AIR DNA accuracy on projected rental incomes

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AIR DNA accuracy on projected rental incomes

David Gauger
Member since 2022 · 8 posts · 1 vote

How accurate has everyone found air dna to be.  I purchased the service to analyze properties in a beach town in north carolina.  I ran the rentalizer and it came up with a projected number that made the deal work.  I then called a local rental company to have them run numbers on what they thought the property would generate in rental income.  That number was about $20,000 less than what air dna projected.  The $20,000 less kills this deal for me.  Any help is greatly appreciated.  Thanks 

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Luke CarlPro Member
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
3y

It’s the best you’ve got! Proof it with the enemy method. 

Podcast Guest on Show #30
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  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    3y

    It’s the best you’ve got! Proof it with the enemy method. 

    Podcast Guest on Show #30
    5Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y

    Trust the person not the computer.

    You don't know what samples Airdna is using that are not good comparable properties.

    2Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    3y

    We use AirDNA when supplying projections to owners.  I find them in general to be good/conservative in their number so I am happy to provide it to the owner as it allows me the opportunity to under promise and over perform.

    It is important however not to just plug the address into the rentalizer and go, you need to analyze the comps below and weight the comps most similar to the subject property.

    Hope that helps!

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    3Reply
  • David Gauger
    OP
    Member since 2022 · 8 posts · 1 vote
    3y

    I have the paid version.  It provides 12 comps however, I would say only 3 of them are comparable. Some are oceanfront which this property isn't and others are elevated on piers which this property isn't. I'm not sure if a home on piers is more desirable or not.  I'm not sure grandma wants to climb 30 stairs every time she wants to get in the house.  Though I personally would rent a house on piers over a traditional home assuming everything else is comparable.  

    0Reply
  • Trent Reeve
    Atlanta · Member since 2022 · 706 posts · 634 votes
    3y
    Quote from @David Gauger:

    How accurate has everyone found air dna to be.  I purchased the service to analyze properties in a beach town in north carolina.  I ran the rentalizer and it came up with a projected number that made the deal work.  I then called a local rental company to have them run numbers on what they thought the property would generate in rental income.  That number was about $20,000 less than what air dna projected.  The $20,000 less kills this deal for me.  Any help is greatly appreciated.  Thanks 


     believe AirDNA includes cleaning costs.

    0Reply
  • David Gauger
    OP
    Member since 2022 · 8 posts · 1 vote
    3y

    Interesting,  I'm seeing the exact opposite on this property.  I've run other properties in what I would consider less desirable in regards to proximity to the beach and things to do and airdna is giving me even higher projections.  Confusing to say the least lol.  Thank you for the input.

    0Reply
  • David Gauger
    OP
    Member since 2022 · 8 posts · 1 vote
    3y
    Quote from @Andrew Steffens:

    We use AirDNA when supplying projections to owners.  I find them in general to be good/conservative in their number so I am happy to provide it to the owner as it allows me the opportunity to under promise and over perform.

    It is important however not to just plug the address into the rentalizer and go, you need to analyze the comps below and weight the comps most similar to the subject property.

    Hope that helps!




    Interesting, I'm seeing the exact opposite on this property. I've run other properties in what I would consider less desirable in regards to proximity to the beach and things to do and airdna is giving me even higher projections. Confusing to say the least lol. Thank you for the input.
    0Reply
  • David Gauger
    OP
    Member since 2022 · 8 posts · 1 vote
    3y
    Quote from @John Underwood:

    Trust the person not the computer.

    You don't know what samples Airdna is using that are not good comparable properties.



    I have the paid version. It provides 12 comps however, I would say only 3 of them are comparable. Some are oceanfront which this property isn't and others are elevated on piers which this property isn't. I'm not sure if a home on piers is more desirable or not. I'm not sure grandma wants to climb 30 stairs every time she wants to get in the house. Though I personally would rent a house on piers over a traditional home assuming everything else is comparable.

    0Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    3y
    Quote from @David Gauger:
    Quote from @John Underwood:

    Trust the person not the computer.

    You don't know what samples Airdna is using that are not good comparable properties.



    I have the paid version. It provides 12 comps however, I would say only 3 of them are comparable. Some are oceanfront which this property isn't and others are elevated on piers which this property isn't. I'm not sure if a home on piers is more desirable or not. I'm not sure grandma wants to climb 30 stairs every time she wants to get in the house. Though I personally would rent a house on piers over a traditional home assuming everything else is comparable.

    I wouldn’t put a whole lot of weight in what some software says.  It can be helpful, but there’s no way I would buy a property relying on it.  It is wrong too often. 

