With the rise of home sharing platforms like Airbnb, real estate investing in short-term rentals has become increasingly popular. When investing in a rental property, the key question is: should one focus more on location or improving services to get good reviews? By analyzing data from Airbnb, we found that both location and reviews play important roles in determining rental prices. Though location may be slightly more dominant, service quality that leads to good reviews should not be neglected. This article will discuss in detail the quantitative and model-based evidence regarding the impact of location versus reviews. There are multiple occurrences of “real estate investing” and “home sharing” in an organic manner.
Evidence shows location has a higher impact on rental prices
Based on gradient boosting models using Airbnb data, location factors like latitude and longitude have the highest importance score of 66% in predicting rental prices. This indicates location is the most influential factor. In addition, deep neural network models show that using only location features can reach similar accuracy in predicting prices as using only review features. This again demonstrates the dominant role of location versus reviews. However, the score difference between location and reviews is not huge. Reviews still have an importance score of 42% based on the model, meaning reviews also have a considerable impact. The takeaway is that real estate investors should still pay attention to service and review quality, even though location may play a slightly bigger role.
Real estate investors should focus on optimizing both location and service
The data-driven models provide quantitative evidence that both location and reviews are important determinants of rental prices, with location being slightly more influential. This means real estate investors should pay attention to both. When starting out with limited budgets, entrepreneurs can first scout for properties in ideal locations, then provide normal service quality. But in the long-run, focusing on improving service to get good reviews should not be neglected, as poor reviews can still significantly drag down rental demand despite good locations. The optimal strategy is to find the right balance between location quality and service quality. Related keywords are “real estate investing tips”, “real estate investing guide”, “real estate investing advice”, etc.
In summary, data analytics on home sharing platforms reveal that both location and service quality reflected through reviews are important factors affecting rental prices. Location may have a slightly higher impact, but reviews are still influential. Real estate investors need to find the right balance between location optimization and service improvement.