Airbnb property analysis

[Mehul Patel]

Total newbie here to Airbnb. How does one go about analyzing the numbers on a potential airbnb property? How do you estimate expenses for cleaning etc? how much potential income it will generate? are there any calculators you suggest?

[Paul Sandhu]

Use "The Enemy" method.

[Michael Dumler]

@Mehul Patel, The Enemy Method: 

[Luke Carl]

Enemy Method

[Jacob St. Martin]

Hello Mehul, I would second what the others have said but will also go into a little more detail: 

1. Is this even a market I want to be in? Is there STR demand here? Where is the STR demand coming from? Is the STR demand reliant on one industry or attraction?

2. Plug the address into airDNA rentalyzer. airDNA is by no means a super accurate tool but it will help you get a quick and dirty estimate of performance. If your annual pricnipal and interest payments alone are $80,000 and airDNA says you will only gross $50,000 it is so far off that it probably wont work even if you outperform your competitors. 

3. If it passes these tests and looks like it might be a decent deal now I start my more in depth analysis. I will plug the numbers into a spreadsheet that I use and do research to make sure the numbers I am using are accurate. Part of this is knowing what financing structure you plan to use as this will impact you expenses. I will evaluate the airDNA comps and other comps that I find personally on airBNB (airDNA doesn't always list them all) using the enemy method to see where I should fall amongst them and where I can outperform them. If all of the listings have terrible photography you immediately can outperform most of them. If you are the only one in the area with a hot tub or pool or amenity that is sought after you can outperform. This part is a little less scientific than the rest of the process but also the most important because it will help you to adjust your expectations based on your competitors.

4. If your detailed analysis shows that the property should do well it is time to move forward. You will need to move forward with your financing and start looking for the team members to make your airBNB successful like your cleaners, handyman, etc. 

I hope this was helpful! Feel free to reach out if you have more questions. I would also be willing to share my spreadsheet with you. I personally like it a lot but there are also people with more experience than me whose spreadsheets are available as well. Good luck in your STR search!

[Michael Baum]

I also like and use the enemy method. For your reference, read about it here.

https://www.biggerpockets.com/...

[Brian Barch]

I really like awning as a favorite. Airdna is good for analyzing a market as well. Note airdna includes cleaning fees, awning does not.

awning will allow you to pick comps, estimate fees, etc and see the whole proforma inclusive of tax benefits

[Tyler Solomon]

AirDNA + the enemy method is a great tactic! I would also reach out to local property managers in the areas that you are looking at, as well as reaching out to operators if you can get into contact with them!

[Leslie Anne Morris]

I just wrote a blog post about this topic. It’s here on Bigger Pockets under my agent profile.