Airbnb Questions for first timer

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Airbnb Questions for first timer

Justin Brown
Lender · Claremont, CA · Member since 2020 · 34 posts · 19 votes

Im going to buy my first Airbnb (had one with a partner a few years ago but it didnt do to well so we sold it after 2 years, was a breakeven deal pretty much)
So trying to do some more research and due diligence this time to hopefully get some good cash flow!
Heres what i found so far

  1. Airdna.co to research the market and profitability
  2. Research the competition in the area and see how you can niche your property (super family oriented, man cave, she shed, luxury, for entertaining, etc)
  3. Contact other local airbnb hosts to network and make contacts for service providers and get tips
  4. Look for at least a 3x return (try to get at least 3xs the mortgage payment monthly )


Any other tips you have to add or thoughts on this??

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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y

1) Don't use AirDna for your data, do your own research if you want real numbers. 2) When doing your decorating and furnishings, go to Antique Stores, Thrift Stores and Goodwill as much as possible. I hear about people spending $30k to outfit a place, when the number could be $3k.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Justin Brown:

    Im going to buy my first Airbnb (had one with a partner a few years ago but it didnt do to well so we sold it after 2 years, was a breakeven deal pretty much)
    So trying to do some more research and due diligence this time to hopefully get some good cash flow!
    Heres what i found so far

    1. Airdna.co to research the market and profitability
    2. Research the competition in the area and see how you can niche your property (super family oriented, man cave, she shed, luxury, for entertaining, etc)
    3. Contact other local airbnb hosts to network and make contacts for service providers and get tips
    4. Look for at least a 3x return (try to get at least 3xs the mortgage payment monthly )


    Any other tips you have to add or thoughts on this??


    Consider all the expenses: taxes (including state lodging and sales tax), insurance, marketing, cost to furnish, city registration, consumables (coffee, TP, replacement linens or furniture, etc), utilities (including TV, internet), landscaping, and even your personal time (answering questions, maintenance calls, bookings, etc.)

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    6Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    1) Don't use AirDna for your data, do your own research if you want real numbers. 2) When doing your decorating and furnishings, go to Antique Stores, Thrift Stores and Goodwill as much as possible. I hear about people spending $30k to outfit a place, when the number could be $3k.

    8Reply
  • Scott E.
    Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
    4y

    Nathan's response above on the expenses is solid.

    Your #4 item of "look for 3x monthly mortgage payment" is just some arbitrary rule that somebody made up to sound smart. You need to actually underwrite the deal if you are going to get into the hospitality business again, and accounting for all expenses is a big part of that.

    Something else that will be valuable is the opinions of local short term rental property managers. Their feedback will help you understand the annual gross income potential, which will give you a starting point to back out all expenses.

    3Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    While your researching your competition look at their prices and occupancy.  This will give you better data than Airdna.

    3Reply
  • Justin Brown
    OP
    Lender · Claremont, CA · Member since 2020 · 34 posts · 19 votes
    4y
    Quote from @Bruce Woodruff:

    1) Don't use AirDna for your data, do your own research if you want real numbers. 2) When doing your decorating and furnishings, go to Antique Stores, Thrift Stores and Goodwill as much as possible. I hear about people spending $30k to outfit a place, when the number could be $3k.


     Thanks for the tips! what sources or data do you use to do your own research?  

    0Reply
  • Justin Brown
    OP
    Lender · Claremont, CA · Member since 2020 · 34 posts · 19 votes
    4y
    Quote from @John Underwood:

    While your researching your competition look at their prices and occupancy.  This will give you better data than Airdna.


     Thanks!! 

    0Reply
  • Michael BlumBusiness Member
    NC · Member since 2018 · 55 posts · 49 votes
    4y

    Avoid analysis paralysis. Learn the local market. Document your goals and what makes a good investment for you. Begin your search and when you find properties that meet your criteria don't be afraid to pull the trigger. So many people get caught up looking for home runs that they miss the base hits along the way and end up with nothing. Your first one may not be a home run, but if it checks off the majority of your search and returns criteria, highly consider it.

