Rental Property Investor · Ashland, KY · Member since 2019 · 16 posts · 5 votes
My wife and I are new to short term rentals. We have our eyes set on a property on a lake that we frequent, and want to know how to analyze it to make sense if we could purchase for us and our family to enjoy, while tenants pay for it when we aren’t there.
Do you all analyze short terms like you would a long term? We have been looking on AirDNA and comps on Airbnb and it appears the monthly average at 50% occupancy is 1200-1400$ to be conservative I would probably analyze at 1,000$.
Investor · Roseville, CA · Member since 2016 · 893 posts · 1k+ votes
6y
@Justin Bartram Here is a spreadsheet I share often on this forum if you would like to check it out. It helps line up your expenses against your total revenue.
You need to know ADR and Occupancy rate to generate your gross revenue. I usually start with Airdna and then manually review Airbnb and VRBO listings to confirm or adjust what Airdna shows. Keep in mind, Airdna often shows your ADR with cleanings included which would only apply if you are cleaning the place yourself.
Also remember when comparing to Airdna numbers that somebody's else's success (or failures) are not necessarily indicative of your results. In the end you will either do better or worse then those numbers show based on how you run your business.
Rental Property Investor · Huntington, IN · Member since 2018 · 32 posts · 13 votes
6y
Personally I analyze a deal like a long term fully expecting the STR to perform better than if a long term renter was in it. Things you will have to account for in you analysis are utilities, furnishings, cleaning, and bedding if the place you are looking into isn't already a STR and coming furnished. If it can run as a long term and meet your qualifications definitely look into it. Something else to think about is flood insurance if it is in a flood zone.
Realtor · Gatlinburg, TN · Member since 2018 · 261 posts · 155 votes
6y
@Justin Bartram just my 2 cents... don't over-complicate it. If it's a pre-existing STR, ask sellers to document existing STR income for last two years. If it looks low, ask why. More than likely they only had it posted to 1-2 STR websites, the pics were vanilla or amateur hour, etc. If it's the latter, then it's a business opportunity for you b/c you can leverage poor STR income into your bid.
Investor · Monterey, CA · Member since 2014 · 174 posts · 55 votes
6y
I own a house near the beach. It's too much trouble to keep "flipping" it for an AirBNB. I'd rather sit back and collect the money monthly and rent a nice condo on the beach occasionally...
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
I have a lake house and it does way better on Vrbo. I think true vacation properties do in a lot of cases. At least that is my experience.
There are way more properties on my lake on Vrbo than Airbnb. I am on both, but get 95% of my bookings via Vrbo.
So check data on Vrbo and Airbnb to make sure you are looking at all the data.
I would look at calendars of comparable properties on both platforms and check occupancy and nightly rates. Look at the peak season rates as you will make a lot more money in June July than January.
People are just now making summer vacation plans so until it gets closer to spring it will be hard to judge occupancy.
But once you have some average prices based on season you can play with the occupancy number and let excel give you numbers based on various occupancy numbers.
I would drop all this into a spreadsheet along with your expenses and see what it looks like.
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
I use the Vrbo "marketmaker" I also manually look up similar properties in my area on Vrbo to see how much they are charging.
I look at top ranked properties to see what amenities they have and what their pictures look like to make sure I stay competitive. I am usually ranked in the top 5% to 10% and almost always show up one the first page of the search results of Vrbo.
Investor · Roseville, CA · Member since 2016 · 893 posts · 1k+ votes
6y
@Justin Bartram Here is a spreadsheet I share often on this forum if you would like to check it out. It helps line up your expenses against your total revenue.
You need to know ADR and Occupancy rate to generate your gross revenue. I usually start with Airdna and then manually review Airbnb and VRBO listings to confirm or adjust what Airdna shows. Keep in mind, Airdna often shows your ADR with cleanings included which would only apply if you are cleaning the place yourself.
Also remember when comparing to Airdna numbers that somebody's else's success (or failures) are not necessarily indicative of your results. In the end you will either do better or worse then those numbers show based on how you run your business.
My wife and I are new to short term rentals. We have our eyes set on a property on a lake that we frequent, and want to know how to analyze it to make sense if we could purchase for us and our family to enjoy, while tenants pay for it when we aren’t there.
Do you all analyze short terms like you would a long term? We have been looking on AirDNA and comps on Airbnb and it appears the monthly average at 50% occupancy is 1200-1400$ to be conservative I would probably analyze at 1,000$.
Any advice?
AirDNA is good. You should also use Airbnb and other other STR platforms to run an analysis on the property yourself though.
With our lake house, I took a look at each and every rental that was slightly similar to ours. I used both AirBNB and VBRO/HomeAway for the stats. Then I could estimate how we would do over the summer and what I could charge per night.
I don't use AirDNA. It's algorithm is fine as long as there are a lot of rentals to compare with minimal outliers.
When I tried AirDNA it came up with a nightly rate of over $700. That was due to fairly small sample with some very expensive lodges on the lake that skewed the results much higher than it should be. So, take the AirDNA results with some skepticism. Verify the results with what you pull manually.
Remember you have to outfit the place so that can be a hefty expense.
Also, the first year of rental will be on the thin side. You will be brand new on the sites with no reviews so it will take a bit of time to build it up. Our first year was thin, then things were great after that.
What lake are we talking about? I can take a look and see what's what.
Investor · Ogden, UT · Member since 2018 · 295 posts · 208 votes
6y
@Justin Bartram look on Airbnb as if you were looking for a place to rent to see your competition. See what everyone else is renting for by the night - you can expect somewhere in that range depending on the quality of your place and the amenities you offer. Also look at their calendars on the site, see how many nights they are booked and again you can expect something similar. There are ways you can be booked more often by differentiating your listing with professional photos, adding amenities, creating a cool theme, update your pricing etc.
Then of course you pay the utilities and electric, definitely wifi so your guests can stay connected - on top of your normal repairs and maintenance (which are lower for STR renters because they take better care of the place), CapX, taxes, insurance, and mortgage.
I will also analyze mine as a LTR to know that if regulations with STRs change I have a backup plan.
Rental Property Investor · Queens, NY · Member since 2019 · 50 posts · 33 votes
6y
@Justin Bartram like many suggested, a good option is to look at similar size and quality properties on AirBNB/VRBO, then compile data on average nightly rates and occupancy/vacancy.
Something else you can do is reach out to property owners that run STRs in the area and see if they are willing to share information.
REALTOR, Investor, and Rehab Expert · Miami Beach, FL · Member since 2015 · 196 posts · 74 votes
6y
Hey @Justin Bartram that sounds like an ideal scenario for you to have an airbnb property. We manage many properties for owners and also doing the rental arbitrage strategy. My advice is to look at the best performing properties on airbnb and then derive the analysis from there with a visual on the pictures as well. I’ve been able to do this with bnbvestor.com Additionally, the success of your income will largely depend on how good of a host you are. This means immediate communication, the speed which you solve a problem for guests, pictures on the listing, design and accomodations of property, Lastly the small details that will allow you to stand out for example a high chair and pack and play for toddlers.