Short term rental startup advice?

Question

For everyone in the STR business.

What was the criteria you followed to purchase a STR property?

For those of you who used Airdna or Rabbu prior to purchasing your property, how accurate did you find their yearly estimates to be?

I’m in the Chicago suburbs!

Brian Barch · Answer

I second the use of awning.com. They even have a plug-in tool for Zillow that will really speed up your process.

too early to tell how accurate airdna and awning are. I think they are great at analyzing a MARKET.

You will never have 100% surety. The tools we have today are better than ever in history. At some point run the numbers from several conservative angles, and move in the direction the numbers point you

Leslie Anne Morris · Answer

I wrote this post here on Bigger Pockets that dives into the underwriting I use to evaluate STR. I’m looking for 20% cash on cash. NOI (net operating income) an important metric as well, is also calculated here

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

Michael Baum · Answer

Hey @Rakan Ammari, so if you are running the data and it isn't panning out then that is your answer. I don't have any ideas for Illinois, but you might want to expand your areas. What about somewhere on the Great Lakes? Lakefront can been a good place. Smaller lakes as well.

Michael Baum · Answer

Hey @Rakan Ammari, so basically start with where it is legal to do it. Once you have settled on the area, then it's time to drill down on the nightly rates and occupancy for the area. What amenities do they offer? What do the pics look like? Etc.

All of that will help you decide what to pay for a place.

You should also spend a ton of time reading the forums. All you need to know is right here.

Are you looking to buy in Chicago or elsewhere?

John Underwood · Answer

Just run the numbers.

Take projected income based on occupancy and night rate of similar properties on Vrbo and Airbnb,  subtract expected expenses guessing on the high side. Pretty simple to do.

Put it in a spreadsheet to make it easier to change the numbers.

Sara Levy-Lambert · Answer

Look up Awning Airbnb Airbnb Estimator it's a completely free estimate tool and gives you comps of nearby listings as well.

Michael Baum · Answer

Well, that precludes a waterfront place as far as I can tell on the Great Lakes. They seem to go for over 1m.

Rakan Ammari · Answer

Yeah that is what I was worried about it being my first property and not having accurate numbers. From the numbers that I ran it seems like the properties with the most profit margin seem to sit around 250k but the budget is 350k if the numbers are right.

Michael Baum · Answer

For me, the answer is no. AirDNA had us waaay over on the nightly rate. We are on Lake Coeur d'Alene in north Idaho.

AirDNA is just an algorithm. It takes in and puts out based on what's there. If you are looking at areas with just a few places, that could be telling.

So, what is your budget?

Short term rental startup advice?

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