Wondering how to make profitable investments in vacation rental properties? You need access to the best source of reliable vacation rental data.
Table of Contents
- What Is Vacation Rental Data and Why Is It Important?
- What Vacation Rental Data You Need for Analysis
- What Types of Analysis Can You Do With Vacation Rental Data?
- Where to Find the Most Reliable Source of Vacation Rental Data
The past couple of years were challenging for the entire real estate industry but especially for the short term rental market. As the pandemic is expected to end soon, our US housing market predictions show that the vacation rental industry is forecast to boom in 2023. The main driver behind the trend is travelers making up for lost opportunities during the COVID-19 peak.
This is excellent news for savvy real estate investors. Nationwide real estate market analysis conducted by Mashvisor reveals that short term rentals consistently bring in better return on investment than their long term counterparts.
However, it doesn’t mean that any investment property you buy to rent out on a short term basis will provide positive cash flow and good ROI. To guarantee profitable investment decisions, you need access to reliable, comprehensive, up-to-date vacation rental data – both on the market and the property level.
In this article, we will discuss what this data is and why it is crucial for investors. Importantly, we will show why Mashvisor is the best source of vacation rental data in the US residential market. We will also demonstrate what types of real estate analysis you can conduct with access to the data available on the Mashvisor platform.
So, let’s get started figuring out how to make money-making vacation rental investment decisions each and every time!
What Is Vacation Rental Data and Why Is It Important?
Vacation rental data is a commonly used term in the real estate investing space. But beginner investors might not be sure what it is and why it is important for making profitable investments.
Vacation rental data is also referred to as short term rental data and sometimes Airbnb data. It is because vacation rentals are income properties that are rented out on a short term basis, usually per day. Meanwhile, Airbnb is the most popular vacation rental listing marketplace not only in the US but also globally.
So, vacation rental data refers to all the numbers and metrics that investors use to measure the performance of short term rental properties that they own or that they plan to buy. Investors can utilize the data at the market level (city or neighborhood), as well as at the property level.
What’s the Significance of Short Term Rental Data?
Using reliable, trustworthy data is important for a few reasons.
If you already own a vacation rental home, you should use data to make sure that you generate positive cash flow, good cash on cash return, and good cap rate.
In addition, you should compare the numbers you get with the numbers of your competitors to ensure that you are realizing the full potential of your investment property. If your property does not measure up to competitors, you might be leaving money on the table.
Meanwhile, if you want to buy vacation rental property, you need to utilize proper data to choose the optimal location for your income property, in terms of state, city, and neighborhood. It includes both quantitative data (like ROI) and qualitative data (whether the local legislation allows non-occupied short term rentals).
It’s also important to base your investment property search and choice on reliable data. You should make sure that your property will be able to make money before you buy it. In other words, the revenue that you generate should cover all recurring rental expenses and still leave some money in your pocket.
Unless you benefit from the best vacation rental data on the market, you will be left behind by other investors. Competition is pretty tough in the short term rental market, and it’s promising to increase in the coming years as more and more investors try to take advantage of this strategy.
So, how large is the vacation rental industry?
The global market is valued at about $83 billion in 2022 and is expected to reach $119 billion by 2030. Unless you base your investment decisions on solid data, you don’t stand a chance to succeed in such a huge market.
What Vacation Rental Data You Need for Analysis
As we mentioned above, vacation rental data can refer to a wide range of different numbers and figures that investors can use to measure how well their property performs.
In general, there are two broad categories: 1) vacation rental market data, and 2) vacation rental property data. The first is used to evaluate how good a certain location is for investing in short term rental properties. The second helps investors check if a specific property is expected to bring good return on investment or not.
Within these two categories, the most important data points include the following:
The daily rate – or nightly rate – is the fee that investors in short term rental properties expect guests to pay to occupy their property for a day. In vacation rental investing, it is one of the key metrics as it determines the monthly rental income, which in turn is used when calculating the rate of return.
Setting the right vacation rental daily rate is crucial. If you ask for a rental rate that exceeds the average in the market, your property will remain vacant. It means you will not generate any revenue. If alternatively, you set a daily rate that’s too low, you won’t be optimizing your vacation rental income.
The vacation rental occupancy rate measures the share of days for which your property is rented compared to the total number of days for which it is available for bookings. While it is sometimes measured in number of days, in vacation rental analysis it is usually used as a percentage.
The short term rental occupancy rate is no less important than the daily rate. That’s because we multiply the two to calculate the monthly or annual rental income that vacation rentals for sale are expected to generate.
The vacation rental income is simply the sum of all the money that guests pay you to stay at your short term rental in a month (or in a year). It is positively correlated with both the daily rate and the occupancy rate.
Together with the recurring rental expenses, the short term rental income determines whether your investment property is profitable. If rental income exceeds rental expenses, you are making money from real estate through positive cash flow. If rental income is less than monthly operating costs, you are losing money through negative cash flow.
