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Airbnb is a lucrative short-letting platform. It has a 20% share of the vacation rental market. This is a considerable share that puts it among the go-to apps of travellers and tourists. With more than 200 million users, it opens opportunities for second properties to earn as short-term rental units.
In London alone, 56,389 active rentals earn an average of £184.84 per day, £2,448.78 a month and £3,001.73 on peak months. London Airbnb hosts can also expect a rental growth of 12% – which means it’s a very promising market to enter if you have a property that you can list as an Airbnb rental.
But the question is, how much can your property earn specifically? You can only know by using an Airbnb calculator.
In this article, you’ll learn more about Airbnb calculators and how you can use this strategic tool to optimise your rental returns and achieve phenomenal success as an Airbnb host.
How Does an Airbnb Calculator Work?
An Airbnb calculator is a tool that specifically analyses properties to gauge their success as a short-term rental unit on the Airbnb platform. These calculators provide incredible insights to help you make informed decisions to maximise your earning potential on Airbnb. However, you’ll be required to provide information about your property so you can get the specific data that you need.
The information needed would depend on the type of Airbnb calculator that you’ll use. The one on the Airbnb site called What’s My Place Worth will only need the city where the property is located. Other calculators would require more details like the actual address, property type, number of bedrooms, property size, etc.
Once you’ve provided the required information, the tool will use it to calculate the earning potential of the property. It’s programmed to use existing prices of similar Airbnb properties to calculate the estimated earnings you can expect.
These calculators will tap into specific Airbnb data to provide a more accurate calculation of your profits. They can generate data to help you set the right pricing strategy to strengthen your property’s position in the competitive Airbnb market. You’ll get the property’s potential in terms of annual revenue, average daily rate and occupancy rate.
Some more advanced calculators consider the seasonality of rental properties to reveal peak and off-peak income potential – as compared to other similar types of properties. These can even give you insights about the right time to buy rental properties.
The more accurate the information provided, the more thorough the data that the calculator can provide. You can rely on this information to help you make informed decisions to set yourself up as a profitable Airbnb host.
Why Should You Use an Airbnb Calculator?
Using an Airbnb calculator is one of the tools that can help you make decisions that lead to maximum profits. It uses real-time data to provide essential projections – something you can use to optimise your investment strategies.
Take a look at 5 reasons why using an Airbnb calculator is essential in your journey as a host.
To gauge the value of a potential investment property
Investing in a property is a significant financial commitment. It’s not just about finding the right property to buy. It’s also about knowing if it’s the right time to make that purchase.
Using an Airbnb calculator can answer this question. This tool can help property investors gauge the value of a property investment through real-time market data, rental demand and property values. You can analyse these factors to find out if you can afford to buy a property or if it can be set up to pay for itself through short-term letting strategies on Airbnb.
To predict a property’s profitability
One of the primary concerns of property investors is the profitability of their property investment. An Airbnb calculator can predict the profitability of a property by analysing similar Airbnb units. It can use the information provided (e.g. location, property type, etc.) to determine its rental income potential, occupancy rates and even operating expenses.
These projections will allow property investors to gauge their expected earnings to assess if it’ll be a viable investment or not.
To accurately calculate the net income
Apart from knowing the income potential of a property, it’s also important for property investors to determine the net income that they’ll get. This is the amount that’s left after they pay off the mortgage payments, insurance premiums and other operating expenses.
Some Airbnb calculators allow you to see a projection of the operating expenses to give you an idea of what it takes to manage Airbnb properties. You can tweak these figures to make them more specific to how you plan to manage the property. This will give you a more accurate calculation of the amount left after all the deductions have been made.
To compare the short-term and long-term letting potential
Property owners often struggle with the choice between short-term and long-term letting strategies. While short-term rentals earn more per night, there’s a sense of stability in long-term letting.
Through an Airbnb calculator, you can use the projections to determine which of the two is more aligned with your portfolio goals. Which letting strategy can give you the income to hit your portfolio targets? The calculations derived from the income and occupancy projections will help you make an informed choice between the two letting strategies.
To determine the expected rental growth
With what you know about the income projections, you can also determine the expected rental growth of the property. The Airbnb calculator uses historical data and present market trends to forecast the property’s future performance. This insight will allow you to set proactive plans that can improve and maximise this growth even further.
Where Can You Find Reliable Airbnb Calculators?
There are several sources of Airbnb calculators. These come in various forms but they all offer invaluable insights and data-driven projections that can optimise your investment strategies. To help you search for the right calculator, consider these three sources.
Airbnb
You can find the What’s My Place Worth tool on the Airbnb website. This tool will require the location of the property you want to list as an Airbnb unit. You’ll get an overview of the rental prices in that location and it’ll give you the average rental income that you can expect if you decide to push through with the investment.
Once you become an Airbnb host, the site will give you other tools and resources that you can use to calculate and manage the financial aspect of your Airbnb unit.
Online Tools
Some sites offer Airbnb calculators like the one offered by AirDNA. These calculators usually require you to provide the street address of the property as well as the number of bedrooms, bathrooms and occupants that it can accommodate. They tap into the public data provided by Airbnb (sometimes even VRBO) to give you a near-accurate projection of the property’s income potential.
Property Management Companies
Another option for an Airbnb calculator involves property management companies. City Relay offers a tool on the website that can calculate the rental income potential of properties. You’ll be required to input your data and that of your property or properties. The tool will calculate the rental valuation of the property based on their flexible letting model. This combines the peak earnings of short-lets and the income stability of long-lets.
It’ll be a slightly different calculation compared to what you’ll get from an Airbnb calculator but it’ll also give you insights on the rental income potential of your properties.
Calculate Your Airbnb Property’s Earning Potential
Using tools like an Airbnb calculator empowers you to make informed decisions that’ll maximise your property’s performance and profitability. It’ll give you financial projections that you can use to map out a strategic plan that’ll lead to significant growth, not just for your property, but also your skills as an Airbnb host. Leveraging these projections will help you choose the right property investments, pricing strategies and letting methods that are aligned with your portfolio goals.
You can also enlist the help of a property expert to aid in these calculations. Their expertise and experience will provide you with guidance that you can also use to position your property to grow and succeed in the Airbnb platform. City Relay offers a comprehensive package of services that’ll make property management a stress-free experience.
Find out how you can thrive as an Airbnb host. Get in touch with City Relay so we can calculate and explain how we can optimise your property’s rental yields.
