Advice

The Easiest Airbnb Investment Strategy

Pinterest LinkedIn Tumblr

Do you know how to get started in Airbnb investing? Do you know which steps to take and when to take them? This is where having a simple and effective Airbnb investment strategy comes in. 

According to the Britannica Dictionary, a strategy is defined as “a careful plan or method for achieving a particular goal usually over a long period.” By having a strategy, you’re giving yourself the best chance at success. Failing to plan is planning to fail, and an Airbnb investment strategy acts as a road map. It helps guide you and ensure that your business has a clear path to follow. 

In a vacation rental sense, what does a ‘strategy’ look like?

A strategy in a vacation rental sense is your plan of action for how you’re going to start and operate your business. Your Airbnb investment strategy should include everything from investment cost, eventual vacation rental pricing, management decisions, location research, and more. 

The team at DPGO has been in the vacation rental industry for a very long time and over those years, we’ve developed a simple and easy-to-follow Airbnb investment strategy. 

Identify a Market

Finding a market to invest in is honestly half the battle with an Airbnb business. There are plenty of tools on the market that can help you identify a profitable market, but investors can often get lost in what factors to consider. What would we recommend you look out for when identifying a profitable market? 

Well, you first need to identify a target guest. If you want to target family bookings, then look at areas that families prefer in summer holiday periods, like log cabins near lakes or beach houses. The obvious drawback of these types of properties is that they are very seasonal. Very few travelers want to go to the beach in winter. 

You’ll also need to look at market popularity, average daily rate, occupancy rate, historical listing numbers, and day-of-the-week occupancy. All of these insights will help you identify if a market is worth investing in. 

You can access all of this information and more with Markets by DPGO and it’s free to use.

Analyze Airbnb Data with Markets by DPGO

Check That Market’s Rules & Regulations

When Airbnb took over the world of travel, business-minded individuals flocked to their local real estate agents to get their piece of the short-term rental craze. As a result, Forbes reported that for every 1% increase in the number of Airbnb listings there is a 0.026% increase in house prices. Because of this, local governments reacted and started putting limits on vacation rental hosts to protect residents and residential homeowners in their area. 

Before you invest any amount of money, please check the local regulations. The most common type of regulation limits the minimum number of nights that guests can stay. These limits usually mandate that rental properties can only be rented on a 30-day minimum basis. Beware of these restrictions and check before you invest! 

Explore Smart Management Systems

Living in the modern world is a wonderful thing. People have invented amazing technologies that can and will make your life easier, especially if you’re a business owner. For vacation rental hosts, technologies like property management systems can fast become a must-have, especially if you own and run more than one property. 

Guesty, HostAway, Hostfully, and iGMS are all great examples of property management software vendors and they offer a whole range of time-saving and efficiency-boosting features. 

Determine Administrative Details

Before you open your vacation rental business, you’ll need to set some rules for how you want your business to operate. Things like minimum stay requirements, seasonal changes, extra person fees, and operating costs must be determined before opening. These factors affect your pricing and your pricing will affect your booking rates.

You’ll also need to determine how many people your listing can accommodate. As well as whether you want to allow single-night bookings and if you want to offer discounts. 

How to Invest in Short-Term Rentals the Right Way

Get Started on Pricing

A big part of your Airbnb investment strategy should center on how you plan to price your listing, whether you want to offer discounts, how you want to change your pricing seasonally, whether your weekends will have a different price than your weekdays, and how much you have to charge to avoid losing money. 

Dynamic pricing is one of the best ways to get your business off to a roaring start. If you’re unsure of how to price your listing, making use of a dynamic pricing service like DPGO is your best bet. Low booking rates are often a sign of a bad pricing strategy. 

By basing pricing determinations on data, you stand a better chance of winning those vital bookings. DPGO analyzes your local market in real time and updates your prices every day to ensure that they suit the current market environment. Are prices surging? Then DPGO will adjust your prices. Are prices falling? Then DPGO will adjust your prices. 

Dynamic Pricing Tool for Airbnb Hosts

Avatar for Charlotte Rogers

I love writing and I am seriously passionate about real estate and technology. I've been writing about both topics for nearly 10 years and there isn't a development in the world of tech without me reading about it!

Comments are closed.