What is an Airbnb calculator, and is it worth using in your property management strategy? While there is no set answer, it’s worthwhile learning more about them before deciding whether to use them.
An important thing you need to consider as an Airbnb host is profitability, and how to determine profit margins for your business. Whether you rent out an entire house or private rooms, you want to ensure that you are bringing in maximum revenue. An online rental calculator can help by determining the worth of your short-term rentals, and the right pricing strategy you should be using.
Read on to learn all about an online property calculator, and how it can help you leverage the right price for your vacation rental.
What Does an Airbnb Calculator Do?
An Airbnb profit calculator generates data projections for profitability on a vacation rental. It does this by examining several key factors and then producing related information.
Based on this data, first-time investors, who are just starting a vacation rental business, can determine if they should invest their money in a potential property. Hosts who already own vacation rentals can also use this data to make better financial decisions for their rentals.
How Can I Use an Online Rental Calculator to Purchase a Vacation Rental?
Real estate investors can use the stats they get from a profit calculator to help them buy their ideal property. To do this, they can take a closer look at the data relating to:
- Demand by location — Airbnb calculators analyze the demand for rentals based on their area or location. Hosts can choose their location setting to get an overview of the general demand for vacation rentals there. They can then find the best locations to buy vacation rental properties.
- Comparative properties in the area — rental calculators pool data of how much properties in the area sold for. Investors look at these figures to get a better idea of how much money they should be investing in a similar property.
- The features of the investment property — a property’s features and amenities are also analyzed, to help determine the final profit projections.
Looking at this data can help investors to determine what ROI they would make on a particular property and whether they will make a profit.
What Factors Does an Airbnb Calculator Look At When Generating Data?
Online calculators can also help property managers to determine their ideal profit margins and set accurate nightly rates. It does this by looking at other unique data to generate projections. Hosts can then use these in their management strategies:
- Cash flow. Cash flow is the difference in monthly expenses and monthly rental income. Most Airbnb calculators allow you to input your various monthly expenses and subtract them from your monthly rental income. Properties with positive cash flow are worth investing in. Hosts can use these figures to calculate if their set rate is enough to cover costs and generate a profit.
- Airbnb cap rate. The cap rate demonstrates the return on investment (ROI) that a host will earn, by comparing the property’s sale price with its potential annual income. Investors and hosts look for properties with a high cap rate.
- Cash on cash return. Cash on cash return, calculated by an Airbnb calculator, is the ROI an investor will make based on the amount of money invested into a property vs how much money the property makes. It is the annual return made on the property divided by the annual mortgage paid on it.
- Occupancy rate. A rental’s occupancy rate is the number of nights within a set time (usually either a month or a year) that the rental property is booked. Factors like the rental’s location, nightly rate, size and amenities, and the booking rate of similar properties nearby are examined by Airbnb calculators, to determine an occupancy rate.Hosts and investors can work to increase their occupancy by staying competitive, offering seasonal special offers, and obtaining positive guest reviews.
Using this data, hosts can calculate their ideal rental rate. Investors can also determine whether a particular property is worth investing in.
What Are the Most Popular Vacation Rental Calculators?
Using an Airbnb calculator in your investment or rental strategy can help you make smart, data-backed decisions. Here are some top-rated online calculators that can help you to create a detailed rental management strategy:
LearnAirbnb’s online calculator is comprehensive and easy to use. It provides a free template that you can download. It helps you account for all your vacation rental business expenses, which you can then input into the calculator. The calculator will use your data to create projections for potential profit and ROI that you can earn.
AirDNA supplies hosts and investors with a powerful Airbnb calculator named Rentalizer. This calculator provides hosts with vital data about rentals in almost any part of the world! To use it, type in the address of the rental you want to research. The calculator will provide data on metrics like occupancy rate, annual revenue, and comparable data from similar rentals in the area. It takes into account things such as seasonality and rental demand in the area.
Mashvisor’s property calculator simplifies the research process, shortening it from several months to about 15 minutes of online searching! Type in a city in which you are interested in potentially buying a property. From there, browse neighborhoods to get an overview of average occupancy rates, cash on cash returns, and potential ROI for each area.
Mashvisor’s calculator also provides “heat maps” that show areas and neighborhoods that match your inserted requirements. By entering your email address, you can access a free seven-day trial to test it out.
How Can I Increase the Value of My Rental for Greater Profit?
After using an Airbnb calculator to set a good nightly fee, hosts might wonder if there are ways to increase their rental’s value. If you would like to improve the value of your Airbnb rental, there are a few simple but effective means to do this:
Some ways include:
Optimizing your rental’s capacity — an extra bunk bed or a sleeper couch can elevate a listing from a two-person space to a four-person space.
Offering more — garden space could include a grill area, fire pit, or even outdoor furniture.
Staying competitive — keep track of what your competitors are charging. Offer seasonal deals and discounts to support your occupancy rate.
Using data from an Airbnb calculator can help you estimate your ROI, as well as your ideal occupancy rate. These calculations will help your business to run optimally, and assist in growth planning and maximizing profits.