Landlording & Rental Properties

Required Reading: Do Your Homework Before Airbnb-ing Your Property

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10 Articles Written
airbnb arbitrage

When it comes to starting a short-term rental business, conducting effective market research can be the difference between success and failure. Many people think that they can just find a cute home in their market, and it will be successful because it looks nice. This couldn’t be further from the truth.

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Starting a business utilizing Airbnb or similar platforms is exactly like any other real estate investment, which means you've got to do the upfront work or you risk making a mistake. Market research is a big part of the upfront work. You need to know whether or not your market is going to be profitable before you ever acquire a property and list it online.

You will need to be able to answer questions like what are the most profitable zip codes in your city? How much is the average rent? What can I charge per night? How many days of the month will my property be booked?

What will my expenses be? Which seasons are most profitable? Which local attractions do people want to be around the most?

Using Airbnb for Market Research

If you want a quick estimate on the potential revenue you might earn with your property, you can use the Airbnb Calculator available on BiggerPockets. It will give you a basic idea of how your property might perform in your specific city.

If you decide to move forward, then you will need to collect additional data to make a better decision on what type of property you want and which area.

To determine these things, first you’re going to want to open up the Airbnb website and type in your city. Then click the option for “Homes.”

airbnb market research

Related: How to Triple Your Rental Profits with Airbnb

Next select the option for “Entire Home”; this will automatically filter out options for shared rooms or private rooms. This is important because you should ideally be looking to rent out the whole place, which will end up being more profitable and easier to manage.

From here, you can also filter out the number of rooms. Set a maximum of four guests for a one-bedroom house and six for a two-bedroom house.how to use airbnb for market research

At this point, you will have filtered the results down to a much smaller number of homes that you can begin to analyze. If you want to take it a step further and narrow down your results to the best possible listings, you can select “Super Host” and “Plus Verified.” Then start off by examining the listings with the highest reviews to see what’s working for them.

Look at how much they are charging per night and run the numbers to see your potential profitability. If the average price per night is $150, then you can reasonably assume that if you rent the place out for 80 percent of the month, then you will make around $3,500 in revenue.

If you know how much rent and expenses are in your sub-market, then you can calculate how much your net profit will be at different occupancy rates. My advice is to find a property that will cashflow even if it’s only at 50 percent occupancy for the month. That way you can cover expenses during the off-season.

Related: 6 Steps to Getting Started with Airbnb [Video!]

Learn Your Market

Once you know which general areas are experiencing success with short-term rentals, you can begin to learn about your local market and it's various neighborhoods. You will want to find out which attractions people want to be around, such as parks, bars, shopping centers, and sports arenas.

Much of this you can find using Google and Yelp by simply searching for attractions in your market. Then cross-reference what you find with the top properties on Airbnb. Examine their headlines and descriptions to find out what they are marketing to their guests. It’s a good bet that they know what the people want based on their feedback from being in business.

A lot of the work has already been done for you, but knowing where to look is key. I hope you find this information useful on your journey to becoming an Airbnb entrepreneur!

Do you have any questions about researching your market? Or any questions about short-term rentals in general? 

Leave them below in the comment section. 

 

Jason has been in the real estate business since 2015 with a primary focus on commercial investments. Over the last 10 years he has also started and operated businesses in digital marketing and eCo...
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    LINDA WETZEL from Sebastian, Florida
    Replied over 1 year ago
    Check the laws in the areas you plan to do this in, before you go all in. Some cities and/or counties have been pushing back at this by limiting how short a short-term rental may be, trying to force owners to collect and pay hotel taxes, and requiring owners to live on-site. These are some of the strategies I have heard as being proposed recently.
    Jason Allen Investor from United States
    Replied over 1 year ago
    “some” niche communities have gone overboard yes. However most markets even restricted one’s like Atlanta just require a business license, sometimes a hotel license (without hotel tax btw) in order to be in regulation. Honestly I’m kind of glad this minor barrier to entry scares people away because that just means more market share! Good luck!
    Gulliver R. Rental Property Investor from Los Angeles, CA
    Replied over 1 year ago
    Is LA or the OC super regulated? Is there a website I can refer to that will tell me if a city outlaws Airbnb or requires me to have some kind of license in order to host an air bnb place?
    Jason Allen Investor from United States
    Replied over 1 year ago
    I’ve never done business in that market so I can’t help you there. Sorry!
    Dani Sung Rental Property Investor from San Diego, CA
    Replied over 1 year ago
    Gulliver, each county, city and municipality is different. For example, Anaheim has different laws on short term rentals then the neighboring city of Orange. Everything is very detailed and specific. You can scrape the internet for information but from my experience it’s not accurate or precise. I suggest a real estate attorney that specialize in this area. I work with 1 for mine, he also owns a portfolio of airbnb properties in the area so he’s definitely on the host side. Let me know if you would like his contact info.
    Dani Sung Rental Property Investor from San Diego, CA
    Replied over 1 year ago
    Great information! Thanks for sharing!
    Jason Allen Investor from United States
    Replied over 1 year ago
    Thanks!
    Terry Lowe
    Replied about 1 year ago
    I think a lot of towns and cities in Colorado are very restrictive.
    Jason Allen Investor from United States
    Replied about 1 year ago
    Yes, Colorado is very restrictive.
    Justin M Charles
    Replied about 1 year ago
    Jason Allen, is there anyway I could have you call me? I am trying to learn this method and I am moving to Savannah Ga. 843 267 1917 Is my Cell. Justin Charles
    Jason Allen Investor from United States
    Replied 7 months ago
    Hey Justin, I can answer any questions here or you can PM me here on BP.