Airbnb investment in 2024: Expert Guide (2024)

The concept of Airbnb has completely transformed the travel industry. If you are an avid traveler, you must have stayed in an Airbnb rental property at least once to enjoy a homely experience while traveling.

But have you ever wondered what it is like to invest in an Airbnb property and become an Airbnb host for other travelers? In this article, we will take you through the length and breadth of Airbnb investing for dummies (or beginners, to put it more politely) – how to buy an Airbnb property, where to invest, how an Airbnb property differs from a conventional rental property, how to invest in Airbnb without owning property, and more.

By donning the hat of an Airbnb host, you can expand your income portfolio by adding Airbnb rentals to your repertoire without even knowing the technical know-how of real estate management. With the rise in popularity of Airbnb across the world, there has been a significant increase in the purchase of vacation rental property and Airbnb investment companies.

But you also need to be mindful of the risks associated with it. Just because it has worked well for someone, that doesn’t guarantee that it will work for you as well. Keep reading to understand the pros and cons of Airbnb properties in detail.

How does an Airbnb investment function?

Investing in Airbnb can be an excellent source of passive investment income and is a great option for a beginner investor. But please keep in mind that not all real estate investment properties are Airbnb investments. There is a big difference between the two.

When you invest in a vacation rental property to rent out either a part or the entire property on Airbnb, you can consider the property an Airbnb rental business that generates passive income. These types of vacation rental properties are usually rented out for a short period of time and allow the owner of the property to host many guests over a short span of time. But on the other hand, traditional investment property owners can rent out the space to a traditional long-term tenant.

Airbnb Investment During the Pandemic

It is critical to do market research before you plan on buying an Airbnb investment property. There are several external factors that you should consider before you dive into the Airbnb rental business.

For instance, please be careful about the impact that the COVID-19 pandemic had on short-term rentals. Over the two years of the pandemic and counting, this affected almost every sector, especially tourism.

So before making any decisions regarding buying an Airbnb rental property or joining an Airbnb investment fund, evaluate all external factors and their impact on your real estate investment.

Airbnbs, like every other tourist attraction, witnessed a decrease in profitability in the last few years, as people were forced to observe lockdowns due to the pandemic across the globe. But the sector has since seen a surge in tourists as people have started traveling again.

Airbnbs, especially in rural areas, have witnessed an increase in popularity with a 110 percent increase in stays in 2021 compared to 2019. Many people now prefer isolated cottages and cabins in comparison to other more densely populated tourist attractions.

Airbnb Investment vs. Conventional Investment Rental Property – Which is more profitable?

Both Airbnb investing and traditional rental model investing can be profit-making depending on their location and amenities. But in high-demand areas, Airbnb properties can be more profitable in terms of rent.

For example, if you are renting out a one-bedroom apartment in Los Angeles, the average monthly rent of the property will come to around $2,630, which means that you can get around $31,500 if your tenant signs a one-year long-term rental agreement. But if you advertise your apartment to rent on a short-term basis, you can make more profit.

On the other hand, the average daily rate of an Airbnb in Los Angeles is around $190, and most of them are booked throughout the entire year. This means that you can earn $46,000 from your Airbnb rental property, which is around $16,000 more than for conventional rental properties. Airbnb also levies a separate maintenance charge on the property, enabling you to save money on maintaining your rental properties.

But before you make your final decision, you should be mindful of the various types of rental properties and how they will affect your expenses and profit.

Special expenses associated with Airbnb rental investment

Investing and managing Airbnb properties entails various expenses. These include the following:

Furnishing and decorating the Airbnb property for your guests
Maintenance of your property
Other basic utilities
Essential amenities like a subscription for television and electricity charges
Insurance of your property

Airbnb Investment: Advantages and Disadvantages

With the rise in Airbnb rental investing, the Airbnb short-term rental market is very aggressive and has got a lot of competition. As they provide a personalized touch, Airbnb has become very popular among tourists. But there are specific pros and cons regarding Airbnb investing for beginners.

