Whether you are a property manager or a landlord, you are always up to boost your business, put all your efforts into providing a superior guest experience, and perform a seamless operation. After all, what you want to know the most is how much profit and income you’ve earned, and you will earn from your business.
Using a vacation rental income calculator is the best way to evaluate the benefits of running a vacation rental and see the main income sources worthy of investment. However, it is not exclusively about calculating vacation property revenue; it appraises various data and renders several functions, such as:
- Finding the top-performing vacation rentals
- Suggesting the best property location and best-renting price
- Predicting rental income
- Calculating the occupancy rate
- Estimating Return on Investment (ROI)
Let’s find out more by reading the article.
What Is a Vacation Rental Income Calculator?
It is an online software useful for all vacation rental investors of any scale. You might have thought that a property income calculator only aims to count a property monthly/annual revenue. But this is not its sole principle.
This tool provides some data in terms of the neighbourhood level and the property type in a city. Analysing the related data, a vacation rental income calculator finds the potential investment properties and evaluates their profitability.
What Information Does a Vacation Rental Income Calculator Provide?
Investing in a vacation rental can be challenging, especially if you are new to the neighbourhood or aren’t aware of the local market. The vacation rental income calculator would be a beneficial tool to find the right location, property, and rental price.
Information About the Location
As a property owner, you are aware that your property location is a deciding factor in having a successful business. The vacation rental income calculator is a great tool to find the best place for a rental property in your target region. Using a real estate heatmap, the property income calculator analyses different locations in your city of choice and finds profitable areas for investment properties.
The heatmap rates different areas based on a few ROI metrics and compares various neighbourhoods in a city. The highest-ranked areas are assigned a green colour, while the lowest-ranked locations are shown in red on the map.
Information About the Property
Finding the most profitable rental property in a chosen location is another purpose of a vacation rental income calculator. This software offers an extensive analysis of properties listed for sale in the neighbourhood. Thus, it provides a complete report containing data about ROI, rental revenue, occupancy rate, and property price obtained from the local market.
A property income calculator is a flexible tool, and you can customise the set values based on your knowledge regarding the market trend. Therefore, it will change the calculations and give a real-time report of income properties.
Information About the Price
Whether you are willing to buy a property or sell yours, the vacation rental income calculator helps you find the right price. This tool makes a comparative analysis according to the market values and finds properties comparable to yours or the one you are about to buy. Therefore, you can find your property’s fair price based on the local market’s sales prices.
This calculator has access to Airbnb comparisons; so, it comes handier and saves time finding similar properties in the target market, analysing them separately, and making comparisons.
What Data Does a Vacation Rental Income Calculator Release?
A property calculator estimates a vacation rental performance by evaluating some indicators, such as cash flow, rental revenue, occupancy rate, and ROI metrics.
The primary goal expected from every vacation rental income calculator is to compute the amount of money that a vacation rental makes or loses monthly. For assessing cash flow, the calculator diminishes all the costs related to financing and operating from the total revenue to give your rental’s profit. Cash flow can be positive or negative regarding how much you make or lose money.
As you would expect, the vacation rental income calculator will show you approximations of the rental income you might earn from renting out your property. In order to give you the most reliable estimate of monthly rental revenue, the calculator looks at the most popular nightly rate of vacation rentals in the region where your income property is located.
The occupancy rate shows how many days your rental property is likely to be rented over the course of a year. The property calculator estimates the occupancy rate according to Airbnb analytics gathered from your target market.
Return on Investment is used to assess investment efficiency by measuring the return rate of the investment cost. Cash on cash return and cap rate are two examples of ROI metrics calculated by the vacation rental income calculator.
Cash on Cash Return
Cash on cash return measures the amount of profit your property can make based on the amount of money you put into it. The vacation rental income calculator determines the property’s cash on cash return by factoring in your cash down payment as well as closing costs. This metric will come in handy if you’re thinking about investing in a vacation rental with a mortgage loan.
The capitalisation rate (known as cap rate) calculates how much profit your investment property would generate and determines your property worthiness, assuming that the property’s entire cost is paid in cash. However, it doesn’t take into account loan payments.
In summary, whether you are a newcomer or have run your holiday let for a while, making a new investment involves taking a risk. It will also become more challenging when there are no recordings of your income property performance and when the property you are considering buying has never been used as a vacation rental.
Having a vacation rental income calculator will decrease your shoulders’ loads if you are thinking of adding a short-term rental to your portfolio. This tool gathers data from the local market and reliable sources to give a real picture of your property and analyse your potential deals. Therefore, using a property calculator seems crucial for all property owners to boost their operation duties, and more importantly, expand their businesses.