How To Choose The Best Airbnb Investment Property For You [UK, 2022]

Airbnb helped pioneer today’s booming short-term property letting market and now it has become an entirely new investment sector. But how do you find and choose the best Airbnb investment property for you? Find out here.

March 20, 2023

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Airbnb helped pioneer today’s booming short-term property letting environment. Everyone from tourists discovering new countries to locals looking for a weekend city break flock to Airbnb in increasing numbers for their stays. The lower costs, the convenient locations and the more personalised and local feel people get from staying in these rental properties are evermore attractive over hotels and other traditional stays.

With the change in the hospitality sector and with more people relying on these short-term rentals, savvy investors have been increasingly interested in snapping up properties. The high demand and a global world mean people will be renting with Airbnb in droves for a long time to come. This means finding the best Airbnb investment properties can be a lucrative investment. And, with a top short-let management service such as Houst, it can be hands-off too.

If you’re one of those who want to invest, keep reading. We’ll help you choose the perfect Airbnb investment property in the UK.

Why choose to invest in and rent out with Airbnb?

Airbnb is one of the leaders in short-term vacation rental properties. It’s the go-to platform for millions of travellers around the world. They connect both property owners and managers with travellers in one place. And it’s free to get up and running.

The platform helps hosts rent out successfully. They can set and adjust rates for optimal prices based on major factors such as seasonality. They also provide a Host Guarantee Program that covers up to $1,000,000 in damages, giving property owners peace of mind.

And as the world shifts and becomes more globalised, the demand for people renting with Airbnb continues to increase. People choose short-term rentals with the platform for accessibility, prices, locations and more.

How does renting Airbnb properties work?

First, you should understand how renting out Airbnb properties has differences compared to traditional real estate investing. While a traditional property investment means buying a property and letting it for often very long durations, renting out a property with Airbnb means more short-term rentals.

Rent duration.

At first glance, the main difference is rent duration. While traditional rental investments are long-term rentals with a minimum of at least six months, an Airbnb investment property will be anywhere from a single night to many weeks on end. This means there will be more property management on your end. But there are many companies now offering to manage landlords’ short-term Airbnb rentals for them - established in 2015, with a team of experts in cities across the world, Houst is the world's largest.

Host responsibilities.

As is the nature of short-term rentals, guests will only stay a short while. Each guest will expect the property they stay in to be in the condition as advertised. This means housework and maintenance.

Number of guests and pricing.

Investing in and renting out an Airbnb investment property has the benefit of giving landlords more flexibility in the prices they charge. This is because short-term renting means you’ll have more people in and out per year than traditional renting. It gives you the freedom to use different pricing strategies and adjust your rates as often as every day.

Identify and find the perfect Airbnb investment property.

Investing in Airbnb properties can be very lucrative investments. They can even be more lucrative than traditional rental homes. And you may want to invest in multiple properties. But the process of buying the best Airbnb investment properties is a bit different than buying a traditional property.

Here are the steps to identifying and finding the perfect Airbnb investment property suitable for you with the highest profits.

1. Know your budget.

While an Airbnb investment property can be more lucrative than a traditional rental home, there’s a higher upfront cost with a few more steps in the process of setting it up. Here’s what you’ll need to take into account:

  • Inspection fee.
  • Closing fees.
  • Repair and remodelling.
  • Other expenses, such as if you’ll pay a company to manage your hosting.

Make room for these expenses in your budget. Although there are more upfront costs, you’ll reap heavy profits in the long run that makes all this back and more. And you can use online Airbnb rental calculator tools to give you a clear estimate of these expenses and they can even calculate your profits over a 10-year period.

2. Decide on the type of investment.

Investing in a short-term rental property to host on Airbnb gives you many options. From city-centre apartments to cabins to lakehouses, people want to stay in all kinds of vacation homes. Deciding on the type of property you invest in will largely depend on the types of guests you want to market to.

You’re not limited to tourists. There are many types of people who use short-term rentals for their stays:

  • Business travellers.
  • Family visits.
  • Doctor visits.
  • Wedding guests.
  • Remote workers.
  • Long-distance movers who need a bed for the night.

Certain types of properties will be more attractive than others depending on guests’ reasons for travel. And some are more profitable than others. It’s a good idea to research the data to find out which types of properties are most sought-after in the location you choose. This will give you a clearer picture of what will be the most suitable investment for you.

3. Choose your location.

Location is one of the most important factors in choosing the perfect Airbnb investment property. One of the main reasons people choose short-term rentals is for convenience. Many hotels are situated on the outskirts of towns and cities with the more expensive ones in the centre. The locations for the prices offered through Airbnb are an enticing factor for short-term renters.

It’s convenient to own an investment property near your home. But you don’t need to limit yourself. Research the most profitable cities and neighbourhoods. Some of the most sought-after cities in the UK for Airbnb renters are London, Bristol, Brighton, Bath and Manchester. Large towns and cities like these continue to be popular destinations for travellers from around the world. This makes them worthwhile considerations for investors who want to reap the highest profits.

