Last updated on April 24th, 2024
What is the best number of bedrooms for Airbnb? You might be surprised to know the answer!
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What is the best number of bedrooms for Airbnb? You might be surprised to know the answer!
- Last updated April 24, 2024
What is the Best Number of Bedrooms for Airbnb?
Executive Summary
As a (short-term rental) data scientist, I’ve had the privilege of looking into how the number of bedrooms could impact Airbnb metrics in various cities.
Here’s a summary after looking into over 500 Airbnb markets worldwide:
1. Typically, listings with fewer bedrooms enjoy higher occupancy rates: Studio > 1 bedroom > and so forth. The average occupancy rate drops by 3-5% as the number of bedrooms increases.
2. The average daily rate increases by anywhere between 20-50% by adding an extra bedroom.
3. Rare properties with 6+ bedrooms may get a low average occupancy rate. However, they can charge a premium daily rate. More extensive properties can be irreplaceable and unique by offering an exciting amenity like a basketball court or a wedding venue. While revenue can be high, they’re unlikely to be booked as frequently as others. The gross rental yield of 6+ bedrooms can be higher in the right market.
4. 2 to 3 bedrooms have the lowest gross rental yield on average. Their sales price is high because you must compete with primary residential home buyers.
5. There’s usually little to no difference between a studio and a 1-bedroom unit.
Introduction
Aside from location, the best number of bedrooms for Airbnb is also a major factor in real estate investing, as this can also maximize the revenue potential of your investment property. In this blog post, we’ll use accessible short-term rental analytics to answer the question on every investor’s mind, “What is the best number of bedrooms for Airbnb?”
So, whether you’re a seasoned investor looking to expand your portfolio or a newcomer eager to capitalize on the sharing economy, read on to discover the insights that will help you maximize your returns on your prospective Airbnb property!
What qualifies as a bedroom on Airbnb?
An Airbnb bedroom should typically be a private space within your listing that offers sleeping accommodations. It should have walls, a door, and a window for ventilation and natural light. In terms of size, it should be large enough to accommodate a bed comfortably, with ample space for guests to move around.
To meet Airbnb bedroom requirements, it should feature a real bed, such as a standard double or queen-sized mattress, or a larger alternative like a king-sized bed. While potentially suitable for extra guests, air mattresses or sofa beds generally do not count as qualifying beds for an Airbnb bedroom.
Additionally, the bedroom should provide basic furniture and amenities essential for a guest’s comfort and convenience. This includes items like nightstands, lamps, storage space (such as a closet or dresser), and privacy-enhancing features like curtains or blinds.
Importantly, a bedroom should not be a shared space, such as a living room, dining area, or any other common area within your property. While you may offer these spaces to guests, they should be clearly differentiated from a designated bedroom.
How many bedrooms are best for Airbnb?
Surprisingly, there really isn’t a magic number! The number adjusts depending on the Airbnb market. However, realtors often advise you to go for a property with the most number of bedrooms if your target is to maximize income. It may be true that a bigger property means a higher nightly rate. On the other hand, its downside may be a lower occupancy rate.
Myth: More Bedrooms the Better?
But people still try to give a definite answer and give the exact best number of bedrooms for Airbnb. They say that it is around 3, but this number is just an average within a market.
While averaging the best number of bedrooms for Airbnb already gives us an idea, the tricky part is the size of the market which they get the average from. Is it the average per state or country? If this is the case, perhaps the short-term rental market is too big to give investors the best number of Airbnb bedrooms and guide them closer to buying the investment property that will give them the highest return.
Gross Rental Yield
To find the best number of bedrooms for Airbnb, intelligent investors consider the gross rental yield. It is one of the financial metrics used to assess the return on investment (ROI) of a rental property. This helps you measure the property’s income-generating capacity in relation to its purchase price.
In the next section, you will learn how to find an Airbnb investment property using gross rental yield to finally answer the best number of bedrooms for your next Airbnb market.
How To Find the Best Number of Bedrooms for Airbnb in Your Market?
