Real Estate Investing

Airbnb Investment in 2022: What You Need to Know

Casey

October 25, 2022

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https://www.getaway.co/articles/airbnb-investment-in-2022-what-you-need-to-know

In just a little less than a decade and a half, Airbnb has become a household name across the globe. What started as an idea to help people find a place to stay while on vacation has turned into a multi-billion dollar company. While we’re currently seeing significant volatility in many markets, from stocks to precious metals, real estate- and vacation rentals- offer a durable, cash-flowing asset to shield your portfolio in times of trouble. 

So what is Airbnb investing? And more importantly, is it right for you? In this blog post, we'll break down everything you need to know about Airbnb investing so you can make an informed decision.

What is Airbnb investing?

Airbnb is an online platform that connects people who need a place to stay with people who need to rent out extra space. Airbnb has been growing in popularity ever since it was founded in 2008, and it has now become one of the most popular ways to travel. 

One of the reasons why Airbnb is so popular is because it offers a unique way to travel. Instead of staying in a hotel, you can stay in someone's home. This allows you to get a more authentic experience of the place you're visiting. 

Another reason for the platform's popularity is the fact that it's often cheaper than staying in a hotel. When you're renting someone's home, you're not paying for all the extras that come with a hotel room (like room service and maid service). 

So, what is Airbnb investing? Basically, it means that people are investing money into Airbnb so they can make money from renting out their properties. There are two ways to do this: either by becoming an Airbnb host or by investing in an existing Airbnb property. 

If you're considering investing in an existing Airbnb property, you should also keep a few things in mind. First of all, Investing is a high-risk investment, and there's no guarantee that you'll make any money from it. Secondly, if the property isn't managed correctly, it could end up costing you more money than it makes. 

But the right investment in an Airbnb or other vacation rental can pay serious dividends down the line, both in terms of regular income from guest stays as well as property appreciation and tax benefits.

Let's take an in-depth look at Airbnb investing and how you can leverage this powerful digital-age lodging and vacation experience platform to secure your financial future.

Pros and cons of investing in Airbnb property?

Airbnb investment

There are pros and cons for everything in life - and investing in an Airbnb property is no different! Here are some things to consider before taking the plunge: 

Pros

  • You can potentially make a lot of money! Airbnb has become a large player in the hospitality space in recent years, so the right opportunity could be very lucrative, particularly in high-traffic vacation destinations.
  • It's a relatively low-maintenance investment. Unlike traditional rental properties, you won't have to worry about finding tenants, collecting rent, or dealing with maintenance issues.  
  • You can be as involved (or not involved) as you want. If you want to manage your property yourself, great! If not, there are plenty of companies out there that will do it for you. 

Cons

  • There's always the potential for damage. No matter how well you screen your guests or how clear your house rules are, accidents happen, and people sometimes don't treat your property with the respect it deserves. Be prepared for the possibility of repairs/ replacements down the road.  
  • It's not necessarily a passive income stream. If you're looking for something that will generate money with minimal effort on your part, you probably don’t want to pursue direct ownership and management of a vacation property. If you go the direct route, you'll need to put in some work upfront to get things set up and running smoothly and then continue to monitor and manage it over time. 

However, there are several ways to invest in an Airbnb rental or other vacation rentals with little to no effort, like fractional ownership of vacation properties, which we’ll cover below.

Are Airbnb properties a good investment?

There is no doubt that Airbnb has taken the world by storm. The home-sharing platform has been a game changer for both travelers and hosts alike. But what about investing in Airbnb properties? Is it a good idea? 

The short answer is yes, Airbnb properties can be a good investment. But there are a few things you need to keep in mind before diving in head first. However, remember that an Airbnb investment is not without risk. 

There’s always the potential for problem guests, property damage, or changes in local regulations that could negatively impact your business. But if you do your homework and manage your risks wisely, an Airbnb investment can be a great way to earn some extra income – or even turn a profit!

How to buy an Airbnb property?

Here are a few things to consider before making any investment in an Airbnb property:  

1. Location, location, location. 

The most important factor in any RE investment is location. And that's especially true for Airbnb properties. You want to choose a location that will be popular with tourists and business travelers alike. A good rule of thumb is to look for areas within walking distance to major attractions and public transportation. 

2. Do your research. 

Once you've found a few potential locations, it's time to do your homework. Check out the competition and see what they're offering guests. Find out what amenities are most important to travelers and make sure your property has them. And finally, get an estimate of what you can expect to earn in rental income. 

3. Consider the costs. 

Investing in an Airbnb property can be expensive, so you must understand all the associated costs before you commit to anything. These costs can include everything from furnishings and decoration to marketing and insurance. 

4. Think long-term. 

Airbnb rentals are typically short-term investments, so you need to consider how you'll generate income from your property over the long term. One way to do this is by diversifying your rental portfolio with properties in different locations or price ranges. This will help ensure that you always have guests booked, no matter the economic conditions.  

5. Decide how you want to invest.

If you're looking to invest in Airbnb but don't want to own property, you still have plenty of options. The first thing to think about is whether you want to be a hands-on investor or hands-off. If you're the type of person who likes to be involved in all aspects of their investments, then being a hands-on investor in Airbnb rentals is probably for you. This means you'll be responsible for finding and managing properties, as well as dealing with guests. 

There are also other, less time-intensive methods you can use, which we’ll cover below. 

How to invest in Airbnb without owning property?

Are you looking to invest in Airbnb but don't own or don't want to own property directly? Don't worry; there are still plenty of ways to get involved. 

fractional rental property investment

Here are a few ideas:  

1. Invest in an Airbnb Management Company  

If you don't want to deal with the hassle of being a landlord, investing in an Airbnb management company is a great way to get involved with the industry without actually owning property. These companies will find and manage properties for you, taking care of everything from listing the rental on Airbnb to dealing with guests. This hands-off approach can be a great way to invest in Airbnb without having to deal with any day-to-day headaches that come with owning property. 

2. Invest in an Airbnb Property Fund or Buy Airbnb Stock

One option is to invest in an Airbnb property fund. These funds invest in properties that are listed on Airbnb, and they provide investors with a passive income stream. There are a few different funds to choose from, so do your research before investing. You can also purchase stock in Airbnb, the company, directly.

3. Lend money to Airbnb Rental Sponsors through Peer-to-Peer Lending Platforms  

A third option is to lend money through peer-to-peer lending platforms. These platforms connect investors with borrowers looking for loans for their rental businesses or development projects. When you lend money through these platforms, you can earn interest on your investment. And since the loans are secured by real estate, there's minimal risk involved. Some popular peer-to-peer lending platforms include RealtyMogul and Groundfloor.

Best cities to buy an Airbnb property in

With more and more people looking to rent out their properties on the popular platform, it’s no surprise that the demand for Airbnb-friendly cities is on the rise. If you’re thinking about becoming an Airbnb host, you may be wondering which cities are the best to buy an Airbnb property in. 

The best city for your individual situation will depend on several factors, including your expected rate of return, how much risk you’re willing to take on, and the results of the due diligence you perform on the region before investing. Prime vacation rental properties are usually found in more temperate areas with better weather, like Miami or Palm Springs, but you’ll also find opportunities in other regions, like Big Bear, Vail, or Aspen.

To help you make your decision, we’ve compiled a list of the best cities to buy an Airbnb property in 2022.

Disclosures
Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Getaway has not independently verified such information and makes no representations about the accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; Getaway has not reviewed such advertisements and does not endorse any advertising content contained therein. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters.

References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any offerings. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.
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