How to analyze a short term rental.

Question

John Underwood · Answer

Yes the owner can print out reports from Vrbo and Airbnb.

They can also provide their Schedule E from their taxes.

You can look at similar properties on Vrbo and Airbnb to see prices and occupancy and compare that to the properties you are buying to see if owner was appropriately priced.

Basit Siddiqi · Answer

Who cares how much the prior owner collected from airbnb / vrbo in the past 2 years.STR's are performing much differenctly now than they were 2 years ago.I would run your own profit and loss using rental comps(Airdna) and expenses that you will be charged.It is not like if things are grossly different when you purchase the property that you can go to the seller and ask him why your numbers are so much far off than his.Best of luck!

Lateefah Mathews · Answer

@Abad Marroquin IDK If they've been on Vrbo and Airbnb for several years, it makes zero sense not to have expense tracking...even new owners have "something" they can share. It could just be disorganization, sloppy bookkeeping, or the numbers haven't been looking good. Either way, don't ignore that.

Also, AirDNA is a good tool add-on. You can pull historic averages, seasonality, and occupancy rates daily, monthly, and annually. This can also help you get a better picture of expense tracking and not just net performance from the seller.

Lastly, if the town isn't a popular destination spot, there has to be a "strong" reason why guests would book. No demand equals no bookings. Make sure you're buying performance, not just a price that looks like a good deal.

Andrew Steffens · Answer

I agree with the above 100%

I am frequently a buyers agent for STR's in Tampa, and quite often they are turn key active STR's.  If they are marketing as a turn key STR they need to provide accurate financials (revenue + expenses (P&L)).  Even if sloppily tracked it should not be difficult to pull this data together through bank or credit card statements, and revenue is easily found via bank statements and/or print outs from the OTA's.

I also use AirDNA.  Some turnkey properties do not have strong financials due to poor management or personal use, AirDNA can help show you what the property can do potentially when compared to comparable properties nearby.

Pete Slaga · Answer

Hello Abad,

The owner should have one or several of these to share

1. Tax returns on the properties2. TOT tax returns paid3. He can pull Airbnb and VRBO reports and share them with you.

It is ok if he did not make too much..  This is where you can try to determine if there is value add.      You can go to Airdna, Airroi and use one of the following tools.   1. enter the address to get a general rental estimate based on the location and bedroom and bathroom count.   2. You can pull a market specific report and see what 2/1 and 1/1 make by percentile quality.  Also you should be able to see what similar properties nearby are generating.

Berenger Greer · Answer

Abad,

As part of due diligence you can request income statements, rent roll, reports from VRBO and AIRBNB as well as an expense report of repairs if they have one.

You can use AIRDNA for a good estimate for what the units will go for on a daily rate, or you can go to airbnb itself and find similar properties to compare prices to/check their availability for vacancies.

I usually go the manual wrote to ensure properties are being leased consistently and the area is a good spot for a STR.

Best of luck with the aquisition,

Berenger

How to analyze a short term rental.

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