    4Reply
  • Justin Brown
    OP
    Lender · Claremont, CA · Member since 2020 · 34 posts · 19 votes
    4y
    Quote from @Nathan Gesner:
    Quote from @Justin Brown:

    Im going to buy my first Airbnb (had one with a partner a few years ago but it didnt do to well so we sold it after 2 years, was a breakeven deal pretty much)
    So trying to do some more research and due diligence this time to hopefully get some good cash flow!
    Heres what i found so far

    1. Airdna.co to research the market and profitability
    2. Research the competition in the area and see how you can niche your property (super family oriented, man cave, she shed, luxury, for entertaining, etc)
    3. Contact other local airbnb hosts to network and make contacts for service providers and get tips
    4. Look for at least a 3x return (try to get at least 3xs the mortgage payment monthly )


    Any other tips you have to add or thoughts on this??


    Consider all the expenses: taxes (including state lodging and sales tax), insurance, marketing, cost to furnish, city registration, consumables (coffee, TP, replacement linens or furniture, etc), utilities (including TV, internet), landscaping, and even your personal time (answering questions, maintenance calls, bookings, etc.)


     Thanks!! is there a general rule of thumb on cost per SF to furnish , consumables, etc?  or is it really just case by case?

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Justin Brown:
    Quote from @Bruce Woodruff:

    1) Don't use AirDna for your data, do your own research if you want real numbers. 2) When doing your decorating and furnishings, go to Antique Stores, Thrift Stores and Goodwill as much as possible. I hear about people spending $30k to outfit a place, when the number could be $3k.


     Thanks for the tips! what sources or data do you use to do your own research?  

    I don't use any sources except my own searching on VRBO and AIR. Search for different size groups on different dates, well into the future. Do this with every house that is similar to yours. This will give you a really good feel for what you can get for your place during different seasons.
    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Justin Brown:
    Pretty much case by case. Depends on your goals and your expected clientel...
    0Reply
  • Mel Adams
    Investor · San Diego · Member since 2021 · 86 posts · 91 votes
    4y
    1. Hey Justin! Here’s my opinion on each point you mentioned:
    2. 1) Airdna is a good starting point, but don’t solely base your numbers off it. Start with that, but then start going through all the Airbnb and VRBO listings in your area to see what they’re pricing at. You’ll start to get a sense of what to price yours at and occupancy. 

    3. 2) don't get carried away with the niche stuff, it can really be a waste of money in terms of ROI. Furnish your property based on the demographic of who'll be visiting and in line with other listings. Guests want a clean, functional, well-stocked, comfortable stay. Someone else mentioned this as well, but local antique stores and thrift stores and Facebook marketplace have great, unique finds that can add a lot of character to your property without spending exorbitant amounts of money.
    4. 3) Join facebook groups as well. If you're buying in a popular STR market it'll be more helpful and less time intensive than reaching out to hosts.
    5. 4) Most people will measure STR profitability on an annual basis, not monthly, because almost all markets are seasonal. I personally want a 20% ROI. Make sure you're including all other expenses in addition to your PITI like utilities, incidentals, restocking, capex, pest control, etc.

    Hope this helps! 

    7Reply
  • Marianna Sullivan
    Member since 2022 · 3 posts · 8 votes
    4y
    If you decide to go luxury as your niche, the details really matter. Linens, furnishings, consumables. The high end visitors will expect a bespoke experience! Not that this can't pay off for you, just something to consider.
    7Reply
  • Jeff Stephens
    Investor · Sacramento, CA · Member since 2020 · 5 posts · 3 votes
    4y

    I've found AirDna to be hit and miss as well. Personally, I'll hop onto PriceLabs and grab a Market Data Report for an area I'm interested in ($9.99). From there I like analyzing all the historical numbers for the types of properties I am looking for (ex: 3B/2BA, 4BD/3BA, etc.). This gives me an idea of the average nightly rate for different builds, as well as the occupancy from a rolling 12 month period. Not to mention the average cleaning fees as well! There is also information such as different amenities guests are looking for. Using this in addition to browsing AirBnb and VRBO is a technique I like to utilize. 