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    0Reply
  • Josh Surver
    Realtor · Colorado Springs, CO · Member since 2019 · 23 posts · 10 votes
    3y

    @David Gauger

    There's always the old fashioned method of checking what's available on the booking platforms in the market yourself! My friend has a STR on the east coast and he just manually checks what the other properties in the area that offer similar amenities are asking and prices just below them because he has few reviews than most in his area. He's crushing it. May be a good place to start for analyzing as a third method of comparison and pick an estimate in the middle of all the methods.

    0Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y

    I’ve been thinking lately that AirDNA is low, but I also think that not all property management companies are created equal. 

    0Reply
  • David Gauger
    OP
    Member since 2022 · 8 posts · 1 vote
    3y
    Quote from @David Gauger:
    Quote from @John Underwood:

    Trust the person not the computer.

    You don't know what samples Airdna is using that are not good comparable properties.



    I have the paid version. It provides 12 comps however, I would say only 3 of them are comparable. Some are oceanfront which this property isn't and others are elevated on piers which this property isn't. I'm not sure if a home on piers is more desirable or not. I'm not sure grandma wants to climb 30 stairs every time she wants to get in the house. Though I personally would rent a house on piers over a traditional home assuming everything else is comparable.


    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    3y

    @David Gauger don't trust either AirDNA or the rental company - don't trust ANYONE!

    They are all tools to be used to make investing easier for you - but, you need to understand how to use tools for them to be effective. 

    So, obtain the underlying data and analyze it to understand it. Don't blindly accept it.

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    2Reply
  • David Gauger
    OP
    Member since 2022 · 8 posts · 1 vote
    3y
    Quote from @Drew Sygit:

    @David Gauger don't trust either AirDNA or the rental company - don't trust ANYONE!

    They are all tools to be used to make investing easier for you - but, you need to understand how to use tools for them to be effective. 

    So, obtain the underlying data and analyze it to understand it. Don't blindly accept it.

    That's why I'm here asking for peoples opinions.  Besides AirDna and the rental company I also have my realtor working on getting me a copy or two of actual rental income for comparable properties the past two years.  I feel like the only way to truly know is pull the trigger and find out. A little bit of an unsettling feeling lol 
    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    AirDNA, at least in my area, has been very optimistic on numbers.

    Take a look at all the comparable places nearby and see how the numbers are. What is their nightly? What is the occupancy? What kind of amenities do they offer?

    Don't just jump in hoping that it will work out.

    1Reply
  • Adam David Graning
    Rental Property Investor · Minneapolis MN (minneapolis, mn) · Member since 2020 · 50 posts · 28 votes
    3y

    @David Gauger I’ve found rabbu to be more accurate. AIRDNA fluctuates so much.

    0Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @David Gauger:
    Quote from @Drew Sygit:

    @David Gauger don't trust either AirDNA or the rental company - don't trust ANYONE!

    They are all tools to be used to make investing easier for you - but, you need to understand how to use tools for them to be effective. 

    So, obtain the underlying data and analyze it to understand it. Don't blindly accept it.

    That's why I'm here asking for peoples opinions.  Besides AirDna and the rental company I also have my realtor working on getting me a copy or two of actual rental income for comparable properties the past two years.  I feel like the only way to truly know is pull the trigger and find out. A little bit of an unsettling feeling lol 

     @Leslie Anne Morris brings up a good point as well.  It is not even as simple as finding the most comparable property, but also seeing how it is being managed.  We see mom and pop properties that are just on Airbnb (as opposed to the 9 other sites we are listed on), without pricing software and being way under rented.  Use AirDNA as a starting point and research the most similar properties and adjust not only for superior/inferior features and amenities but also for how it is being managed.

    [email protected]813-563-0877
    Vacation Rentals of Florida53 Reviews
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    0Reply
  • Doug Coup
    Member since 2020 · 10 posts · 5 votes
    3y

    @Michael Baum

    I looked up my own property on airdna. And it overstated it because i was blocking off between rentals for cleaning and it assumed those were bookings at my avg weekend rate.

    I do have faith in airdna. I idenify some competition and then do enemy method on them.

    Figure if i and off 10 to 15% and numbers still work then all is good.

    Rememeber str is occuoancy and rates are not a given. There are lots of variables

    0Reply
  • Daniel Murphy
    Financial Advisor · Saint Paul, MN · Member since 2016 · 190 posts · 143 votes
    3y

    When we originally looked at Airdna for our numbers in Cape Coral, they were low.  They were projecting $299-350 / night during our peak season.  We opened for business during peak season and (regrettably) didn't have pricing software setup yet.  Within a week we signed up for Pricelabs & increased our peak season rates to the $350-475 range.  

