Ottawa, IL · Member since 2016 · 242 posts · 107 votes
I'm trying to work some numbers on a potential purchase. Now I realize this will be very specific to the location/property/price/marketing/etc but what would be an occupancy number you'd put on an Airbnb type rental?
The numbers I have would work very well at 50% occupancy rate (15 days charging less than I would probably charge and pushing my expenses higher than I would imagine they would be and having cushion). So if that works, does that mean the numbers work? Is there something I may be missing?
Rental Property Investor · Napa, CA · Member since 2017 · 23 posts · 10 votes
9y
https://www.airdna.co is a good resource for data. I think you get state or local reports for between $30-50 and it might help you make up your mind.
You also can just manually search listings, count reviews and guesstimate occupancy.
If it was me (and considering the amount of money invested) - I'd fork out a small amount on data and research.
Investor · Chicago, IL · Member since 2014 · 50 posts · 13 votes
9y
I am not sure anyone has mentioned this but occupancy isn't really the right metric for Airbnb since nightly rates fluctuate.
For a long term rental this matters since you have a fixed amount of income coming in monthly BUT Nightly Rate X Occupancy is the metric and you can lever those up and down to get optimal revenue. For example, you can have 100% occupancy but if you aren't getting decent nightly rates, occupancy doesn't mean squat! In my opinion, 100% occupancy too far out (more than 30 days) is CERTAINLY not optimal, it probably means you left money on the table with nightly rate. I'd rather take 15 days or 50% occupancy @ $250/night vs 30 days of 100% occupancy @ $100/night. More revenue, less wear and tear on my place, likely a higher caliber of tenant :)
Investor · National · Member since 2017 · 123 posts · 101 votes
9y
The best way to see the quality of your listings is to focus on revenue per available night. This is a performance metric used in the hotel industry and is calculated by multiplying a properties average daily rate (ADR) by its occupancy rate. Where It differs for vacation rentals or Airbnb airings is that its being calculated by dividing your listings total revenue by the total number of available nights in the period being measured. For example, you have a 30 day month and your average daily rate is 100. You rented the property 20 times so you generated $2000. But let's say 3 of the nights you stayed there and the property was not listed so it leaves 27 bookable days. Divide the 2000/27 to get your RevPan.
Manvel, TX · Member since 2014 · 309 posts · 127 votes
9y
Don't forget to include lawn care in your expenses, @Melissa Kirchhoff! Ask me how I know you shouldn't forget this. :-/
I concur with the strategy of seeing how many occupancy nights you need each month to break even. When we were contemplating setting up our tiny house rentals, it was scary because we had no idea if we'd get any bookings. We are on a Christmas tree farm, so that's nice, but we're in a location that is literally not on the way to anywhere (since the Gulf of Mexico is about 50 miles to our south and I-10 is about 25 miles north) and has absolutely NO tourist draw (just a rural area that's coastal plain with a lot of oil fields and cattle). Nevertheless, the tiny houses were relatively low cost, and the number we came up with was 7 nights per house per month to break even. I'm not sure of our average, but we've always made that number and sometimes gone way over.
As I said before, I didn't include lawn maintenance in my calculations, so my husband has had to do the lion's share of that. Another thing I didn't consider was the laundry. I have a cleaning lady, but I do the laundry. In a VR, you need to wash every single fabric thing that's washable every time you change guests. That has been a pain in the neck. We're planning to put a washer/dryer in the building where we store the supplies for the houses, but the cleaning lady will still not be able to do all of it without staying out here for hours. So, think about the laundry and who will do it, and if it's not you, what will it cost? I read one article from a guy who says to have 4-5 sets of linens & towels, then when half of them are dirty, take them to a drop-off laundromat for wash & fold service. He said it's well worth it, and I'm not ruling that out for the future.
Ottawa, IL · Member since 2016 · 242 posts · 107 votes
9y
@Leigh Ann Smith - Haha! Regarding the lawn care, I actually didn't think of it until I brought my boyfriend out the other day and he pointed it out. That's something I'll happily take on for now (and pay in the future but that will probably be the last to go!)