    Also, like the others mentioned above, do your homework on expenses, and still account for reserves. I have a spreadsheet I can send over if you're interested. It's not perfect, but gives me a good frame of reference for moving forward with a deal. 

    2Reply
  • Mark S.
    Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 474 votes
    4y

    @Bruce Woodruff The comment on furnishing depends on the market, I believe. In markets where there is a lot of competition and owners are doing a very nice job of furnishing and decorating, a mishmash from Goodwill isn’t going to do well.

    4Reply
  • Justin Brown
    OP
    Lender · Claremont, CA · Member since 2020 · 34 posts · 19 votes
    4y
    Quote from @Mel Adams:
    1. Hey Justin! Here’s my opinion on each point you mentioned:
    2. 1) Airdna is a good starting point, but don’t solely base your numbers off it. Start with that, but then start going through all the Airbnb and VRBO listings in your area to see what they’re pricing at. You’ll start to get a sense of what to price yours at and occupancy. 

    3. 2) don't get carried away with the niche stuff, it can really be a waste of money in terms of ROI. Furnish your property based on the demographic of who'll be visiting and in line with other listings. Guests want a clean, functional, well-stocked, comfortable stay. Someone else mentioned this as well, but local antique stores and thrift stores and Facebook marketplace have great, unique finds that can add a lot of character to your property without spending exorbitant amounts of money.
    4. 3) Join facebook groups as well. If you're buying in a popular STR market it'll be more helpful and less time intensive than reaching out to hosts.
    5. 4) Most people will measure STR profitability on an annual basis, not monthly, because almost all markets are seasonal. I personally want a 20% ROI. Make sure you're including all other expenses in addition to your PITI like utilities, incidentals, restocking, capex, pest control, etc.

    Hope this helps! 


     Great advice! thank you 

    0Reply
  • Justin Brown
    OP
    Lender · Claremont, CA · Member since 2020 · 34 posts · 19 votes
    4y
    Quote from @Jeff Stephens:

    I've found AirDna to be hit and miss as well. Personally, I'll hop onto PriceLabs and grab a Market Data Report for an area I'm interested in ($9.99). From there I like analyzing all the historical numbers for the types of properties I am looking for (ex: 3B/2BA, 4BD/3BA, etc.). This gives me an idea of the average nightly rate for different builds, as well as the occupancy from a rolling 12 month period. Not to mention the average cleaning fees as well! There is also information such as different amenities guests are looking for. Using this in addition to browsing AirBnb and VRBO is a technique I like to utilize. 

    Also, like the others mentioned above, do your homework on expenses, and still account for reserves. I have a spreadsheet I can send over if you're interested. It's not perfect, but gives me a good frame of reference for moving forward with a deal. 

     @Jeff Stephens thanks for this! and yes absolutely if you can send me that spreadsheet id love to use it!

    1Reply
  • Kaohuhealani Trueman Jr
    Rental Property Investor · SF Bay Area · Member since 2021 · 8 posts · 5 votes
    4y
    Quote from @Jeff Stephens:

    I've found AirDna to be hit and miss as well. Personally, I'll hop onto PriceLabs and grab a Market Data Report for an area I'm interested in ($9.99). From there I like analyzing all the historical numbers for the types of properties I am looking for (ex: 3B/2BA, 4BD/3BA, etc.). This gives me an idea of the average nightly rate for different builds, as well as the occupancy from a rolling 12 month period. Not to mention the average cleaning fees as well! There is also information such as different amenities guests are looking for. Using this in addition to browsing AirBnb and VRBO is a technique I like to utilize. 

    Also, like the others mentioned above, do your homework on expenses, and still account for reserves. I have a spreadsheet I can send over if you're interested. It's not perfect, but gives me a good frame of reference for moving forward with a deal. 

    Hey Jeff,

    I'd be interested in looking at your spreadsheet as well if you wouldn't mind sharing? I'm in the same boat as Justin in trying to figure this STR thing out before I jump in.
    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Mark S.:

    @Bruce Woodruff The comment on furnishing depends on the market, I believe. In markets where there is a lot of competition and owners are doing a very nice job of furnishing and decorating, a mishmash from Goodwill isn’t going to do well.