Finding Airbnb properties requires a lot of research. But in most cases, Airbnb investors already have a prospective Airbnb market in mind. Be it a beach or shopping destination, they already have a picture of the kind of guests they want to accommodate. The next step for them is to research and get Airbnb data on that short-term rental market.
(For first-time investors who still do not have a specific Airbnb Market in mind, read on because this research method can also help you!)
Check Your Prospective Airbnb Market
Airbtics’ Discovery Tool answers 2 questions very important to investors, “Where should I invest in?” and “What is the best number of bedrooms for Airbnb in that market?”
Airbtics’ Discovery Tool is so easy to use. Simply type in your prospective short-term rental market, and you will instantly see how profitable that market is! Let’s take the Orlando Airbnb market as an example.
According to Airbtics Dashboard, a 2-bedroom Airbnb unit has an average annual revenue of $45,015 while a 1-bedroom unit has $32,656. However, a 1-bedroom Airbnb unit in Orlando is a more valuable investment in terms of gross rental yield (although marginally) compared to a 2-bedroom unit.
The Discovery Tool also shows Airbnb data in nearby cities. And as you can see, fewer bedrooms have higher gross rental yields in Cocoa Beach and Cape Canaveral. This feature of the Discovery Tool presents wider investment opportunities to investors and can make them want to reconsider their prospective Airbnb market.
Less Isn’t Always More
But “fewer bedrooms give higher gross rental yields” is not always the case. If you check Jacksonville, you can see that the higher the number of bedrooms, the higher its gross rental yields and annual revenue! This is why it’s really important to check the data on your Airbnb market before buying a multi-million dollar investment property.
We’ll also offer you a more detailed way to see the best number of bedrooms in a very specific Airbnb market.
Get Location-Specific Airbnb Data
Let’s say that you’re planning to buy a property in West Seattle where you dream to retire in the future. But in the meantime, you want to make it a worthwhile investment that will give you a stable income and simultaneously give you a faster return (measured by gross rental yield).
You have narrowed down your options, and now you have to choose between this 2-bedroom property worth $634,950 and this 3-bedroom property worth $927,999.
With access to the right data, you can simulate the ROI of your prospective property investment by customizing an Airbnb market. It gives you a dataset specific to your target market such as their average Airbnb occupancy rate. Let’s now mirror the Airbnb West Seattle market using the Airbtics Dashboard.
West Seattle currently has 79 active Airbnb listings that have an average occupancy rate of 78% and charge an average nightly rate of $195. The average annual revenue in this Airbnb market is $56,769.
You can now answer the question of which of the two properties you will buy: the 2-bedroom property worth $634,950 or the 3-bedroom property worth $927,999. By using the advanced filters you can know the financial performance of a property size. And from there, you can determine the best size house for Airbnb in a specific market.
Both property sizes are profitable (and interestingly, the 2-bedroom property in West Seattle Airbnb Market can give a higher annual revenue). Let’s now use one of the industry-standard methods of getting the gross renting yields.
In this research, we have learned that a 2-bedroom property in West Seattle is a more worthwhile investment. It has an average revenue of $83,476 ($1,683 more than that of a 3-bedroom property). This property size even has a 4.33% higher gross rental yield, which is another performance indicator of property investment.
Our hypothetical investor is now really glad! He has already found the investment property that meets his criteria: a stable passive income and a faster return on investment. It has solved the problem of which of his prospective properties in West Seattle is more worth spending his hard-earned money on, the 2-bedroom or 3-bedroom unit!
Conclusion
In this article, we have learned that we cannot really put a figure on the best number of bedrooms for Airbnb. As we have seen, the wisdom that “more rooms, more revenue” is only true because you can charge a much higher nightly rate.
However, it might take you longer to get your return on investment of that bigger property worth at least $ 1 million. At the same time, we cannot rely on a “less is more” mindset. As we have seen in Jacksonville, the annual revenue and gross rental yield increase with the number of bedrooms.
How to find Airbnb properties is a challenging question to answer, but Airbnb investors will just have to analyze the data on their prospective market. This article aims to give them a hand with how to use short-term rental analytics when looking for their next rental property.
If you have a property in mind, try this comprehensive and accessible Vacation Rental Calculator and see how much you gain from your prospective property investment.
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