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Homeowner Tips

Know this before Investing

Are you thinking about dipping your toes into the world of short-term rentals? Try a live analysis of an area you're interested in at AirDna.

While your instincts about a property are important, it's essential to crunch the numbers to determine whether it will provide the financial return you're looking for. So, as you browse properties, keep these five factors in mind:

Cash flow analysis: This involves calculating your expected monthly rental income minus all expenses, including mortgage payments, property taxes, insurance, maintenance and cleaning costs, and Airbnb fees.

Occupancy rate: The percentage of occupancy in your property at any given time will affect its cash flow. It's essential to consider the expected occupancy rate of a property.

Location analysis: Rental rates are affected by factors such as the local market, competition, and seasonality. Therefore, it's essential to compare properties to ensure that yours is likely to generate enough income to cover costs.

Capitalization rate (CAP rate): This is a measure of the property's expected rate of return. It's calculated by dividing the net operating income by the purchase price or current market value.

Tax implications: Owning a rental property has tax implications that can affect your personal income tax. Therefore, it's essential to consider the tax implications of owning a short-term rental property, including the potential benefits of depreciating the property.

The truth is, not all short-term rentals are created equal. Before you jump in, make sure you take these factors into consideration to ensure that you own profitable rental properties. Do you have any other questions about short-term rental investing? Reach out to me

 

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