Unlocking the Secrets of Maximizing Airbnb Property Returns: A Comprehensive Guide by Masterpiece

As the landscape of real estate investment continues to evolve, investors in short-term rentals find themselves at a critical juncture – deciphering the nuances of acquiring Airbnb properties for optimal returns. In recent times, short-term rentals have emerged not just as a lucrative real estate strategy but as the preferred choice, overshadowing their long-term counterparts. However, the challenge lies not just in embracing this profitable avenue but in pinpointing the ideal property amidst the complexities of seasonal demand, dynamic daily rates, and the intricate web of laws and regulations governing this realm

This comprehensive guide, brought to you by Masterpiece, aims to demystify the intricate process of identifying the best residential properties for profitable Airbnb rentals. We present an exhaustive eight-step guide that delves into the meticulous process, complemented by the sophisticated tools and analytics provided by Masterpiece for expert guidance

Embarking on Airbnb property investment remains a highly lucrative endeavor in 2023. According to a nationwide real estate market analysis conducted by Masterpiece in March 2023, short-term rental properties yield an average cash-on-cash return of 3.69% across the US market, surpassing the 2.99% return for their long-term counterparts. Despite initial setbacks during the COVID-19 pandemic, Airbnb has reasserted itself as a premier real estate investment, backed by robust trends in the vacation rental industry.

Commence the journey by meticulously evaluating your budget, factoring in savings, diverse income streams, and anticipated fluctuations in revenue and living costs. Precise budgeting is pivotal to sidestep mortgage payment defaults and navigate unforeseen financial challenges effectively. Assess various financing methods, encompassing conventional mortgages, FHA loans, hard money, or HELOC, and consider down payments, interest rates, loan terms, and other relevant conditions. With mortgage rates on the rise, exploring different lenders becomes imperative to secure the most favorable financing for your Airbnb property.


Beyond the down payment, consider additional startup costs, including closing costs, property fixes and repairs, furnishing, setting up a smart home, obtaining comprehensive home insurance, and accounting for property taxes. Preparation for monthly operating expenses is paramount, covering property maintenance, management, property taxes, insurance, income taxes, utilities, supplies, and Airbnb service fees. Maintaining robust cash reserves ensures the capability to cover recurring costs during potential rental vacancies.

Identifying the type of guests you intend to attract is the next crucial step. Consider solo travelers, vacationing couples, families, businesspeople, travel professionals, and remote workers. Tailoring your property to meet the unique needs of specific guest demographics enhances occupancy rates, fosters positive reviews, and maximizes return on investment (ROI)

Selecting a city aligned with your target guests becomes paramount. Consider cities offering affordable property prices, high Airbnb daily rates, above-average occupancy rates, low operating costs, and ensuring reasonable safety. Leverage Masterpiece's blog and rankings to identify top Airbnb locations based on diverse criteria.

We’ve looked at markets with affordable property prices (median below $1,000,000) and strong Airbnb demand (more than 100 active Airbnb listings and occupancy rate above 50%).

As a result, below you can see the five best short term rental markets with the highest ROI in 2023.

1. Northlake, IL
Median Property Price: $323,180
Average Price per Square Foot: $217
Days on Market: 139
Number of Airbnb Listings: 120
Monthly Airbnb Rental Income: $4,269
Airbnb Cash on Cash Return: 8.29%
Airbnb Cap Rate: 8.44%
Airbnb Daily Rate: $171
Airbnb Occupancy Rate: 53%
Walk Score: 33
How to Find Airbnb Properties - Northlake IL
Use Mashvisor’s Investment Property Search Engine to find and analyze homes for sale in Northlake, Illinois, that would make profitable short term rentals.

