Airbnb investment and yield: What you need to know
From the moment you decide to convert your home into a short-term rental, you do your best to maximise its profitability. As a host, you receive a rental income.
Most of the time, this income is much more flexible when you rent your place on Airbnb, compared to classic leasing. Our short-term rental experts answer some of the most common questions about turning your place into an Airbnb investment.
Estimate your property’s potential
Use our estimate widget to quickly gauge the rental potential of your property. Simply enter the address and the number of bedrooms, and get an instant estimate to help you make informed decisions about your investment.
Is my accommodation profitability guaranteed?
No.
The profitability of your short-term rental depends on dozens of factors, with the location and seasonality being two of the most important ones:
The location
Imagine you have an apartment in London, with a view of the famous Tower Bridge. Immediately, you would expect your accommodation to generate a higher income than you would anywhere else in the UK. This criteria is really important, especially if you plan to rent your flat for a long or medium-long period.
Your accommodation should be close to means of transport with easy access to prominent places in your city. Furthermore, regarding business travellers, they often need to be close to train stations, metros… they are most of the time looking for a “practical” place to stay, the design doesn’t matter. Indeed, the surrounding areas of a train station are not always fancy; however, a business traveller who booked a train ticket to leave early in the morning would be really happy to rent a flat next to the train station.
The location is a decisive criteria when you plan to invest in a short-term rental. It’s often the first criteria for people who are looking for a place to stay in your area. That’s why you need to anticipate your potential travellers’ expectations.
Seasonality
Depending on the season and the events around the city, your bookings can fluctuate. For example, most people will prefer going to Portugal during summer rather than during winter. If you have accommodation there, spring and summer (especially July and August) will be more favourable for renting. In London, the Bonfire festival is a well-known event; if you have a flat there, you can expect to rent your accommodation for just one or two nights during this period.
Keep in mind that even with short-term bookings you can increase the profitability of your flat. The more short-term stays you welcome, the better your profitability will be. Now you have in mind that seasonality is as important as the location of your accommodation.
Don’t forget that a lot of people (couples without children, elderly people) prefer travelling during school breaks. In this way, your apartment can be as profitable in April as in July. Don’t only focus on the summer holidays when each month can be a huge opportunity for your host activity!
Property type
When considering an investment in property for Airbnb hosting, what are the key factors you should evaluate? Beyond location and seasonality, potential investors need to consider property type, local demand, and future growth prospects.
For instance, properties in areas with a consistent flow of tourists or business travellers often promise higher returns. However, it’s not just about the immediate appeal; looking at future urban development plans or upcoming infrastructure projects can provide insights into the property’s long-term value.
Additionally, understanding the nuances of different property types, from cosy apartments to family homes, and their appeal to various traveller demographics is crucial. This knowledge helps in making an informed decision, ensuring that your investment aligns not only with current market trends but also with future growth potential.
How can I evaluate my income during the seasonal rental?
Before you make a downpayment on your soon-to-be rental property, it pays to run the numbers first. AirDNA is a tool based on Airbnb data that calculates your accommodation profitability for the ongoing year based on four factors: your accommodation address, the number of available rooms, the number of bathrooms and the property capacity.
Then, the tool gives you two important pieces of information: the average Airbnb occupancy rate in the UK and the average daily rate UK you’re likely to be able to command with your accommodation. AirDNA uses this information to calculate an estimate of your potential annual income.
As an example, if you own a flat in London, next to the famous London Eye, you can expect to earn 76,029$ in one year, considering a 301$ average daily rate and an occupancy rate of 69% (around 252 days in the whole year).
How can I optimise my accommodation to turn it into an income source?
As we just explained, different factors have a strong impact on your Airbnb yield. Nevertheless, we have to put a stop to a well-known common preconception: a large property doesn’t always lead to better profitability. It is more about how you organise (and optimise) the living area.
We recommend you maximise the number of beds. A 32 m2 accommodation can be as profitable (maybe even more) than a 47 m2 one. It depends on how your flat is arranged. A light and clean apartment, with a lot of beds, will be much more profitable than a dark, badly organised place – even if the last one is larger.
It is really important to spend time on the harmonisation of the decoration you have chosen. Indeed, when people have a look at your listing, they will pay attention to the pictures you took, in detail. Your apartment’s design is really important to obtain the best conversion rate possible.
Airbnb gathers a large community of hosts but also of guests, people you came or plan to come to your accommodation. It means that your guests’ comments about their stay in your place matter for your next bookings (and, thus for your accommodation’s profitability).
This way, criteria like your availability in advance of their arrival, how well you welcome them, the cleanliness of your property and its match with the pictures on Airbnb are essential. The more laudatory the comments are, the more bookings you will have in the future; people will want to have the same amazing experience thanks to you! Don’t put anything aside.
GuestReady is here to help you
Maybe now you are wondering how you can maximise the profitability of your accommodation, how you can become one of those Airbnb super hosts? It is important to keep in mind that being an Airbnb host can become time-consuming and you can feel overwhelmed sometimes.
Here’s where GuestReady comes in. Our team of experts takes care of everything, from A to Z; from setting up your listing on platforms like Airbnb to welcoming guests and cleaning up the space after their departure.