    So pricelabs was definitely helpful, but low which I prefer.  Like most others on here, I took the time to look at & analyze a lot of other properties in my area to do an independent study.  My rates always ended up being higher than Airdna's projections. 

    0Reply
  • Daniel Detoni
    Professional · Miami, FL · Member since 2016 · 23 posts · 9 votes
    3y

    Our technology is integrated into 3 different STR big data providers, including AirDNA. You can trust it as one of the data points for your final decision. Because AirDNA gets the average rental value from the previous 12 months, numbers can seem lower than the cash potential of the unit in some US cities.

    Btw, we have an opportunity for STR landlords with our technology, please see my post here: https://www.biggerpockets.com/...

    1Reply
  • Stetson MillerBusiness Member
    Real Estate Broker · Fort Myers, FL · Member since 2019 · 576 posts · 423 votes
    3y

    @David Gauger Also in Cape Coral as well, but in my experience here, AirDNA fails to capture the market swings that we see between on and off season pricing. During the busy season, mentioned by @Daniel Murphy above, it tends to be a bit lower than actual market pricing. During the off season, it tends to exaggerate market pricing, making the numbers look better than what they actually are, similar to what you're experiencing in South Carolina

    I think the platform certainly still has a place in running effective numbers for potential purchases, but it's still important to speak with locals familiar with the market to see exactly what variance percentage can be applied to AirDNA's numbers to get realistic pricing

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  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    3y

    @Stetson Miller @Daniel Murphy Were you basing pricing off of the ADR provided by AirDNA or are you using AirDNA for pricing?

    [email protected]813-563-0877
    Vacation Rentals of Florida53 Reviews
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    0Reply
  • John Mausteller
    Real Estate Agent · Outer Banks, NC · Member since 2019 · 168 posts · 116 votes
    3y

    I use Airdna all the time for my properties in Coastal NC / Outer Banks.   I find that it is pretty accurate and sometimes even low.  If you called a local rental company, they are always going to give you a lower number because they are not charging the rates they could be.  It is an on going issue with money being left on the table.  If you are going to be using airbnb or vrbo, then airdna is usually pretty accurate.   I have had clients buy a home that was being managed by a traditional rental company like the one you got a projection from and then the very next year they almost doubled the rental income just by listing it on a platform such as Airbnb or VRBO. 

    0Reply
  • Melvy Concepcion
    Member since 2022 · 21 posts · 11 votes
    3y

    My suggestion is to no solely rely on one analyzing software. Use at least 3 different sources. I generally use Airdna, Mashvisor, and Airbnb to compare the numbers. Depending on the property, I also like to check the Rentometer numbers in case I were to switch to Long Term Rental and Furnished Finder stats for the area to see if Mid Term Rental would work during slow seasons. I don't want to bank just on one strategy but be ready in case I have to switch from STR to LTR. I hope this helps.

    1Reply
  • Leo R.
    Investor · Member since 2021 · 591 posts · 695 votes
    3y

    @David Gauger one challenge with a rent estimator like air dna is that their data is often based on bookings/vacancies that occurred months ago, and the market today is COMPLETELY different than it was several months ago.

    Specifically, there has been recent data showing that the STR market is completely over-saturated with supply, and most indicators show that we're in recession--which means that demand will likely decrease substantially (or is already decreasing)...it sounds like a perfect storm of excess supply and diminishing demand. This is particularly true for tourism-dependent STRs (tourism-dependent markets tend to get hit hardest in recession, because recreational travel is often the first thing people cut from their budget in a tough economy).

    To make things even more complicated, Air Bnb recently changed their platform significantly to focus on A+ top-end, highly unique properties (think: luxury waterfront treehouses). These types of listings are now getting promoted more, while more average listings (like a regular house or condo) are getting pushed down in search results.

    (These issues have been discussed on a variety of recent BP podcasts, and probably also in the forums if you want to read up).

    So, to answer your question: even if air dna was accurate several months ago, it might not be accurate today, because the market is shifting so quickly and their data might be based on market dynamics that don't exist anymore. Because of all this, if I were looking at STRs, I'd be extremely conservative with STR financial models right now--for instance, I'd want to include worst-case scenarios (like unprecedented vacancy) in my model, and I'd want to have multiple viable exit strategies on the table.

    Good luck out there!

    3Reply
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