Also, the laundry is something I thought about (another reason I think not having laundry on site is a huge negative!) I had already planned on having multiple sets of things and swapping out but instead, bringing them home and do them on my own time. I am also a massage therapist and have a private practice out of my house, so this isn't new territory for me either. I buy all white so I can bleach them and I have tons of sets in case I don't have time/don't want to/can't wash and dry them right away (which was very handy when it took a week for our dryer to be fixed!) But to never have an option to do it there (and not being able to really do it without crapping up the place or doing an addition) is something that still makes me super hesitant. And I feel like with water and hiking around people staying might prefer it too, I know I do when I travel!
The 7 days also helps. At a rate that I would likely be at that would cover it plus plenty, so it's good to know that you make it and that you are similar, thanks for sharing your stories!
Realtor · Charleston, SC · Member since 2016 · 229 posts · 159 votes
9y
You really need to consider the legality part as well. You should only buy the property if it works from a long term rental stand point also because some places ban airbnb and cite owners up to $1000/day that they are running a short term rental.
It is always good to have multiple "outs" exit strategies instead of banking on one.
I have 3 airbnb in my area and its been pretty good so far. I have been operating for about a year now. Tourist season certainly makes it easier and more profitable, but during the slower times you need to get creative with filling the units. Professional relocation housing, renting to transient workers, travel nurses...etc.
Where in the tampa area are you working out of? We were thinking about coming down there (because my inlaws live there) and looking into the old Ybor area and Old Seminole Heights Areas to do a long distance airbnb. Anything in terms of legal issues that are being brought up? Also, what kind of unit are you renting (i.e single family, condo, duplex, tent lol)
Buffalo, NY · Member since 2017 · 6 posts · 6 votes
9y
@Melissa Kirchoff - I came across an interesting article/charts recently posted by Airdna for Airbnb. It shows occupancy rates and average daily rate for Airbnb listings in a lot of different cities. It's hard to know how accurate the data is but the charts are pretty interesting. Here's the link.
Ottawa, IL · Member since 2016 · 242 posts · 107 votes
9y
@Peter Brinton - Interesting! Thanks for sharing, I wouldn't want to (right now) make a move outside of my area but I would have never guessed some of those, I would have thought NYC and San Fran would be *huge*! Very great article!
Where in the tampa area are you working out of? We were thinking about coming down there (because my inlaws live there) and looking into the old Ybor area and Old Seminole Heights Areas to do a long distance airbnb. Anything in terms of legal issues that are being brought up? Also, what kind of unit are you renting (i.e single family, condo, duplex, tent lol)
Chris,
I am in South Tampa. Palma Ceia to be more specific.
Real Estate Agent · Chicago, IL · Member since 2016 · 283 posts · 71 votes
9y
In Chicago 60% occupancy is about as high as you get with the summers obviously being the major time. The key for Airbnb is to get long multi week tenants even if it is at a discounted rate. Keep an eye out for any conventions or festivals that may take part in the city
As an Airbnb host, the glaring factor I haven't seen you mention is your time. Or whoever is going to be answering emails, texts and phone calls. check in, directions, repairs, etc. For Dallas, we're making 1-2k above long term tenants, but I keep my time below 4-6 hours a month. That makes it worth the extra hassle.
Once we got the our unit furnished and up and running. I spend maybe 2 minutes a booking when I get an alert. all the work is done with my thumbs. I think I booked a guest while I was on the bus heading up to Machu Picchu last month.
Rental Property Investor · Aurora, CO · Member since 2017 · 17 posts · 12 votes
9y
Location, Reviews, Price, and Listing quality (photos/description/rules) are the 4 pillars of an Airbnb/STR property that will drive your occupancy rate up or down.
When I started out new 2.5 years ago I undercut all the competition so to slowly build up consumer confidence via reviews. As reviews went up so did demand along with my price. As price went up my occupancy rate dropped slightly but I'm still earning more now than before and with better quality renters.
Entire property rentals need at least 10% of the year to breathe for repairs/updates if you want to continue to operate at a high level and offer a quality product.
My current occupancy rate as of August 2017 is 78% with $20k net income after all expenses and mortgage paid.