Advantages:

Chances of making more profit than traditional renting
You don’t have to depend on long-term clients
Since your property will be on Airbnb, you don’t have to advertise to find renters
Pick and choose the days the property is available for rent

Disadvantages

Higher upfront costs owing to decoration and furnishing of the property
The operational costs are higher
There is less security as there will be no long-term rental agreements
Airbnb management will require your time and effort

What type of property to purchase for an Airbnb investment?

Although there is a perception that Airbnb property should be like a vacation home, many Airbnbs are used by business travelers, who mainly travel to central locations across the country. This points to the fact that your Airbnb property can be profitable despite the location and type.

If you’re considering Airbnb investing, you’ll first need to take a look at the local listings to analyze properties that are in demand in the area of your choice. In addition to this, you can also consult a real estate agent to help you find the right type of Airbnb property for sale.

Do Airbnb owners need to live near their property?

There is no hard and fast rule that Airbnb property owners need to live near their own property. But it is always better to stay near investment properties as it helps with property management. If you decide to invest in a property that is far from your permanent residence, then you need to hire a property management company or a co-host to take care of your Airbnb.

Best Cities for Buying an Airbnb Investment Property

Owing to the pandemic, it took some effort to choose the best places for Airbnb investment in 2023. But going by previous trends, the best locations for Airbnb investment in 2023 include the following destinations:

City	State	Active Properties	Annual Revenue	Revenue Growth
Palm Springs	California	2,154	$64,571	99
La Quinta	California	1,323	$77,936	99
Sevierville	Tennessee	3,064	$61,961	65
South Lake Tahoe	California	2,057	$62,187	91
Gatlinburg	Tennessee	1,801	$55,439	56
Pigeon Forge	Tennessee	1,036	$51,857	70
Saint Augustine	Florida	2,341	$47,371	68
Gulf Shores	Alabama	2,538	$99,095	74
Bradenton Beach	Florida	1,052	$60,051	48
Panama City Beach	Florida	4,815	$59,986	55

Top Places for Airbnb Property Investment Across the World

According to the latest reports, the short-term rental industry will witness unprecedented growth in the coming years. This means that Airbnb rentals will also be profitable and prove to be a good investment for real estate investors. In this section, we will take you through the best Airbnb markets around the world.

United States

The following places in the United States are considered the best destinations for investment by many Airbnb hosts.

Maui, HI

Famous for its beaches, migrating whales, and stunning sunset points, Maui is the second-largest Hawaiian island. If you are planning to invest in beach rental properties, then Maui might be the perfect option.

The place has more than 70 percent occupancy rent, and the revenue growth is high as well. These factors make Maui, HI, an attractive destination with a very high investment ability rate.

Quick Overview

Average Value of Homes	Occupancy	Average Daily Rate	Average Revenue
$802K	73%	$375	$102K

Kenai Peninsula, AK

From national parks and wildlife sanctuaries, to other outdoor expeditions that include the very famous salmon fishing activity along the rivers of the peninsula, Kenai Peninsula is an attractive location for all wildlife enthusiasts, especially during the summer months.

With the increase in demand for outdoor activities after the pandemic, these places have witnessed high tourist footfall.

Quick Overview

Average Value of Homes	Occupancy	Average Daily Rate	Average Revenue
$237K	67%	$262	$44K

Chattanooga, TN

Chattanooga is situated in the foothills of the Appalachian Mountains alongside the Tennessee River and is one of the top locations for Airbnb short-term rentals.

Renowned for its Lookout Mountain Incline Railway and surrounding places like Lookout Mountain and Dunlap, the city of Chattanooga attracts tourists from all across the globe. It’s no surprise that the area is a great Airbnb investment opportunity.

Quick Overview

Average Value of Homes	Occupancy	Average Daily Rate	Average Revenue
$258K	70%	$180	$47K

Europe

The European real estate market is one of the most profitable markets in the world. Owing to the strong economic growth of its countries, there are many places on the continent where you can choose to invest. In this section, we will help you in deciding where to buy property in Europe.

