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Airbnb Rental Analysis: How to Conduct One

While Airbnb investing is a great way to build a fortune, you need to conduct a detailed Airbnb rental analysis to land profitable opportunities.

But it might be easier said than done. What does Airbnb rental analysis entail? What does it include? Where do you find the necessary data and analytics? All these questions and many more are on the minds of real estate investors interested in short term rental properties.

Table of Contents

  1. How Profitable Is an Airbnb Rental?
  2. Analyze the Airbnb Investment Potential of the City
  3. Analyze the Airbnb Rental Potential of the Neighborhood
  4. Analyze the Airbnb Rental Property
  5. Where Can I Find Reliable Data for Airbnb Rental Analysis?
  6. Getting Started With Profitable Airbnb Investments

Traditionally, analyzing an Airbnb market and property used to take months as there are many factors and numbers that investors need to consider. Recently, the advancement of real estate technology and big data has significantly reduced the time required to decide if a location and a property offer good opportunities.

In this article, we will show you the steps that are needed to conduct Airbnb market and property analysis. We will also discuss how apps and tools have made each of these steps easier and more efficient.

However, it doesn’t mean that all Airbnb investing platforms available on the market are equally good and reliable. Some are just better than others. Throughout, we will show you why Mashvisor is the ultimate tool for analyzing short term rental markets and properties and how it helps optimize your decisions.

How Profitable Is an Airbnb Rental?

An Airbnb rental property can be very profitable, but it depends on a multitude of factors, including the market, the property, the management strategy, and others. You cannot expect every single home that you purchase to turn into a money-making short term rental. To achieve this, it’s important to conduct a diligent Airbnb rental analysis before buying.

Mashvisor nationwide rental market analysis of late November 2022 shows that Airbnb rentals generate an average monthly income of $3,473, compared to $2,470 for long term rentals. Moreover, the average national cash on cash return for short term rentals exceeds the figure for long term rentals: 3.23% vs 2.73%, respectively.

Note: The analysis above includes US markets with 100+ rental listings for the respective category to ensure the viability of the strategy in the selected locations.

It means that Airbnb rentals are the better rental strategy across the US. In addition, expert US housing market predictions for 2023 forecast strong growth within the short term rental industry. The growth will be driven by resumed travel and people’s catching up with missed opportunities during the pandemic.

Now that you know Airbnb promises to be the superior real estate investment strategy in 2023, it’s time to take a look at how to conduct Airbnb rental analysis for buying the top properties.

Analyze the Airbnb Investment Potential of the City

The first step in performing short term rental analysis is Airbnb rental market analysis. After all, while you can change a lot of things about your property, you can’t change its location. So, it’s important to confirm that your selected market has what it takes to start an Airbnb business and be profitable.

Your Airbnb market research must have two main components. First, you should do quantitative research focused on the average performance of short term rentals there. Second, you need to perform qualitative research to ensure that non-owner occupied short term rentals are legal in the market. Otherwise, you can’t be an Airbnb investor in your preferred city.

Find Out City-Level Airbnb Market Data

Getting access to city-level Airbnb data on your own is not an easy task. Depending on the size of the market, there could be thousands of short term rental listings, so you can’t possibly collect, enter, clean, and analyze data on all of them. The worst part is that short term rental booking platforms like Airbnb, Vrbo, and do not provide city-level data either.

However, you can use Mashvisor’s real estate blogs to locate the best locations for investing in short term rentals. Within a blog, you will find the following information for each ranked market:

  • City median property price
  • City average property price per square foot
  • City average Airbnb rental income
  • City average Airbnb daily rate
  • City average Airbnb occupancy rate
  • City average Airbnb cap rate
  • City average Airbnb cash on cash return

The above data points will help you find out if a location is affordable for your budget. As a beginner Airbnb host, you should focus on markets and properties that are within your pocket and will not drive you toward bankruptcy and foreclosure. You can also check if a market provides enough Airbnb income and ROI to make investing in it worth it.

To obtain this kind of city-level Airbnb rental data, keep an eye on the Airbnb Rentals and Top Locations categories on the Mashvisor blog.

Check Out City-Level Short Term Rental Regulations

An indispensable part of any Airbnb rental analysis is researching the local laws and regulations pertaining to short term rentals. As a result of the quick expansion of the Airbnb rental industry across the US, many cities have imposed laws to restrict the further spread of vacation rentals and protect local communities. It sets short term rentals apart from long term rentals.

So, the second part of the city-level Airbnb market analysis is to study the regulatory environment in your preferred location. It doesn’t make sense to buy an investment property to rent out on an Airbnb that doesn’t allow non-owner-occupied vacation rentals.

Usually, the best source of this Airbnb information is the websites of local authorities, including states, counties, and cities/towns. As you can imagine, searching through a multitude of websites can take a lot of time, particularly for inexperienced real estate investors.

A quick solution to this major problem is checking out Mashvisor’s short term rental regulations pages.

