How do you research vacation rental income in your area?

Question

I think there's a good opportunity to invest in vacation rentals in my area. I own a condo in Mesa, AZ that I rent out as a SFH. Recently the new Cubs Spring Training Facility was built within walking distance, they rehabbed the park next to it and shopping/dining is very close. I've noticed lots of new properties on Airbnb in the area so I've been considering converting the condo into a VR.

I haven't had much luck researching what kind of income or occupancy rates I can expect.

Please share how you conduct your research for potential VR's.

Anyone in the Phoenix area using Airbnb or any of the other sites, have you had success? Please share your experience.

John Underwood · Answer

Easy.

Search on Homeaway.com / VRBO.com or Airbnb for similar properties.

Look at their rates for different times of the year.

I found 4 comparable properties and put them in a spreadsheet with pricing, key features and links to get back their page so I can easily check on them through out the year. This is also a good way to pickup on events in your area that you might not have though about. Festivals, college graduation, fishing tournaments etc.

I adjust my price through out the year based on demand, events, and time of year.

I have accounts at Homeaway (also searchable on VRBO) and AirBnB.

Homeaway and VRBO blows away the bookings I get on AirBnB for vacation rentals so I would use the data from here primarily.

You can also check local Craigslist ads  for properties similar to yours to see what their pricing is.

Also look at their requirements for security deposits, pet fees and cleaning fees to she what you should be charging for these also.

Once I started getting reviews on Homeaway my calendar started staying full.

I charged on the low end to get more reservations in the begging and once I had several 5 star reviews then I started charging on the high side.

Michael McKay · Answer

When I explore a new area for vacation rentals, I use three strategies:

• Airdna reports- these give a good overview and are a quick way to know if it's worth more investigations. Worth the $40-$80 in my opinion.
• Mashvisor- I export the data to Excel and put it in pivot tables. From there I narrow it down only to hosts with 12+ reviews to weed out the people who only Airbnb on occasion and use this to identify the best zip codes for both nightly rates and occupancy.
• Check Airbnb listings with high reviews in the zip codes to see which listings are doing well.

Ian C. · Answer

@Ryan Hilbun, It depends. We have considered doing the same with two properties we own. However, the HOA places restrictions on short term rentals aka AirBNB. Several friends of mine have made up to 3000 per month fully furnished for 3-6 months. Three things: Location, and Location, and proximity to "fun stuff."

Michael Greenberg · Answer

Original Post:

@Ryan Hilbun - take a look at Airdna.co for Airbnb data and do a broad search of Homeaway.com based upon our actual location.  @Zane Belden you will for sure want to check your HOA CC&R's, however AZ's governor did sign into law a statute to make VR's legal however to my understanding these can be over-ruled by HOA's.

I have (2) VR's in Scottsdale, both of which are consumed February and March by "snowbirds" from Minnesota and Wisconsin.  You'll likely have much success should your endeavor for the time period you are referencing.

Happy to share further if you want to PM me.

Mike

Zane Belden · Answer

@Ryan Hilbun Thanks for your post, I'm interested to hear the responses.  I have a townhouse in Scottsdale that I've considered doing the same with, or at least Jan-April.  Mine is already a furnished rental so there's nothing I'd need to change, EXCEPT, our HOA might have issue with short term renting.  You likely won't have this problem with your SFR, unless you are in an association.  Check on that if you are.  But your location and the recent CUBS frenzy should draw huge rents for at least the end of Feb thru end of March.

Good luck!

Zane

Paul Sandhu · Answer

@Zane Belden You are sort of in business with me.  We both get money from the same source.  And I don't mind it when the price of gas goes up at the pump.  Actually, I like to see that.

Zane Belden · Answer

@Paul Sandhu Sounds like a great set up. Thanks for sharing.

I sell crude oil to that refinery...Somehow I feel like I'm in business with you ;)

Zane

Paul Sandhu · Answer

I don't have vacation rentals, but I have furnished houses for refinery contractors.

There are 2 cheap motels in my town.  They both charge $350/week for a room with 2 beds and a bathroom.  They have about 120 rooms combined.  They were built before I moved to town, and that was in 1973.  I charge $350/week for a 2 bedroom house.  There is usually a 3rd bed in the living room.  There is cable tv in every room, washer/dryer, wifi, and a full kitchen.  It's a basic place to stay.  These are my hamburger and french fry houses.

There are 2 nice hotels in this town. They both charge around $600/week for a room with 2 beds and a bathroom.  They have exercise rooms, swimming pools, and breakfast daily.  Both were built in the last 10 years.  I have nicer houses where I charge $200/week per bedroom in each house.  These houses will have 2 washers, 2 dryers, 2 fridges, plus entertainment like a streaming Blu Ray player, HDTV, kegorator, fire ring with fire wood outside, ping pong, darts, exercise equipment and free weights, etc.  These are my steak and potato houses.

4 years ago I have one rental.  Now I'm up to 22 with 82 beds.  It takes 4-6 months of rent for a house to pay for itself.  It takes 6-10 months to get 4-6 months of rent.

Today, 18 of my 22 places are rented out.  The longest tenant has been there 22 weeks.  2 others have been there for 18 weeks.  My 3 newest tenants all moved in 3 weeks ago.

Ryan Hilbun · Answer

I'll be moving back to Scottsdale next September, so I'll be managing local. My strategy has been buy and hold SFH, but recently started looking into the VR's because I think they may give bigger returns. I'm not worried about the extra work involved. Thanks for the feedback.

Ryan

Stone Jin · Answer

We own and manage 4 VR in Chandler.  The winter season is almost 100% booked via VRBO/Homeaway.  The rest of the year is a mix of Airbnb and VRBO, we no longer advertise on CL as it just didn't yield much results.  We are pretty on top of it so our vacancy rate is usually less than 1 month total per year per unit, so a week here and a week there.

VR are significantly more work than unfurnished rental (which we also have).  If you are out of state, you will need to find a PM that does VR, they generally charge about 25%.  I think VR is one of the few ways you can still make decent returns in the PHX market however just be prepared for the extra work, the unexpected utility bills in the summer (some tenants just leave the AC at 70 all the time, so $300-$400 a month is not unexpected, you can put clauses in that say you will cover only the first $150 but that's hard to do with short term rentals that may not start on billing cycles).  The cleaning staff scheduling, the restocking of consumables, the counting of inventory, etc etc.

Best of luck

Stone

How do you research vacation rental income in your area?

Most Popular Reply