United Kingdom

The places mentioned below are a few of the best places to look for Airbnb investment property for sale, especially in a vacation rental in the United Kingdom.

Market	ADR	RevPAR	Annual Revenue
Gwynedd, UK	£186.40	£131.46	£47,984
Mid-Wales, UK	£168.86	£107.54	£39,253
Isle of Anglesey, UK	£137.46	£102.31	£37,342
Devon, UK	£152.13	£100.74	£36,771
Suffolk, UK	£159.65	£98.92	£36,106
Lake District, UK	£141.38	£97.47	£35,578
Conwy, UK	£141.08	£95.49	£34,854
Dorset, UK	£153.54	£94.88	£34,632
Gloucester/Cheltenham, UK	£161.66	£92.54	£33,778
West Wales, UK	£149.08	£92.18	£33,647
Cornwall, UK	£132.14	£92.04	£33,594
Scarborough, UK	£126.99	£90.69	£33,100
Isle of Wight, UK	£141.74	£88.94	£32,463
Peak District, UK	£136.92	£87.42	£31,910
Norfolk, UK	£133.39	£87.10	£31,791
Sussex, UK	£141.16	£82.18	£29,994
Somerset, UK	£132.92	£80.23	£29,283
Brighton and Hove, UK	£144.86	£79.65	£29,073
Kent, UK	£138.72	£78.25	£28,561
West Yorkshire, UK	£125.65	£77.19	£28,173
Perth/Dundee, UK	£137.40	£76.86	£28,055
Argyll and Bute, UK	£127.15	£76.62	£27,967
Salisbury/Winchester, UK	£133.12	£76.38	£27,879
Shropshire/Herefordshire, UK	£126.09	£75.57	£27,583
Stirling, UK	£134.15	£74.05	£27,029
Bristol/Bath, UK	£136.29	£73.21	£26,721
East Yorkshire, UK	£111.79	£73.14	£26,698
Highland, UK	£115.89	£70.72	£25,813
Oxford, UK	£138.93	£70.49	£25,729
Southern Scotland, UK	£117.51	£67.57	£24,661
North East England, UK	£113.24	£67.37	£24,589
Cardiff/Newport, UK	£127.83	£64.27	£23,460
Southampton/Portsmouth, UK	£121.36	£63.33	£23,115
Chester, UK	£116.09	£61.68	£22,512
Edinburgh, UK	£123.30	£59.06	£21,558
London, UK	£138.44	£58.87	£21,486
Lancaster/Blackpool, UK	£109.62	£58.55	£21,371
Essex, UK	£113.29	£57.06	£20,826
Reading/Windsor, UK	£119.41	£55.45	£20,238
Nottingham/Lincoln, UK	£98.84	£52.83	£19,282

France

In addition to the capital city of Paris, smaller towns within driving distance have gained popularity among Airbnb real estate investors. Surrounded by rivers, mountains, and other natural wonders, these rural escapades have emerged as attractive destinations for Airbnb travelers.

City	Listings	Rental Demand	Rental Growth	YoY % Change New Bookings
Montrichard	64	75	99	150%
Sens	60	98	78	113%
Vertou	58	93	83	110%
Gaillard	79	89	85	111%
Sallanches	126	78	79	124%
Chaumont	49	96	76	92%
Agen	153	91	86	66%
Tarbes	154	83	76	87%
Douai	81	96	79	45%
Lens	56	94	80	45%

Portugal

World famous for its white sand beaches, sightseeing points, natural landscape, and beach resorts, Portugal has emerged as one of the top European tourist destinations across the world. If you are planning on buying property in Portugal, you can consider investing in areas such as Lagos, Lisbon, Porto, and other cities.

Australia

The Australian real estate market has seemed to bounce back since the end of the COVID-19 pandemic. There has been a considerable increase in direct bookings of holiday homes across all Australian states.

This has led to the growth of rental revenue in the continent. If you are planning your Airbnb rental investment strategy, then make sure to include Australia in your Airbnb investing list.

We have mapped below the most attractive investment locations across Australia based on their market size.

