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Why Airbnb Atlanta Is a Risky Investment in 2022


The world of real estate is a-changing. In that sense, it’s important to discuss why investing in Airbnb Atlanta in 2022 might prove to be risky.

Table of Contents

  1. Atlanta Real Estate Market Trends in 2022
  2. 4 Reasons Why Airbnb Atlanta Is a Risky Investment in 2022
  3. Why Consider Investing in a Traditional Rental Property in Atlanta Instead
  4. Is It Legal to Operate an Airbnb Atlanta Business?
  5. Top 5 Neighborhoods for Airbnb Atlanta Investment
  6. How to Find a Profitable Airbnb Atlanta Property
  7. To Conclude

Atlanta Real Estate Market Trends in 2022

The year 2022 is expected to come with an increase in Atlanta home sales and prices by more than the national average. To be more specific, the forecast involves a 3.5% jump in terms of price growth and a 10% sales growth year-over-year.

The main factors that are determining the Atlanta real estate market include affordability, job growth, and population growth. Here are some quick stats on the Atlanta market according to Mashvisor’s latest report:

  •  Number of Listings for Sale: 2,626
  •  Median Property Price: $601,992
  • Average Price per Square Foot: $465
  • Days on Market: 72
  • Number of Traditional Listings: 3,799
  • Monthly Traditional Rental Income: $2,425
  • Traditional Cash on Cash Return: 2.53%
  • Traditional Cap Rate: 2.59%
  • Price to Rent Ratio: 21
  • Number of Airbnb Listings: 4,631
  • Monthly Airbnb Rental Income: $2,134
  • Airbnb Cash on Cash Return: 0.66%
  • Airbnb Cap Rate: 0.68%
  • Airbnb Daily Rate: $151
  • Airbnb Occupancy Rate: 43%
  • Walk Score: 44

The value of houses in Atlanta grew by 16.6% over the last year and by more than 74% over the last 5 years.

Related: Atlanta Real Estate Market Forecast 2022

Affordability

In terms of affordability, the Atlanta, Georgia real estate market has a number 4 index out of the 1–10 scale. Here, number 1 represents the most affordable market while 10 stands for the least affordable one. In that sense, this particular market falls into the mid-range category, meaning there are still a lot of people who can buy a home in the city. But because of the high price-to-rent ratio, it is more economical for many to rent instead of own a property.

Job Growth

It’s expected that the metropolitan area of Atlanta will provide about 1.2 million new jobs in the next three decades. The forecast mostly focuses on professions in construction, tech and science, professional, and health care fields.

What’s more, the metro area has reported a 1.14% year-over-year employment growth. It’s also important to mention that Atlanta has been deemed a thriving innovation hub, as the ideal hotspot for tech and Black-owned businesses. The city holds a position among the top 25 ecosystems in terms of global startups.

Related: Job Growth and Its Effects on the US Housing Market

Population Growth

It’s true that the growing population numbers have dropped a bit when compared to previous years and decades, but Atlanta is still growing. Some might say that the current population growth is much healthier than before. The key driving growth force is considered to be employment, putting the housing market in a tough position when it comes to catering to new residents.

As the capital of Georgia, Atlanta has about 6.1 million residents in the metro area, with half a million just in the city. The population increased by 1.14% over the last year or 11.6% over the last decade. In the next 30 years, Atlanta’s population is expected to grow by 2.9 million people.

4 Reasons Why Airbnb Atlanta Is a Risky Investment in 2022

It’s clear that Atlanta is still a thriving place for real estate investment, but this year, choosing to opt for short-term rental investment or the Airbnb Atlanta route may not be the most practical and lucrative move. Here’s why:

1. Cash on Cash Return

When we take a look at things from the owner’s perspective, the Atlanta Airbnb cash on cash return is definitely lower compared to traditional rent. By checking the stats above, we can see that the average percentage for traditional rentals is 2.53 while Airbnb is below it with only 0.66.

Related: What Cash on Cash Return by City Should Real Estate Investors Expect in 2022?