2. Columbia Heights, MN
Median Property Price: $294,482
Average Price per Square Foot: $142
Days on Market: 22
Number of Airbnb Listings: 314
Monthly Airbnb Rental Income: $3,742
Airbnb Cash on Cash Return: 8.06%
Airbnb Cap Rate: 8.21%
Airbnb Daily Rate: $158
Airbnb Occupancy Rate: 58%
Walk Score: 82

3. Bridgeton, MO
Median Property Price: $264,711
Average Price per Square Foot: $136
Days on Market: 23
Number of Airbnb Listings: 120
Monthly Airbnb Rental Income: $3,291
Airbnb Cash on Cash Return: 7.69%
Airbnb Cap Rate: 7.83%
Airbnb Daily Rate: $154
Airbnb Occupancy Rate: 58%
Walk Score: 3

4. Rileyville, VA
Median Property Price: $332,031
Average Price per Square Foot: $192
Days on Market: 15
Number of Airbnb Listings: 155
Monthly Airbnb Rental Income: $3,733
Airbnb Cash on Cash Return: 7.57%
Airbnb Cap Rate: 7.69%
Airbnb Daily Rate: $236
Airbnb Occupancy Rate: 56%
Walk Score: 10

5. Harahan, LA
Median Property Price: $398,200
Average Price per Square Foot: $209
Days on Market: 57
Number of Airbnb Listings: 111
Monthly Airbnb Rental Income: $4,022
Airbnb Cash on Cash Return: 7.46%
Airbnb Cap Rate: 7.57%
Airbnb Daily Rate: $137
Airbnb Occupancy Rate: 59%
Walk Score: 56

Once the city is chosen, narrow down the search to the neighborhood level. Factors such as property prices, rental demand, rental rates, and local regulations must be meticulously examined. Leveraging Masterpiece's real estate heatmap aids in identifying areas with low property prices, high rental income, elevated Airbnb occupancy rates, and superior ROI. Conducting a detailed neighborhood analysis through Masterpiece's Neighborhood Analysis Pages further refines the selection process.

Short-term rentals stand apart from their long-term counterparts due to the legislative environment. While some states are more or less landlord-friendly, numerous locations strictly regulate or even prohibit short-term rentals. Hence, the next step involves studying local Airbnb laws to ensure non-owner occupied short-term rentals are permissible. Additionally, ensure there are no limitations on the number of days you can rent out per year. Masterpiece's short-term rental regulations page offers a swift and efficient way to access summaries of applicable requirements in top locations for Airbnb hosting, along with links to more detailed information.

The subsequent step in this intricate process involves perusing available vacation rentals for sale. While traditional methods such as reading local newspapers, seeking "For Sale" signs, networking, collaborating with real estate agents, and consulting property managers remain viable, Masterpiece's tools offer a tailored, investor-centric approach. Leveraging Masterpiece's Investment Property Search Engine and Property Finder allows for a focused search, employing filters for market, budget, financing, income, ROI, and property type.

Once potential properties are identified, a detailed analysis becomes paramount. This undertaking involves substantial research, data collection, and calculations. However, the tools available on Masterpiece streamline this process, enhancing accuracy. The Masterpiece Airbnb calculator conducts a meticulous rental property analysis, furnishing investors with comprehensive data and numbers crucial for making informed and profitable decisions before acquiring a property. The tool covers property price, financing details, startup costs, monthly rental income, monthly recurring costs (property tax, insurance, income tax, management, maintenance, utilities, etc.), cash flow, occupancy rate, cash on cash return, and cap rate. All pre-set estimates are grounded in the performance of actual Airbnb rental listings in the area, offering valuable insights for decision-makers. Moreover, these figures are adjustable, allowing investors to tailor the analysis to their specific circumstances as Airbnb hosts.

The final step, though not exactly a step, holds immense significance and warrants individual emphasis: the pivotal role of leveraging the right real estate investing tool. The Masterpiece Airbnb analytics platform emerges as the crux of this journey, providing a suite of tools and resources to identify profitable vacation rental opportunities. The real estate blog, heatmap, neighborhood analysis pages, Investment Property Search Engine, and Property Finder collectively serve as the best companions for both novice and seasoned investors. These tools empower aspiring hosts to