Airbnb Investment in Small Markets:

City	Active Listings	Rental Demand	Rental Growth
Warrumbungle	41	88	100
Broken Hill	54	93	89
Upper Hunter	32	81	99
Cabonne	98	83	93
Upper Lachlan Shire Council	62	78	98
Plantagenet	34	75	100
Clare	40	95	79
Wollondilly Shire Council	45	74	100
Kyogle Council	50	79	93
Cooma Monaro	42	86	85
Mundaring	55	71	98
Oberon Council	93	69	99
The Berri Barmera	28	73	95
Blayney	74	70	97
Flinders Council	41	74	92
Glen Innes Severn	34	82	84
Hawkesbury	97	69	96
Rockhampton	90	84	81
Tenterfield	47	64	100
Yass Valley Council	66	68	95
Bunbury	55	81	82
Goulburn Mulwaree	95	80	79
Swan Hill Rural City	30	79	80
Southern Grampians	91	71	85
Auburn	29	58	98

Airbnb Investment in Medium Markets

City	Active Listings	Rental Demand	Rental Growth
Mid-Western Regional	426	91	97
Dungog	129	85	98
Esperance	136	94	88
Denmark	206	95	86
Bellingen	248	90	91
Albany City Council	365	92	88
Orange	299	89	90
Northampton	194	91	88
Port Lincoln	147	93	86
Northern Grampians	250	82	92
Broome	131	83	90
Lithgow	146	87	86
Fraser Coast	534	83	89
Kangaroo Island	429	87	83
Mackay	196	90	80
Lismore	192	76	93
Dubbo Regional Council	125	91	78
Nambucca	245	80	86
Kiama	736	77	89
Scenic Rim	282	81	85
Geraldton Region	161	84	80
Lake Macquarie	538	76	88
Gympie	343	67	96
Greater Taree	283	72	89
Augusta Margaret River	977	82	79

Airbnb Investment in Large Markets:

City	Active Listings	Rental Demand	Rental Growth
Great Lakes	1556	82	91
Byron	3189	83	87
Blue Mountains	1239	72	94
Busselton	1695	78	78
Shoalhaven City Council	4231	68	87
Snowy River	1044	58	96
Sunshine Coast	6217	76	76
Wyong	2745	68	83
Colac Otway	1035	67	83
Port Stephens Council	1882	58	92
Tweed	1312	73	75
Eurobodalla	1162	67	82
Surf Coast	1961	58	82
Brisbane	5194	70	68
Geelong	1525	62	73
Bega Valley	1034	48	85
Gold Coast	6511	59	72
Bass Coast	2458	51	80
Adelaide	3237	69	55
Cairns	1753	61	59
Australian Capital Territory	1009	85	34
Alpine Shire	1025	36	80
Perth	3804	80	28
Melbourne	15878	54	52
Douglas	1070	38	64
Sydney	15758	55	19

Analysis of Airbnb Investments and Real Estate in Every Market

After you lock in your investment location, you need to think about other factors like adjacent neighborhoods, markets, and other important conditions like competition, average daily rental rate, quarterly and annual revenue growth, popular amenities, and other pros and cons. You can consider the following parameters before making any investments.

Seasonality

Just like every other market, the Airbnb market also has high and low seasons. Places like beachside resorts, ski towns, and lakefront escapes depend highly on seasonality. So keep all these in mind, you would want to evaluate the pricing strategy of your property in your business plan.

Supply and demand

Before investing in even one property for Airbnb, you should consider the supply and demand in the area.

Use an Airbnb investment calculator to evaluate your booking window, booking rates, year-on-year revenue rate, and comparison and occupancy rate of your market.

Short-term rental research

Make sure to conduct proper market research before investing in Airbnb rentals. While some locations are very popular, there are a few places that are not very popular but have a very high occupancy rate, rental growth, and much less competition.

Compare Airbnb Investment Markets

The correct way to find your perfect location for Airbnb real estate investing is to conduct a market comparison first. To ensure that your investment is profitable, evaluate the revenue, occupancy rates, growth rates, best-performing locations, and property types and sizes of various markets. After you consider all these factors and make a comparative study, you can go ahead with the investment of your choice.