It’s important to note that each town and city has individual requirements for short-term rentals. For example, London has a 90-day rule which caps the total number of days anyone can stay at one time in a short-term rental at 90 days.

4. Know the short-term rental regulations.

On the previous note, you should know the laws and regulations for short-term rentals in the locations you’re interested in. Some towns and cities go as far as banning Airbnb rentals. Others will allow you to rent out their properties only if you’re the main resident of the property. And as previously mentioned with London as an example, different towns and cities have different lengths of time one can rent out their property. Do the research and invest in areas that are and have been Airbnb friendly for some time and have a positive forecast in this regard.

5. Choose the property type.

You likely want the best Airbnb investment properties that bring in the most profits. Achieving this will be based on several major factors. Reaping the biggest returns on investment will mean choosing the right property type for your target guests and the location you’ve chosen.

If you’re like many investors looking to invest in properties for short-term rentals with Airbnb located in busy city centres, small apartments are a great choice. Apartments nestled in popular areas with plenty of amenities and transport links close by will be the best. These will be ideal for business or solo travellers who make up the majority of people who will be renting in city centres.

If you’re targeting families or large groups, however, you’ll want to look at investing in homes. Homes on the outskirts of cities and beach homes are worth considering.

6. Consider taxes, extra costs and your budget.

You know your budget. You’re aware of the upfront costs. But some costs and expenses will have an impact on your return on investment.

While short-term rentals prove profitable for many investors, choosing an Airbnb investment property has many of the same costs as traditional renting plus extras. You’ll need to consider these factors when making your ultimate decision on a property:

  • Property tax.
  • Property management fees.
  • Maintenance fees.
  • Furniture, utilities and bills.
  • Vacancy provision.

One of the most important factors to consider when looking for the best Airbnb investment properties is paying the mortgage while your property is in quieter seasons. Having your budget prepared to accept the likelihood your short-term vacation rentals won’t always be rented out will play a prime role in making your decision on a property. Considering your maximum budget in the context of taxes and extras is key to success in this game.

7. Analyse the market.

With costs, taxes, budget and all the other factors we’ve mentioned in view, it’s time to analyse the market for properties within your reach. Using an online listing website, real estate agencies and or property finder tools, you can determine suitable properties for investment. If you’re new to property investment or short-term rentals, look for properties that are foreclosed, bank-owned or even off-the-market as they’re lower in price and can make for great long-term investments.

8. Consider working with an agent.

You may want to consider hiring real estate agents to help you pinpoint the perfect Airbnb investment property. Different real estate agents in different towns and cities can direct you to the best neighbourhoods given your target guests, location and other factors. They’ll also be aware of the local laws and regulations.

There are agent fees, of course. But if you’re struggling to find the right Airbnb investment property for you, they can help. Once you tell them your details such as budget and location of interest for your investments, they’ll help get the ball rolling much faster.

Key takeaways.

  • Investing in Airbnb short-term rentals can be very lucrative. But there are several extra fees and costs to consider compared to traditional property investments.
  • Hosting short-term rental properties with Airbnb can prove time-consuming because of the responsibilities. But there are plenty of options to help. At Houst, we're specialist in short-term lettings and management - everything from listing creation and guest management, to the cleaning, laundry and keys.
  • Deciding on the right property type that suits you which accounts for target guests and location is one of the main factors to consider before putting money down on an investment.
  • Each town and city will have its own rules and regulations concerning Airbnb. Some even ban it. Doing thorough research into the location of your Airbnb investment property will play a vital role.
  • Considering the amount of market research you’ll have to do, it might be worth considering hiring estate agents to help direct you. Friends, family and acquaintances around the country can also help you in your decision-making.

In conclusion.

Hosting with Airbnb continues to help homeowners and investors alike make tidy profits from renting out their properties as short-term rentals. As the world continues to become ever more global and as Airbnb expands and improves its services, it’s likely the trend for renting private properties will continue to increase. And while choosing the perfect Airbnb investment properties involves several important steps and can be costly upfront, it has the potential to be highly lucrative and the return on investment can be much more than traditional real estate investment.

About Houst London

Houst was launched in London in 2015. Since then, our team has been helping homeowners and landlords across the capital increase their earnings while managing everything for them. We're now the world's largest Airbnb host management service.

Our highest earning host has a 3-Bed Apartment in Old Street with 94% occupancy!

To make the most of your property, we list on multiple booking platforms, maximising your income from a unique mix of short, medium and long-lettings all year round.

We have teams of professional cleaners, housekeepers and partners to turnaround laundry on-demand, and our London-based team writes your listings, takes photographs and offers expert advice on how to improve your property for business and holiday short-lets. Meanwhile, our pricing specialists are continuously working hard to optimise your occupancy and overall revenue.

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