All things considered, the following markets are predicted to be among the best vacation rental markets of 2021:
Berkeley, New Jersey
Airbnb Cash on Cash Return: 9.2%
Airbnb Daily Rate: $283
Average Price per Square Foot: $190
Average Days on Market: 61
Traditional Cash on Cash Return: 3.2%
Traditional Rental Income: $1,376
Price to Rent Ratio: 17
How Much Time Will You Spend There
Vacation property makes more sense if you plan to spend a lot of time there. For me, I have flexible summers but Im not sure its practical to spend more than 2 or 3 weeks away. Its tough to justify the cost of buying vacation property if you can only spend 2 or 3 weeks there. For snowbirds who like to go to the same place for the entire winter, buying may make more sense than renting.
Estimate Roi On A Vacation Home Investment Property
When you find an investment property that appeals to you, run some numbers to calculate your potential return on investment . The experts at Vacasa Real Estate can also share an estimated monthly cash flow analysis for individual properties, plus estimates of their operating expenses and net income.
Once you get familiar with this data, you may be surprised to discover that vacation homes selling for the same price can have very different cash flow potentials as vacation rentals. When you factor in short-term rental data around location, square footage, bedrooms, bathrooms, HOA fees, property taxes, and more, you may find yourself more attracted to a specific type of property or a core location.
Why Should You Invest In Real Estate
Here are a few pros and cons of investing in real estate:
|If you invest in physical property, you can control your investment. You could also have a totally passive investment that you dont need to manage.||In a Great Recession type of event, prices can collapse and take down your entire portfolio.|
|Can be a source of steady monthly income payments.||With the amount of leverage required, even small price drops can wipe out your whole investment.|
|Can reduce your overall volatility through diversification and lower price movements in general.||If you choose to flip houses or personally own rental properties, it can turn into a career in itself and use up significant free time.|
|Can lead to long-term wealth through the use of leverage.||Up-front costs can make initial investments difficult. You need to save enough for the down payment and to cover cash flow shortages when there are vacancies.|
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What Permits Or Licenses Are Required To Operate A Florida Vacation Rental Property
The state of Florida requires that all vacation rentals hold a current license issued through the Florida Department of Business and Professional Regulation .
The Florida DBPR issues short-term or transient rental licenses according to these limits:
Vacation Rental Condominium
A license will be issued for a unit or group of units in a condominium or cooperative.
Vacation Rental Dwelling
A license will be issued for a single-family house, a townhouse, or a unit or group of units in a duplex, triplex, quadruplex, or other dwelling unit that has four or fewer units collectively.
The location of the property/unit, the number of units involved, and who operates the property/units determines who holds and maintains the license:
A Single license may include one single-family house or townhouse, or a unit or group of units within a single building that are owned and operated by the same individual person or entity, but not a licensed agent.
A Group license is a license issued to a licensed agent to cover all units within a building or group of buildings in a single complex.
A Collective license is issued to a licensed agent who represents a collective group of houses or units found on separate locations. A collective license is limited to 75 units or less and is restricted to counties within one district.
Vacation Home Loan Requirements
- Debt-to-income ratio For a primary residence, borrowers can sometimes finance with a 50 percent debt-to-income ratio, or DTI. For a vacation property, think closer to 43 percent, or maybe a touch higher.
- With an FHA loan, you can buy a primary residence if your credit score is 500 and you have a 10 percent down payment. For a vacation property, for which FHA loans arent available, figure that youll need a credit score of at least 640.
- Down payment Generally, you can buy a primary residence with as little as 3 percent down. With a vacation home, youll need at least 10 percent.
- Reserves In some cases, you can buy a primary residence with little or no reserves. For a vacation home, youll likely need reserves equal to two to six monthly mortgage payments.
Be sure to check vacation home mortgage requirements with different lenders the financial stress created by the pandemic has caused many lenders to tighten their approval requirements.
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Decide How To Finance Your Vacation Home
Once you find a lender, consider your financing options. You may be considering paying the down payment through savings, a cash-out refinance from your primary residence or a home equity line of credit . Savings are the best option because you wont tack on additional debt.
While lenders can be liberal in some ways when financing a primary residence, vacation homes are different. FHA and VA financing are out theyre only intended for primary residences but conventional financing is available. Freddie Mac defines a second home as:
- It must be occupied by the borrower for some portion of the year.
- It must be a one-unit dwelling.
- The borrower must have exclusive control over the property.
- The second home cannot be a timeshare.
- It must be suitable for year-round occupancy.
- The property cannot be subject to any agreements that give a management firm control over the occupancy of the property.
- Rental income cannot be used to qualify the borrower.
Find Your Vacation Home Or Cottage And Make An Offer
At this point, hopefully, you have found your dream vacation home or cottage and are working with your real estate agent or broker to draft an offer. After your agent or broker submits your offer, you will be waiting to hear from your agent or broker as to whether or not they decided to accept your offer, sent a counter offer or rejected your offer. You have done all you can at this point, now it is time to relax, wait and see what happens.
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How To Buy A Vacation Rental Property In 5 Steps
Melanie is a certified business advisor with over 25 years of experience in real estate investing. Her expertise is highlighted throughout Fit Small Businesss real estate financing, property management, and real estate investing content.
Have you ever dreamed of owning a beachfront home or small cottage in the mountains that you can use for your vacations and rent it out when youre not there, leveraging other peoples money to offset property expenses? I owned a cottage on a secluded lake for 12 years and did just that. I could easily offset expenses without having to rent it frequently. Here, were going to give you five steps to help you buy a vacation rental property for fun and profit.
If you want to buy a rent-ready vacation property with a property management company in place, consider investing in turnkey real estate through Roofstock. With Roofstock, you can browse properties that come with existing tenants and property managers in around 40 different rental markets. This allows you to find the property thats right for you and start receiving rental income immediately.