Yet another crucially important vacation rental data point that many investors forget about is the rental expenses. Also known as operating expenses, this is all the money that you need to spend on owning an investment property and running a short term rental business.
They include things like property tax, home insurance, rental income tax, short term rental licenses, maintenance, utilities, cleaning, stocking supplies, and property management.
It’s hard to evaluate how much you will need to spend on your property unless you have access to reliable short term rental data. The costs can vary widely depending on your location, property type and size, and management preferences (being a DIY host vs hiring a professional vacation rental property manager).
The vacation rental cash flow is one of the most basic – yet most significant – ways to measure return on investment in real estate. It is simply the difference between the rental income and the rental expenses.
The cash flow can be positive or negative. If it’s positive, that’s great because it means that you are making money from your vacation rental home. If the cash flow is negative, you’ve made a poor investment decision, as your property is draining money from your pocket. It means you should either change your entire rental strategy or sell your property.
With regards to cash flow, don’t make the rookie mistake of many beginner investors who decide to buy a negative cash flow rental and turn it into a positive cash flow one. Instead, only buy Airbnb properties for sale that promise positive cash flow from day one.
The capitalization rate, or cap rate for short, is one of the most popular metrics of profitability and risk in real estate. It is the ratio of the net operating income (NOI) of a vacation rental property to its purchase price or current market value, expressed as a percentage.
It is relatively easier to calculate than other ROI metrics. That’s why real estate investors often use the cap rate to compare the potential of different markets and different properties for sale within a market.
However, if you want to consider a few markets and a few properties, calculating the respective cap rates requires a significant amount of vacation rental data and manual calculations. So, it’s better if you can find a reliable source of readily available cap rate estimates at the market and property level.
Related: The Top ROI Calculator for Real Estate Investment in 2023
Cash on Cash Return
The cash on cash return, or CoC return, is another widely used measure of rate of return in the vacation rental industry. Unlike the cap rate, the cash on cash return formula includes the method of financing of the investment property, which makes it more comprehensive but also even harder to calculate.
The cash on cash return is calculated by dividing the pre-tax earned cash by the total cash invested in a short term rental property. As you can imagine, getting all the necessary data points and doing all the calculations to compare the CoC return of multiple markets and properties takes weeks or even months.
But the best source of reliable vacation rental data provides access to cash on cash return estimates without the need for manual rental market analysis.
What Types of Analysis Can You Do With Vacation Rental Data?
Ultimately, vacation rental data is so important because it allows investors to conduct different types of real estate analysis.
Here is what analysis you can perform with the help of the right short term rental data:
Real Estate Market Analysis
When buying an investment property, the first step is analyzing the potential of the location, starting with the city. This is known as real estate market analysis.
It’s important to purchase a vacation rental property in a market that attracts a lot of tourists, with friendly short term rental regulations, and offers above-average ROI. When evaluating whether a city is a good location to invest in vacation rental homes, consider the following vacation rental data points:
- Median property price
- Average daily rate
- Average occupancy rate
- Average vacation rental income
- Average cash flow
- Average vacation rental cap rate
- Average vacation rental cash on cash return
Traditionally, obtaining all the necessary information and data to analyze a market used to take multiple weeks. Afterward, investors needed to enter all data into Excel spreadsheets and perform manual calculations.
Now, you can perform all rental market analysis using online real estate investing tools, including the best source of short term rental data, which we will discuss shortly.
The second type of analysis to do when investing in vacation rental properties is neighborhood analysis. Similar to cities, different neighborhoods yield different results for real estate investors. In general, it’s a good idea to look for areas with good access to public transportation, proximity to tourist attractions, plenty of amenities as well as shopping and dining options, and safety.
In terms of specific numbers, you need to consider the same vacation rental data points as in your city-level market analysis.
Once again, getting and analyzing all required data is a long and tedious process that’s been made much faster and easier by recent real estate technology. The top source of vacation rental data should be able to provide you with ready neighborhood analysis.
Short Term Rental Property Analysis
The final type of analysis to do with vacation rental data is rental property analysis. Even if you choose the best city and the best neighborhood for short term rentals, there is no guarantee that a property will yield positive cash flow and good rate of return unless you analyze it. Certain property types, number of bedrooms, and amenities simply perform better in a market.
Investment property analysis requires finding comparable rental properties, called rental comps, and using their performance as an indicator of how you can expect your property to perform.
Related: Rental Comps: What Are They and Where Can I Find Them?
This brings the question: How do I find short-term rental data?
While it’s easy to find vacation rental comps on websites like Airbnb, Vrbo, and Booking.com, getting actual numbers on the performance of properties listed there is not that easy.
You may be wondering: Does Airbnb provide rental data?