There, you can find the following:

  • Summary of the laws
  • Overall rating: Positive vs negative
  • Whether non-owner occupied rentals are legal
  • Limitations on the number of rental days per year
  • Link to the municipality website with further details

So, in a few short minutes, you can know whether running an Airbnb business is legal in the market of your choice and what high-level regulations you will face.

Analyze the Airbnb Rental Potential of the Neighborhood

The second step in the Airbnb rental analysis is finding out the potential of different areas within the city that you’re interested in. The reason for this is that the real estate market is highly localized. The performance of short term rental properties varies significantly not only by city but also by neighborhood.

This part of the research can be divided into two parts.

First, you need to figure out a few areas with a strong potential for Airbnb properties. You cannot possibly conduct detailed Airbnb neighborhood analysis on all areas within a city, especially if you consider a major market like NYC or San Francisco. Second, you have to dig into the numbers for these neighborhoods.

The process can take many weeks or even months unless you have access to the best real estate investment tools for Airbnb hosts.

Figure Out Good Neighborhoods for Airbnb Investing

Locating areas within a city that make sense for buying a short term rental property means gathering various types of information and data.

For example, you need to check out the proximity to tourist attractions, access to public transportation, amenities, shopping and dining options, entertainment opportunities, safety, etc. On the more quantitative side, you have to check if home values are affordable, whether the occupancy rate is strong, and if daily rates allow for profitable investments.

Alternatively, you can use the Mashvisor real estate heatmap tool to search for the best neighborhoods for Airbnb rentals in any US city or town. In specific, you can look for areas based on the following:

  • Median listing price
  • Airbnb rental income
  • Airbnb occupancy rate
  • Airbnb cash on cash return

Once you choose your criterion, the heatmap will color neighborhoods with low values in white and neighborhoods with high values in dark blue, with all the colors in-between. So, with a few clicks of the mouse, you can locate areas with low home values and high Airbnb return on investment.

Related: Real Estate Heat Map: A Revolutionary Tool for Neighborhood Analysis

Airbnb Rental Analysis - Mashvisor's Heatmap

Mashvisor’s real estate heatmap lets you search for the best neighborhoods for Airbnb rentals in any city or town in the US.

Find Out Neighborhood-Level Airbnb Market Data

Getting a reliable sense of the potential of a neighborhood for Airbnb investments (based on accurate Airbnb data analysis) is a good thing. Nevertheless, it’s not enough to make an investing decision with the required level of confidence.

Thus, the next step in the Airbnb neighborhood analysis is to obtain neighborhood-level short term rental data. Traditionally, it requires finding existing Airbnb listings that are similar to the one that you’re considering buying and located within the same area. Then, you’d need to figure out what daily rates, occupancy, monthly income, expenses, and ROI they are able to generate.

The easier and more accurate way to do that is to use the Mashvisor Airbnb data analytics platform. The neighborhood analysis pages on Mashvisor provide investors with all the crucial neighborhood-level numbers and metrics they need. They can use the data to confirm if an area makes sense for Airbnb.

Neighborhood Airbnb data includes:

  • Median property price
  • Average price per square foot
  • Average Airbnb income
  • Average Airbnb occupancy rate
  • Average Airbnb cash on cash return
  • Number of investment properties for sale
  • Number of active Airbnb rental listings
  • Optimal strategy: Airbnb vs long term rentals
  • Airbnb rental property type distribution
  • Airbnb rental property number of bedrooms distribution
  • Walk Score
  • Transit Score
  • Bike Score
  • Historical rental income
  • Historical average rental rate
  • Historical occupancy rate
  • Mashmeter: A dynamic score that uses past revenue and other data to predict the future ROI of a neighborhood

In brief, Mashvisor will provide you with all the Airbnb rental data points at the neighborhood level that you need to decide if investing in a certain area is worth it. It will save you tons of time while making your conclusions more accurate. It can be helpful as manual data collection and calculations are prone to human error.

Analyze the Airbnb Rental Property

The third – and final – step of the Airbnb rental analysis required for making a profitable real estate investment is investigating the potential of a specific investment property for sale. Once again, the success of the analysis relies heavily on access to superior short term rental data. You cannot make a profitable investing decision based on poor data (unless totally by chance).

How do you tell if an Airbnb is a good investment?

Telling if an Airbnb is a good investment consists of two main processes.

First, you need to be able to find a few short term rentals for sale that can potentially turn into top-performing Airbnb rentals. This step is needed as you cannot analyze every single MLS listing or off market property in a market to choose the best one for your investor purposes.

Second, once you have shortlisted a few potential properties, you should conduct detailed investment property analysis on them.

Related: The Beginner’s Guide to Rental Property Analysis

Search for Airbnb for Sale Worth Analyzing

There are many traditional ways to look for real estate listings. Some of the methods include local newspaper ads, networking, attending real estate meetups, and driving for dollars. Some more recent strategies, enabled by technology and VR, are real estate property marketplaces like Zillow and even (if you’re interested in off market properties).

