Is It Good to Invest in a Studio Apartment? 

According to Airbtics, studio Airbnbs in 10 US cities have an average annual revenue potential of $35,084 from charging an average nightly rate of $110. Their average gross rental yield is 14.21%.

Why invest in studio apartments?

Choosing the best number of bedrooms for short-term rentals is important to ensure profit maximization in any given market. However, it is also a reality in short-term rentals that investing in a studio apartment is a cost-efficient and also profitable way to earn a steady passive income. Here’s why?

 1. Low Cost

Compared to larger properties, studio apartments have a lower purchase price. This gives a very affordable entry point to a lot of first-time Airbnb investors. And because of their small size, studio apartments require less cost compared to bigger properties like houses or multi-bedroom apartments. 

Maintenance expenses for utilities, repairs, and upkeep are significantly reduced because of lesser space and fewer amenities. These lower costs play a crucial role in boosting the overall profitability of your investment, allowing you to keep expenses in check while generating steady rental income.

2. Central Location

While studio apartments are small in size, being in prime locations is their best selling point. They are usually situated in the most vibrant and energetic parts of cities where there is a variety of leisure activities. 

Studio apartments are usually smacked in the middle of business centers and tourist attractions. These locations are usually well-connected to different transportation networks such as airports, roads, and public transportation.  Being centrally located offers a higher chance of visibility and accessibility, making it more appealing to potential guests.

3. Adaptability 

A studio apartment has its own charm, yet it’s flexible to different guest demographics. These small units can cater to various segments of guests, such as solo travelers, couples, young professionals, and even small families.

A key advantage of catering to a diverse range of guest segments is the potential to maintain consistently high occupancy rates throughout the year. During periods when one segment may be less active, there are still other guest segments eager to book the property. This diversified demand helps to stabilize occupancy rates and minimizes the impact of seasonal fluctuations or market trends that may affect a specific guest segment.

4. Scalability and Diversification

Investing in studio apartments for Airbnb can jump-start the journey to financial independence of budding real estate investors. Due to their lower purchase price, studios offer an excellent return on investment and yet demand less financial commitment from the get-go. 

After establishing a successful Airbnb studio apartment, gradually expanding your property portfolio could be your next step. You can consider buying more studio units for Airbnb. Even investing in bigger properties or those with more sophisticated amenities is well within your reach. By adopting this gradual expansion approach, you can naturally develop and expand your Airbnb rental business, leveraging your expertise, available resources, and the demand in the market.