    I wasn't talking about getting furniture from Goodwill. That can be done at an antique or high end thrift store. The stuff you can get at a Goodwill type store are silverware, plates, small appliances, some art, mirrors, all that kinda stuff...

    0Reply
  • Kyle Cross
    Member since 2021 · 2 posts · 0 votes
    4y

    @Jeff Stephen's

    Hello Jeff,

    I too am entering into the STR area and trying to gain some level of comfort prior to moving forward. If you wouldn't mind sharing your spreadsheet with me as well, I would be very grateful.

    0Reply
  • Becky Deaver
    Member since 2022 · 2 posts · 0 votes
    4y
    Quote from @Jeff Stephens:

    I've found AirDna to be hit and miss as well. Personally, I'll hop onto PriceLabs and grab a Market Data Report for an area I'm interested in ($9.99). From there I like analyzing all the historical numbers for the types of properties I am looking for (ex: 3B/2BA, 4BD/3BA, etc.). This gives me an idea of the average nightly rate for different builds, as well as the occupancy from a rolling 12 month period. Not to mention the average cleaning fees as well! There is also information such as different amenities guests are looking for. Using this in addition to browsing AirBnb and VRBO is a technique I like to utilize. 

    Also, like the others mentioned above, do your homework on expenses, and still account for reserves. I have a spreadsheet I can send over if you're interested. It's not perfect, but gives me a good frame of reference for moving forward with a deal. 

    @Jeff Stephens


    I’d love to take a look at that spreadsheet too if you don’t mind. Generous of you to offer to share it!! 

    0Reply
  • Jimmy Woodard
    Walnut Creek, CA · Member since 2020 · 285 posts · 318 votes
    4y

    @Justin Brown @Kaohuhealani Trueman Jr @Kyle Cross @Becky Deaver here's a simple spreadsheet you can use to determine if a property is worth investing in: https://docs.google.com/spread...

    Justin, really spend time on point number 2 as that will make or break your business. The STR market is not a "list it and they will come" solution. You have to figure out how to stand out from the crowd or pay the price the hard way.

    Good luck and feel free to DM me if you have any questions on acquisition, renovation, or self-management!

    0Reply
  • Que Tran
    Real Estate Agent · Scranton PA · Member since 2019 · 93 posts · 98 votes
    4y

    @Justin Brown

    When you're looking at furnishings, try to get sturdy furniture that is easy to clean. Get good kitchen supplies from a 2nd hand store or at local Salvation Army store - they will get stolen. Stock up on toiletries when they are on sale. And make a "house rules" binder to identify local grocery stores, restaurants, and things to do. Congratulations! It will be a fun ride:)

    0Reply
  • Joshua JanusBusiness Member
    Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    @Justin Brown STR's have been very successful for many just like any other investing strategy but getting your plan down and executing properly is the most important. I would interview multiple STR management companies so you can get an idea of what they offer, emphasize and their experience so you can hand off your asset in the hands of a reliable, intelligent and effective team. Make sure your units meet the standards of the STR's in your market so you aren't left holding the ball every night. This is definitely a more heavy up front cost way of investing but the increased cash flow in many cases can make that initial investment worth the time, energy and money. Buying a unit or units that already operate relatively well as a str with the plan of improving the looks of the units in order to decrease vacancy and up the nightly rate is a great way to add value and increase the cash flow. I have seen this done multiple times.

    [email protected]614-502-5316Podcast Guest on Show From DoorDasher to $1.5 MILLION in Real Estate (All at 22 Years Old!)
    0Reply
  • Nick Rutkowski
    Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    @Justin Brown

    Your guest demographics. Are they going to be vacationers, workers, visiting family and friends, needing a place to stay while buying a house? For example Upstate NY is going to have different guests than Miami, FL for different reasons. Cater to the correct crowd and you’ll come out on top.

    0Reply
  • Kaohuhealani Trueman Jr
    Rental Property Investor · SF Bay Area · Member since 2021 · 8 posts · 5 votes
    4y

    @Jimmy Woodard

    Thank you I appreciate the spreadsheet!

    1Reply
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