But surfing through online marketplaces without any specific tools can take weeks or even months until you are able to analyze all listings and find out the most promising one.

However, there is a more efficient way to locate listings for sale that have what it takes to become top-performing Airbnb rentals. The Mashvisor investment property search engine allows investors to set up their specific set of criteria before providing them with a list of properties that meet these criteria.

Some of the search criteria you can use include:

  • City, neighborhood, street address, or zip code
  • Budget
  • Financing method
  • Rental income
  • Cap rate
  • Cash on cash return
  • Property type

They cover all the metrics that an investor needs in order to locate profitable opportunities with positive cash flow and high ROI.

To start finding profitable Airbnb rental property opportunities across the US, sign up for a 7-day free trial of Mashvisor now.

Find Out Property-Level Airbnb Data

After shortlisting a number of properties for sale, you need to perform a detailed Airbnb rental property analysis on them. It means that you need to estimate the expected rental income and rental expenses. It will help you determine if the property will be able to make money (rather than lose money or simply break even).

How do I analyze Airbnb potential?

Traditionally, this implied finding what is known as rental comps in the world of real estate investing. They are active Airbnb listings that are similar to the property you are analyzing in terms of type, size, amenities, etc., and that are located close to this property. The more similar the properties, the more accurate your analysis will be.

But finding such properties and collecting the needed data on them is not that easy at all. You’d have to spend a lot of time on booking platforms, but even that won’t be enough as you won’t find all the numbers you need. You’d also have to talk to local Airbnb hosts or figure out other sources of relevant information.

Use an Airbnb Calculator

Alternatively, you can use the Mashvisor Airbnb calculator to get all the data and analytics you require for your property-level Airbnb rental analysis.

For each property listed on Mashvisor, you will get the estimated:

  • Property price
  • Price per square foot
  • Down payment
  • Startup costs
  • Airbnb occupancy rate
  • Monthly Airbnb rental income
  • Cash flow
  • Airbnb cap rate
  • Airbnb cash on cash return
  • Recurring monthly expenses
  • Monthly mortgage payment

For your analysis of potential properties, remember that a good cap rate is in the range of 8%-12%, while a good cash on cash return is 10%-12% and above. If you see an Airbnb rental for sale within your budget, with such ROI, make a move for it.

Airbnb Rental Analysis - Mashvisor's Airbnb Rental Calculator

You can use Mashvisor’s Airbnb rental calculator to obtain all the data and analytics for your property-level Airbnb rental analysis.

Use Airbnb Rental Comps

Good rental comps are at the core of reliable Airbnb rental analysis. The Mashvisor Data Team is well aware of this fact, and that’s why all calculations and analytics are based on the performance of Airbnb rental comps in the area.

Related: Rental Comps: What Are They and Where Can I Find Them?

Together with the readily available investment property analysis, you’ll also get access to rental comps that you can use to expand and deepen your own research. In this way, you will know where exactly all Mashvisor numbers and figures come from.

Moreover, since the analysis provided by the Mashvisor real estate investing app is based on comps, it’s highly accurate and reliable. It’s much more accurate and reliable than any form of manual data gathering and analyzing.

Where Can I Find Reliable Data for Airbnb Rental Analysis?

As we said, good, reliable, solid, up-to-date data is at the core of Airbnb rental analysis at the city, neighborhood, and property level. So, the burning question is where you can find the best Airbnb rental data in the US market.

Can you see analytics on Airbnb?

No, Airbnb does not provide data and analytics in a form that investors can use to analyze and make decisions.

AirDNA, Rabbu, and AllTheRooms are some popular names in the Airbnb investing industry that provide some analytics needed by investors. But none of them offers all the functions and capabilities that Mashvisor does. That’s why Mashvisor is the best Airbnb and real estate data provider across the entire US.

Related: AirDNA vs Mashvisor: Which One Is the Better Source of Airbnb Data?

Mashvisor provides investors with all the data points that they need to select the top markets and properties for running an Airbnb business.

Moreover, all data inputs come from reliable sources like the MLS, Airbnb, and public records. The Data Team consults with Airbnb hosts across the US on a regular basis to confirm that the figures generated by the Mashvisor machine-learning algorithms are accurate.

Getting Started With Profitable Airbnb Investments

How capable you are of conducting high-quality Airbnb rental analysis will determine how successful your real estate investments will be. To compete in the hot short term rental market, you have to forget about the traditional ways of searching for and analyzing properties. Instead, you should focus on technology-driven tools.

The Mashvisor Airbnb data analytics platform allows you to do everything you need to invest in a money-making vacation rental from a single website. You can find a good city, locate a top neighborhood, search for a promising property for sale, and analyze its investment potential.

The entire process should not take more than 15 minutes while providing you with accurate, rental comps-based analytics. With Mashvisor, you can easily outperform not only beginner investors but also those with decades of experience in the market.

To find out all the capacities of Mashvisor, sign up for a free demo with our experts.

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