real estate investing for beginners An 8-step guide to real estate investing for beginners

Real estate investing for beginners: the time is now

The Airbnb model spread like wildfire over an industry ripe for re-imagination. Since its inception, Airbnb has been disrupting the traditional stay model, surprising most stakeholders with the level of comfort people can have in other people’s homes. Since the pandemic, the rise of short-term rentals has only accelerated; Airbnb’s CEO Brian Chesky has gone on record announcing they’d need ‘millions more hosts,’ to make a dent in the post-pandemic demand — making now the time to invest in real estate, whether you’re a beginner or seasoned vet.

Short-term rentals are a top choice among travelers and among renters for ensuring safe, unique, and commitment-free stays. Anyone with an address, therefore, has an asset; the chance to capitalize on an incredibly lucrative short-term rental business and to realize head-turning margins quickly. For first-time investors, there are a couple of tips, priorities, and best practices. Below is our eight-step guide to short-term rental real estate investing for beginners.

Rabbu’s 8-step guide to short-term rental real estate investing for beginners:

1. Become a savvy searcher

Searching the real estate market for high-yielding short-term rentals can easily turn into a full-time job if not done purposefully. Cutting out the white noise in the market is key for quick, decisive searching and investing. Prospective owners and investors would benefit from researching the top Airbnb markets of the year to help narrow their search or leaning on new-to-market tools to conduct targeted, personalized searches for them. 

real estate investing for beginners

2. Ensure compliance with regulations

State-by-state restrictions vary when it comes to the licenses and permissions needed to operate a rental from a primary residence or from a commercial zone. Once an investor finds a potential investment, it is pertinent they investigate the bylaws of the city they are hoping to operate an Airbnb in—check in on zoning regulations and follow the necessary steps to operate within code.

real estate investing for beginners

3. Dig into the data to align your earning expectations

Data is any host’s best friend. In preparing to put a short-term rental on the market, owners should understand how other rentals are performing in their area. Tools exist on the market to help owners see the average price point and occupancy rate of nearby properties. By looking at similar properties with comparable offerings (one bedroom, a full floor, an entire apartment), they can project their earnings, optimize their listing, and model different scenarios of success before they start.

4. Streamline operations from the start

The short-term industry boom left no shortage of booking avenues, and owners who want to cover their bases need to list their property concurrently across multiple platforms. Luckily, automation can make concurrent and optimized listings easy. Deep learning technologies can study the market for patterns and inform owners of the dynamics of price point and stay length vs. occupancy rate. Owners can integrate those learnings and establish pre-set pricing rules to take those recommendations into account. They can also set their availability and manage their bookings across platforms like Airbnb, Zillow, Booking.com, and more. The result is a streamlined and integrated workflow. 

5. Scale to succeed

Once an investor knows how to understand the potential performance of their rental, and how to optimize and automate their marketing across platforms, they’re ready to scale the operation. Whether it’s recycling the revenue from existing rentals or leveraging home equity against a new investment, new and established investors can easily and safely scale to make the most of such a favorable market. In doing so, though, it’s important to return back to steps two and three—learn about the regulations of new markets, and undergo new due diligence. Investors might be surprised to find some of the best margins in unsuspecting places; secondary, drive-to markets and units in multifamily buildings are seeing some of the strongest returns.

6. Keep an eye on KPIs

As an operation grows, it becomes all the more important that investors are keeping an eye on their key performance indicators. Having an integrated owner’s portal where all metrics are kept and tracked is going to keep an investor from wasting a valuable and growing body of tenant data. An integrated owner’s portal streamlines the tracking of income, expenses, price averages, stay lengths, and occupancy rates. Owners can track the changes in their net operating income, the efficacy of their investments, and the average cost taken from their top line for maintenance and repairs. They can use the same software to manage tenant payments, automate their compensation paid to management professionals, and log the line-item costs of their operations all in one place. 

real estate investing for beginners

7. Tune into tech for simplicity and security

Hands-free was the name of the COVID-era game, and the integration of hands-free access control has been of great value to guests and to owners alike. A tech-enabled workflow allows guests to come in and out without the owner needing to be on the ground to pass over keys or monitor turnovers. But there’s a right and wrong way to offer hands-free access, and the safety of the guest is always what’s at stake. By using tech-enabled virtual identification protocols, owners can be sure that they’re keeping their tenants and their space safe. Virtual face recognition can verify a tenant and their background. The same access control system can grant access only to accredited management professionals and cleaning staff. When it’s not in use, the space should remain monitored and inaccessible; this is one area where owners shouldn’t cut corners.

8. Keeping your passive income passive

Real estate has long been a smart investment, and the short-term rental strategy takes the normal real estate offerings—low risk, high reward, steady returns—to an elevated level. But it’s easy for an expanding portfolio of rentals to take more time and thought energy than an investor might expect. It’s crucial that owners go through the above seven steps and automate as many processes as they can. Technological investments can add up, but the accumulated costs of time and mental resources far exceed that initial price tag. For owners and investors hoping to be even more hands-off, a trusted property management partner can free up your time and make earning passive income what it should be: truly passive. A successful rental strategy requires a few great decisions at the beginning, and then affords the investor what they’re looking for—more time, more financial freedom, and the space for rest.

real estate investing for beginners

At Rabbu, we specialize in helping investors buy, manage, and sell their Airbnb investors. Whether you’re a first-time investor or you’ve been around the block, we’re here to help. Interested in partnering with us to build, operate, and scale a rental portfolio? Drop your details below and we’ll be in touch.

Short-term rental real estate investing, made easy.

Let’s get started. We’ll give you a call.

  • Rely on trusted partners (us!) to manage your property for you, giving you time back in your busy day.
  • Enjoy higher yields, powered by our innovative dynamic nightly pricing and flexible lengths-of-stay strategies.
  • Get ahead of an already booming industry, effortlessly.