2. Cap Rate

Again, just like in the case of cash on cash return, the traditional market still fares better than Airbnb in Atlanta. That said, the Airbnb cap rate is only 0.68% while the traditional cap rate is 2.59%. Of course, you might be one for investing with the safest option possible, and in that sense, a lower cap rate might sound appealing to you. However, it is also a fact that with a cap rate as low as 0.66%, you simply cannot expect to cover your purchasing costs reasonably quickly.

3. Income

Finally, what kind of income you can look forward to is one of the biggest factors you need to consider for your investment portfolio. And in the case of Airbnb Atlanta, things don’t seem too ideal either. The monthly traditional rental income is estimated at $2,425. When you compare that to the monthly Airbnb rental income of $2,134, it’s immediately clear which option is more lucrative.

4. Occupancy Rate

The Airbnb Atlanta occupancy rate falls at 43%, which means that chances are you are likely to struggle to secure some bookings at first. With more than half of available Airbnb properties empty, you have to ask yourself just how well your own Airbnb property will manage. After all, if you have no ratings on Airbnb and have to start from scratch, you will have to accept that you automatically won’t get many bookings in the first place.

Consider Investing in a Traditional Rental Property in Atlanta Instead

There’s no reason why you shouldn’t look at Atlanta as a great place to start (or continue) your investment journey. When we consider the job and population growth, adding this city to your portfolio definitely seems worthwhile. However, the stats show that the better course of action in 2022 for Atlanta investment property involves long-term or traditional investing.

What’s more, the previously mentioned reasons why Airbnb in Atlanta Georgia could prove to be risky this year make for a compelling argument in favor of investing in a traditional property. As stated, traditional monthly income, cash on cash return, as well as cap rate are all higher compared to Airbnb stats. Not to mention that due to the high price-to-rent ratio, you are more likely to find tenants quickly.

Is It Legal to Operate an Airbnb Atlanta Business?

The short answer is yes, it is legal to run an Airbnb business in Atlanta. However, the City Council approved a new law last year that requires certain permits for short-term rentals in Atlanta. What’s more, as a property owner, you will also have to take full responsibility for the behavior of your guests and even pay a fine if your guests act disruptively. There’s also the matter of city hotel-motel tax.

Basically, this new law was passed in September 2021 where hosts are required to get special operating permits from the Department of Planning and Community Development, with a non-refundable fee of $150. The maximum number of permits is two; one for the main address and one for the other property.

Furthermore, the law states that it’s the host’s responsibility to ensure the best behavior of their guests so that they won’t affect the neighborhood in any negative way. If the guests violate the code in some manner, it will be up to the host to pay a fine of $500 for every single violation. If your property gets 3 violations, you won’t be able to market it as an Airbnb rental for one whole year.

Top 5 Neighborhoods for Airbnb Atlanta Investment

Of course, with everything said and done, it still doesn’t mean you can’t or shouldn’t invest in Airbnb Atlanta rentals. This is especially true for experienced investors who are already used to market fluctuations and have a proven technique for Airbnb property management.  

That said, we will list the top five Airbnb Downtown Atlanta neighborhoods that still seem to fare well for the hosts based on Airbnb cash on cash return, according to Mashvisor’s latest report. Keep in mind that just because certain neighborhoods may indicate a lower data number, it’s more than possible for investors to find the optimal Airbnb investment opportunity among them.

1. Vine City

  • Number of Airbnb Listings: 1,137
  • Monthly Airbnb Rental Income: $2,283
  • Airbnb Cash on Cash Return: 3.18%
  • Airbnb Cap Rate: 3.26%
  • Airbnb Daily Rate: $138
  • Airbnb Occupancy Rate: 40%
  • Number of Listings for Sale: 6
  • Median Property Price: $371,800
  • Average Price per Square Foot: $205
  • Days on Market: 69
  • Walk Score: 65