No, Airbnb does not provide short term rental data in a form that individual investors can use to make profitable investment decisions. Thus, investors need to look somewhere else for the best source of reliable vacation rental data. This data will be helpful in conducting all the different types of analysis that go into buying a good rental property.
Where to Find the Most Reliable Source of Vacation Rental Data
Mashvisor comprises the best source of solid, comprehensive, trustworthy, up-to-date data on vacation rental properties.
For all the reasons listed below:
- Reliable data sources: Mashvisor gathers real estate data from the MLS and short term rental data from the Airbnb platform directly. It means that all data available on the Mashvisor real estate investing app is based on the performance of actual real estate comps and rental comps.
- Nationwide market coverage: Mashvisor covers all US residential real estate markets, from the largest metro cities to the smallest towns and villages. It gives investors a lot of flexibility to choose the market and property that fits their budget, as well as their expected revenue and return on investment.
- AI and machine learning: Mashvisor uses AI and machine learning algorithms to analyze all collected data and forecast the performance of other properties in a market. The application of the latest real estate technology assures that all provided vacation rental data is highly accurate and reliable.
- Ease of usage: Mashvisor offers a one-stop shop for all the needs of vacation rental property investors. They can search for markets and properties and analyze their potential. Importantly, the platform is very intuitive and easy to use, even for total beginners.
Here are all the kinds of vacation rental data that Mashvisor offers:
City Level Vacation Rental Data
Mashvisor provides investors with short term rental data on the market level. It means that investors can easily choose the most affordable and most profitable locations for this rental strategy.
Namely, you can visit the Airbnb Rentals and Top Locations sections of the Mashvisor real estate investing blog. There, you will find regularly updated lists of the best short term rental markets, based on occupancy rate, rental income, cap rate, and cash on cash return.
The readily available rankings of the top vacation rental locations can save you multiple hours of research and analysis.
Each top location comes with reliable estimates of the median property price, average price per square foot, average rental income, daily rate, occupancy rate, and ROI. You can use these vacation rental data points to ensure that a market meets all your investor requirements and expectations before starting to search for properties for sale there.
In addition to checking the investment performance numbers, it’s also important to ensure that a city has favorable legislation. You can visit the Mashvisor short term rental regulations pages to check if a city allows non-owner occupied vacation rentals or not.
Neighborhood Level Short Term Rental Data
Similarly, the Mashvisor real estate platform provides neighborhood vacation rental data. It covers all areas in all US cities and towns. This data is available on the neighborhood analysis pages.
The way to access the said data is simple. Once you’ve selected a city where you’d like to invest based on the data provided in the Mashvisor blog, you can use the search engine to look for opportunities in this market. From the listings, you can access the neighborhood analysis pages directly.
On each neighborhood page, you will find the most essential information needed to check if an area makes sense for investing in vacation rentals or not.
The data includes:
- Median property price
- Average price per square foot
- Average vacation rental income
- Average vacation rental occupancy rate
- Average vacation rental cash on cash return
Moreover, you can use the Mashvisor real estate heatmap to look for the most suitable areas for buying a vacation rental in each city. You can use filters like listing price, rental income, occupancy rate, and cash on cash return to focus on affordable neighborhoods with a good rate of return.
Property Level Airbnb Data
Last but not least, the data available on the Mashvisor platform allows you to conduct rental property analysis. First of all, you can use the search engine or the rental property finder to search for vacation rental properties for sale in line with your budget and expected ROI.
Then, you can access detailed analysis for each listing. It includes all previously described vacation rental data points, from property price and rental expenses all the way to cash flow and return on investment.
As someone interested in the short term rental industry, you’ve probably already heard of AirDNA as a source of vacation rental data.
So, you may be wondering: Is Mashvisor or AirDNA better?
Mashvisor is not only better than AirDNA, but it is actually the best source of reliable vacation rental data in the US market. All data comes from proven, trustworthy, publicly available sources and our Data Team double-checks them against the results of actual hosts.
Related: AirDNA vs Mashvisor: Which One Is the Better Source of Airbnb Data?
Final Words on Vacation Rental Data
With 2023 at the door, it’s time to start planning your first or next investment property purchase in order to start the new year on the right foot. If you’re leaning towards investing in a short term rental property, 2023 promises to be a great year for such a strategy. And the guaranteed way to land a profitable deal is to use the best vacation rental data available on the market.
For all the reasons that we’ve explained above, Mashvisor comprises the best source of short term rental data in the US. Our real estate investment platform provides city-level, neighborhood-level, and property-level vacation rental data for the entire US market.
Most importantly, we extract all data from reputable, accurate sources and they go through our proprietary AI and machine learning algorithms. Last but not least, we present them in a way that makes them extremely easy to use, even by absolute beginners.
If you’re ready to make 2023 the most profitable yet, sign up for a 7-day free trial of Mashvisor now.