AIR DNA accuracy on projected rental incomes

Short-Term & Vacation Rental Discussions
3yFollow

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 

1Reply
200 views

Most Popular Reply

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 From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
5Reply
See this reply in the discussion

39 Replies

Jump to latestLatest
  • Jerryll Noorden
    Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
    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.


     The computer bases their results on collected data. Actual history of rentals vacancies etc. etc... while the person is more on opinion.

    I am not saying trust the computer not the person, but I much rather trust actual compiled data rather than some person where their *** is not on the line when they make a mistake. Usually people in real estate are not the smartest people around when it comes to data aquisition, and analysis.

    Sadly I don't know enough about the methods AIRDNA uses to collect data so I can't  make a statement either way.. but in general... it is the oposite what you just said.

    Trust the computer, NOT the person!

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y
    Quote from @Jerryll Noorden:
    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.


     The computer bases their results on collected data. Actual history of rentals vacancies etc. etc... while the person is more on opinion.

    I am not saying trust the computer not the person, but I much rather trust actual compiled data rather than some person where their *** is not on the line when they make a mistake. Usually people in real estate are not the smartest people around when it comes to data aquisition, and analysis.

    Sadly I don't know enough about the methods AIRDNA uses to collect data so I can't  make a statement either way.. but in general... it is the oposite what you just said.

    Trust the computer, NOT the person!


     As other people have mentioned, Airdna can pull in comps that are not your competition. Say 3rd row beach vs beach front etc. So you must check these numbers yourself to get the most accurate picture. 

    Do not trust the computer trust your manual checks which are quick and easy to do.

    1Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    3y

    What @Luke Carl said. I think it's always best to check multiple sources when looking for income. Even with LTR you'll get wildly different numbers with Rentometer vs MLS

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
    WebsiteView Page
    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    So I will reiterate what I have said before. AirDNA is an algorithm. It can only use what it can find. More data points will result in a more accurate result.

    Where we are located on Lake Coeur d'Alene, there aren't anywhere near as many STRs as there are in Pigeon Forge, TN. Selection is limited so we go lumped in with some log mansions that rent for huge bucks.

    I am making an assumption here, but my gut says that if there are fewer than a certain number of data points, it will pull more data from properties that are outside of your specific selections. You see it with any search engine. You always wonder why a website put up a certain product that you didn't search for or why Google put various links to things that didn't have much to do with your search. Search Engine Optimization is part of it of course, but?

    Anyways, depending on the area, AirDNA can be great or suck. It can only do what it can do. 

    0Reply
  • Melvy Concepcion
    Member since 2022 · 21 posts · 11 votes
    3y
    Quote from @Leo R.:

    @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!

    Excellent point you make here. That's the main reason why I'm looking into properties that I can get cashflow using different strategies, STR, MTR or LTR. That way I can pivot very quickly if necessary.

    0Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    3y

    There is only 1 AirBnb in my town, mine.  I get my occupancy and revenue projections from driving by 3 local motels and counting commercial construction contractor vehicles.  It's normally a white F250 with a tool box, 4 doors and a company name on the side.

    0Reply
  • Daniel Murphy
    Financial Advisor · Saint Paul, MN · Member since 2016 · 190 posts · 143 votes
    3y
    Quote from @Andrew Steffens:

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


     No, we originally based our pricing off of what our realtor recommended to us.  In Jan, we drove down with a fully loaded trailer & setup the house. MN to FL with a toddler.  It was crazy busy.  We put more thought into setting up the house than we did into pricing & the mechanics of the business.  We just listed Feb, March & April for the numbers our realtor offhandedly said we could probably get.  

    Our property went live while we were driving home.  We were literally at a gas station in Florida when our phones started dinging left & right with booking requests.  I immediately told my wife to go in and shut down April because we were pricing too low! 
    As soon as we got home, we signed up for Pricelabs & have been using them for our pricing ever since. 

    1Reply
  • Tyler Solomon
    Lender · Austin, TX · Member since 2022 · 223 posts · 244 votes
    3y

    To echo many of the other posts, AirDNA is an algorithm and it is only as good as the data it has. To that extent, credit for doing your due diligence and calling a company with experience in that market. Worth reaching out to other operators in the region as well to get their opinion.

    0Reply
  • Bryan H.
    Member since 2021 · 54 posts · 26 votes
    3y
    Quote from @Tyler Solomon:

    To echo many of the other posts, AirDNA is an algorithm and it is only as good as the data it has. To that extent, credit for doing your due diligence and calling a company with experience in that market. Worth reaching out to other operators in the region as well to get their opinion.


     But to be clear, AirDNA is not ONLY an algorithm. Airdna has true data sets of actual income produced over a certain period of time for properties listed in the search area. This can be extremely valuable. Whether or not the property is a true comparable is up for you to decide. 

    0Reply
  • William Anderson
    Rental Property Investor · Mississippi Gulf Coast · Member since 2022 · 206 posts · 168 votes
    3y

    In the end, none of these silicon valley start-ups can replace eyes on the ground and owners looking at the data.  I recently completed an analysis for a client that included 15 similar properties.  There was a wide swing in rates even when a number of them were in the same condo complex.  The problem is that many people who own STRs are not experienced so they just drop their prices when things get slow.

    I account for those abortions and eliminate the very high and very low ones and the ones with lots of rentals at low but not stupid prices.  If you see the buildings and can match their quality with the area etc., you will have a much more accurate assessment of rates.  

    I agree with the statement that some property management companies push out low rates.  My company resists that even when the clients are desperate.  Actually, we tell new clients that if we are to manage the property, we don't want them consulting on rates.  If an owner becomes too much to work with, we terminate the agreement.  

    We tell each of them that we want a balance between rates and occupancy. As most investors know the secret is fewer guests at higher rates.  It's a hard balance to maintain.

    1Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @Daniel Murphy:
    Quote from @Andrew Steffens:

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


     No, we originally based our pricing off of what our realtor recommended to us.  In Jan, we drove down with a fully loaded trailer & setup the house. MN to FL with a toddler.  It was crazy busy.  We put more thought into setting up the house than we did into pricing & the mechanics of the business.  We just listed Feb, March & April for the numbers our realtor offhandedly said we could probably get.  

    Our property went live while we were driving home.  We were literally at a gas station in Florida when our phones started dinging left & right with booking requests.  I immediately told my wife to go in and shut down April because we were pricing too low! 
    As soon as we got home, we signed up for Pricelabs & have been using them for our pricing ever since. 


     Yes you listed right at the peak season and were too low (obviously).  We learned this lesson the hard way too!

    [email protected]813-563-0877
    Vacation Rentals of Florida53 Reviews
    WebsiteView Page
    1Reply
  • David Gauger
    OP
    Member since 2022 · 8 posts · 1 vote
    3y

    I just wanted to thank everyone for taking time out of your day to answer my question.  We're going forward with purchasing the house and will close December 15th. This BP community is outstanding.  Thanks again!

    0Reply
  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    3y
    Quote from @David Gauger:

    I just wanted to thank everyone for taking time out of your day to answer my question.  We're going forward with purchasing the house and will close December 15th. This BP community is outstanding.  Thanks again!


     Congratulations!

    [email protected]
    Harpoon Capital514 Reviews
    WebsiteView Page
    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    Gratz @David Gauger! Keep us posted on your progress.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free