2. Ashview Heights

  • Number of Airbnb Listings: 637
  • Monthly Airbnb Rental Income: $2,134
  • Airbnb Cash on Cash Return: 2.02%
  • Airbnb Cap Rate: 2.05%
  • Airbnb Daily Rate: $156
  • Airbnb Occupancy Rate: 40%
  • Number of Listings for Sale: 8
  • Median Property Price: $414,350
  • Average Price per Square Foot: $260
  • Days on Market: 102
  • Walk Score: 51

3. Atkins Park

  • Number of Airbnb Listings: 654
  • Monthly Airbnb Rental Income: $2,902
  • Airbnb Cash on Cash Return: 1.70%
  • Airbnb Cap Rate: 1.75%
  • Airbnb Daily Rate: $149
  • Airbnb Occupancy Rate: 50%
  • Number of Listings for Sale: 26
  • Median Property Price: $718,085
  • Average Price per Square Foot: $357
  • Days on Market: 76
  • Walk Score: 85

4. The Villages at Castleberry Hill

  • Number of Airbnb Listings: 1,116
  • Monthly Airbnb Rental Income: $1,500
  • Airbnb Cash on Cash Return: 1.68%
  • Airbnb Cap Rate: 1.77%
  • Airbnb Daily Rate: $141
  • Airbnb Occupancy Rate: 41%
  • Number of Listings for Sale: 3
  • Median Property Price: $272,967
  • Average Price per Square Foot: $315
  • Days on Market: 184
  • Walk Score: 73

5. Inman Park

  • Number of Airbnb Listings: 1,205
  • Monthly Airbnb Rental Income: $2,295
  • Airbnb Cash on Cash Return: 1.28%
  • Airbnb Cap Rate: 1.31%
  • Airbnb Daily Rate: $138
  • Airbnb Occupancy Rate: 46%
  • Number of Listings for Sale: 6
  • Median Property Price: $539,894
  • Average Price per Square Foot: $388
  • Days on Market: 57
  • Walk Score: 87

How to Find a Profitable Airbnb Atlanta Property

If you’re set on investing in Airbnb Atlanta Georgia, you have to perform a comprehensive Airbnb analysis. This includes gathering all the valuable data about the city you’re interested in, such as daily and monthly rental income, occupancy rate, return on investment (ROI), cap rate, etc. As you could see previously, all real estate data by city is available at Mashvisor.

Once you sift through this data, you can further filter and simplify your search by checking the neighborhoods. Again, you can use Mashvisor’s Heatmap Tool in order to pinpoint the best neighborhoods for Airbnb Atlanta GA. Thanks to this tool, you can filter the search by entering the data that works best for you, such as listing price, occupancy rate, Airbnb income, and so on. When a certain neighborhood matches all of your criteria, it will be highlighted green.

And when you find the most prominent neighborhoods for the Atlanta Airbnb Georgia market, you should further proceed to do the comparisons of the neighborhoods and properties. With Mashvisor’s Rental Property Finder, you can quickly locate the best properties in the best areas for you. You can also filter this search by various info, like budget, rental strategy, property type, etc.

Finally, when you have the top Airbnb rental options in front of you, you can complete your analysis by using Mashvisor’s Airbnb Investment Calculator. Backed by updated MLS and Airbnb information, the calculator will give you a detailed property analysis with just one click. For instance, you’ll gain insight into data such as Airbnb cash flow, estimated costs, comparable Airbnb rental income, Airbnb vs traditional rental strategy comparison, and more.

How to Find a Profitable Airbnb Atlanta Property

Mashvisor’s Heatmap Tool gives an overview of the areas in a city that have been performing better based on your selected criteria.

To Conclude

As a real estate investor, you have to pay attention to market changes and fluctuations. The year 2022 seems to be riskier for Airbnb Atlanta investing, but that still doesn’t mean you can’t secure some rather lucrative short-term rental properties if you know where to look. Fortunately, Mashvisor can help you with that.

If you’re ready to make your investment journey as smooth as possible for yourself, make use of everything that Mashvisor has to offer and sign up for a 7-day free trial.



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