Looking to buy my first STR and having trouble finding one that projects to make a COC return worth investing in. The high sale prices and subsequent mortgage payments kill the net profits. Raising the rental rate would price me out of the competition of those who bought low and are seeing a 25% COC return. Am I just looking in the wrong areas (Maui, Lake Norman, Gatlinburg)?
You're going to have to do a lot of research. There are some more known areas, but you want the smaller unknown ones...and to be honest, a lot of people are going to be reluctant to share where those are. Small towns with maybe a possibility of 40 STRs max and you're going to post on here where those are? The town will be filled out within a week.....
Just look.....and think....where do you and people you know like to go?
edit to add, cause that's not helpful: you're on the right track with those kinds of areas. America is HUGE. Find places *like* those but not those. Get a property that's a large, regular single family home that needs some renovations. 20%+ CoC is possible.
@Account Closed is right. It is very possible to make a lot of money with a good STR at any point in time. But you cannot go where everyone else has already been and just duplicate their efforts. Find the next hot area. And then when you get there, don't just buy the next crackerjack house that comes along...be different, be unique. No one wants to stay in a STR like a motel. If they did they would have just stayed in a motel.
Buy a serious fixer and do as much work as possible yourself...that is the best way to get a big ROI...
You're going to have to do a lot of research. There are some more known areas, but you want the smaller unknown ones...and to be honest, a lot of people are going to be reluctant to share where those are. Small towns with maybe a possibility of 40 STRs max and you're going to post on here where those are? The town will be filled out within a week.....
Just look.....and think....where do you and people you know like to go?
Depending how serious you are, you can talk to Tom at AirDNA. They offer a "Best Places to Invest" spreadsheet for around 5k. It is like a meta analysis of most profitable (revenue vs median home price of the area), up and coming mid sized markets in either North America or Europe.
Or you can get it as part of the global unlocked Market Minder annual subscription for about $10-12k/yr. (Not sure what the current price is exactly, it's gone up a bit I was told.)
Or do what Bruce said. Find a place you like, do some research, do some math, and go.
Not sure if I'd recommend spending 5k for a spreadsheet or 10k+ for a subscription. There's no easy easy way, you have to put in the time. A lot of time, a lot of phone calls, a lot of research. Get very familiar w/ Airbnb & vrbo apps and how to analyze calendars for occupancy/ vacancy, etc. Sites like Airdna can offer some valuable data, but starting out you'll need all the capital you have to purchase and furnish/ decorate the home.
Not sure if I'd recommend spending 5k for a spreadsheet or 10k+ for a subscription. There's no easy easy way, you have to put in the time. A lot of time, a lot of phone calls, a lot of research. Get very familiar w/ Airbnb & vrbo apps and how to analyze calendars for occupancy/ vacancy, etc. Sites like Airdna can offer some valuable data, but starting out you'll need all the capital you have to purchase and furnish/ decorate the home.
What is the best way to analyze calendars on Airbnb? Any basic suggestions?
Think of a place you like going and see if any of those areas pencil. I love AirBnbs I'm somewhat new to them and would have been financial independent a long time ago if I would have started with them. I have seen 3 in the last day that had a 30%+ COC at 20% down. So you can find them just work it a little bit.
What is the best way to analyze calendars on Airbnb? Any basic suggestions?
I'd agree not everyone needs the $5,000 sheet or $10k subscription. Think about it: if you're the type who's about to spend $5M, or even $500k, on a property, what's $5-10k if it means you find a place with a way better ROI and you don't make the mistake of wasting six months of your life manually digging through that stuff? You would get that back in the first year and then some. But you gotta know how to use it. It's also good for hedge funds and and for people like us to consider with lots of students. You can get by with one month to the area you want to invest in. Here's a step-by-step using data (Youtube).
You don't want to analyze calendars on Airbnb itself. It's incomplete and you'll be way off if you take a low season mid-week rate from one or two listings and multiply it out, and likewise with a high season weekend date. I've also got a link in my profile for a group and the training I made last week was an intro to AirDNA if you're new to that. (btw I don't get paid to talk about AirDNA, it's just the one we like to use.)
Based on my experience new investors should stay away from airdna and like products. 5k is big money for someone just starting their business and from my experience the data is flat out wrong. I know it will be much more accurate in other markets but for example my str rents with an occupancy of 87% and an adr of $180. Airdna projected occupancy at 57% and adr $102. Not the kind of product I reccomend people use to make business decisions. ESPECIALLY for $5k. If you want a successful business put in the work don't overpay for bad data.
Based on my experience new investors should stay away from airdna and like products. 5k is big money for someone just starting their business and from my experience the data is flat out wrong. I know it will be much more accurate in other markets but for example my str rents with an occupancy of 87% and an adr of $180. Airdna projected occupancy at 57% and adr $102. Not the kind of product I reccomend people use to make business decisions. ESPECIALLY for $5k. If you want a successful business put in the work don't overpay for bad data.