Evaluate your Airbnb Investment Income

After you evaluate your Airbnb rental investment and finish comparing your property with others in the short-term rental market, you can estimate your potential income from your Airbnb property.

To maximize the income of your property, you have to also be able to price your real estate strategically. It is crucial to set a profitable daily rate for your property. You should consider the following for the same:

The booking performance of your property
Pricing of your competitors
Dynamic pricing opportunities
Market level insights

Frequently Asked Questions

Is buying an Airbnb investment property profitable?

If you are planning to expand your income portfolio and gain, then purchasing an Airbnb rental can be a great passive income opportunity. Although there is a slight risk involved, the return is very high if your property is located in a good location and has a moderate to high occupancy rate. In most cases, Airbnb investors get a return of 40 percent or more.

Does Airbnb have a good return on investment?

The profitability of Airbnb rentals depends on various factors, including property size, demand, location, and occupancy rates. Properties that are situated in tourist places rather than metropolitan cities might be more profitable as it witnesses more tourist footfall. However, keep in mind that they may be subjected to seasonality. Starting an Airbnb short-term rental business in a central location can generate income year-round as it would be frequented by business travelers as well as people on vacation.

How to buy an Airbnb property?

If you are planning to purchase an Airbnb rental property, follow these steps:

First, choose your location of investment
Get familiar with all Airbnb laws and regulations
Choose your type of property
Estimate your budget and strategize your financing
Conduct market research for your property
Get in touch with a real estate agent
Make a detailed analysis before investing

How much does it cost to invest in an Airbnb?

The average cost to invest in an Airbnb rental business is between $5,000 and $10,000 for a property that you already have available or that you would need to lease. The cost of investment will build around many factors, such as:

Rental price
Property insurance
Monthly utilities
Property taxes
Furnishing costs

Some of these costs can be reduced or even avoided if you, for example, rent out a spare room in your house or partake in an Airbnb investment fund.

How do I start an Airbnb with no money?

There are several ways to start an Airbnb with no money. Some examples of this are the following:

Using vacant property you already own: If you own a property that is already furnished, you can avoid the cost of securing a new property for Airbnb while generating passive income.

Become an Airbnb property manager: Many people want to invest in Airbnb properties but would rather avoid dealing with the day-to-day tasks of running one. A full-time job as a property manager for Airbnb properties is relatively low risk and effort, provided that the properties you manage for hosts are run efficiently.

Offer Airbnb experiences: Besides property rentals, thousands of people now earn a living on Airbnb by providing cost-free experiences like walking tours and cooking classes.

Become an Airbnb co-host: Similarly to Airbnb property managers, a co-host will work as an Airbnb host and manage the property, except the relationship with the property owner is more direct. An Airbnb co-host may work with one person and manage multiple properties they own.

Do I need a license to run an Airbnb?

There are no generalized licenses or requirements to run an Airbnb. The license you may require depends on the jurisdiction of your property. For example, the City of Los Angeles Department of City Planning requires home-sharing registration for all Airbnbs, while the local authority in Manchester, UK, has no license requirements to run an Airbnb.

How do I run a successful Airbnb?

The way to ensure long and sustained success with your Airbnb business is to be consistent with a high-quality service. This revolves around several factors that affect the quality of stay for your guests.

Ensure a smooth check-in experience: Nobody traveling to a new city or country wants to beunsure of how they’ll check in. Reassure your guests of the check-in process and how they can get hold of you or the property manager if there are any problems.

Buy good quality furnishings: A beat-up sofa and squeaky mattress aren’t the most desirable things guests would want to arrive to after a long day of traveling. Invest in good quality furnishings to ensure that they will last the test of time.

Maintain cleanliness: Clean accommodation is the bare minimum of what guests expect when they stay in Airbnbs.

Make a good first impression: Before people spend money on vacation rentals, keen attention is paid to the description of the property. There is no point in running an Airbnb if potential customers can’t see how it looks or if the description is missing vital details.