Agreed - do not buy a $5,000 spreadsheet if you do not believe in the power of data or know how to use it. However, a single area can be purchased for $20-100 for one month. That's what most people need and should do. It allows you to dig in and get proper information on your own area, which ultimately is what investors need. The spreadsheet (and global access) are for people who are in the hunting phase and are about to drop a lot of money. I'd argue putting in the work involves understanding numbers, statistical significance, and what different investment formulas are doing.
My question to you would be how are you letting AirDNA project your revenue? Usually when I hear that it's because they're not understanding how AirDNA does what it does. Not saying that's you, but if you have an area and only dig surface level, or don't understand what the percentiles are doing, yeah, for sure it's going to be "wrong". There are often hundreds if not thousands of properties in an area, and a zillion variables to all of this. They are guideposts based on profit potential for any given property, letting you set up proper guideposts and, in your case, hopefully exceed them. But if you set up yours based on 2 bedrooms that fit 4 where the host has a set-it-and-forget it policy, and you've got a 3 bedroom that fits 8 and a hot tub and you're doing pricing optimization, for sure it's gonna be "wrong".
I certainly believe in the power of data and I can tell you I only base my business decisions off data. I'll admit I probably don't understand airdna type products as much as I could but after spending time inputting my property and interpreting the reports I gave up. It wasn't worth my time for the data it output. I came up with closer adr #s and occupancy targets in 20 minutes looking at competition on vrbo and airdna. I'm sure it's a much more useful tool than I give it credit for but if you are starting out in real estate or the str game (as indicated by the op) my suggestion is that you need to build on the fundamentals of real estae investing and learn your business not learn how to navigate a tool that may or may not provide value to your particular business. In business we say you design a business process and introduce automation to ENHANCE said process. You will set yourself up for failure if you build your business process around automation. No out of the box software can optimize YOUR particular business but when you understand YOUR business you can pick the one that fits the best.
It's easy. It just takes a lot of time. Sit down in the evening with a glass of wine, 1) select an area you think might work for you (maybe 10 mile radius). 2) Go on Zillow (or?) and find a property in your price range. 3) Go to AIR/VRBO and find very similar properties and search each for vacancies up to a year in advance. 4) Write all the results down 5) Analyze and compare. 6) Repeat with other areas in the same city and other cities.
Based on my experience new investors should stay away from airdna and like products. 5k is big money for someone just starting their business and from my experience the data is flat out wrong. I know it will be much more accurate in other markets but for example my str rents with an occupancy of 87% and an adr of $180. Airdna projected occupancy at 57% and adr $102. Not the kind of product I reccomend people use to make business decisions. ESPECIALLY for $5k. If you want a successful business put in the work don't overpay for bad data.
AirDna from what I can tell takes into consideration many properties that owners use as seasonal. Because the owners generally use them at the best time it seems to skew the numbers low.
Not sure but I believe that’s why the numbers always seem low.
Find a good realtor and they can recommend. That’s their job and specialty. I know all of the up and coming areas in the Charlotte metro area and I’m happy to share them with my clients.
I noticed that if I open airbnb and search an area, it does not show all active listings. Even if I choose “flexible” and check off every month. This is concerning as a lot of strs arent being shown at all. I’ve tried different combos: # of guests, # of bedrooms, amenities, etc and still it will only show a few. Does anyone have any insight into this? It seems like it would really hurt revenue for a lot of strs that arent being shown.
I noticed that if I open airbnb and search an area, it does not show all active listings. Even if I choose “flexible” and check off every month. This is concerning as a lot of strs arent being shown at all. I’ve tried different combos: # of guests, # of bedrooms, amenities, etc and still it will only show a few. Does anyone have any insight into this? It seems like it would really hurt revenue for a lot of strs that arent being shown.
How do you know it's not showing all active listings? And if you just put in 2 guests and any dates, that should give you your best chance to see what's out there....
I noticed that if I open airbnb and search an area, it does not show all active listings. Even if I choose “flexible” and check off every month. This is concerning as a lot of strs arent being shown at all. I’ve tried different combos: # of guests, # of bedrooms, amenities, etc and still it will only show a few. Does anyone have any insight into this? It seems like it would really hurt revenue for a lot of strs that arent being shown.
How do you know it's not showing all active listings? And if you just put in 2 guests and any dates, that should give you your best chance to see what's out there....
I cross referenced with Airdna; I chose an area and it populates with all active strs. If you click on one of the strs in that area it will jump you to the airbnb listing.
@Robert Sullivan you can still get a good COC return, but in markets with higher purchase prices you might be better off with the BRRRR strategy (buy, rehab, rent, refinance, repeat). Finding off-market deals lowers the money you invest upfront, and if you can get cash back from the refi that lowers your initial investment even further.
My company closed on a property in Gatlinburg last month using this strategy and we're excited to launch the STR by the end of this month. Feel free to DM me if you have any questions I can help with!