Investor · Syracuse, NY · Member since 2020 · 33 posts · 13 votes
What's up All?
I'm very comfortable with analyzing residential real estate. However, I haven't found any good videos or topics that discuss analyzing short term rentals. I'm pretty sure I can come up with some analysis that gets me close, but I'm looking to talk with someone who is in the short term rental game or someone who knows a good article, video, etc.. that goes over a few examples. I run the calculator on AirDNA and it gets you started with some high level numbers, but I'm looking to dig into the fine details and map everything out before a purchase. Any insight would help. Thanks!
Investor · Chicago, IL · Member since 2021 · 12 posts · 10 votes
5y
Make sure you account for all utility bills, pest control (if that is relevant in your area), ongoing maintenance needs (like lawn care, spa care, power washing, deck staining), % held for future CapEx, % held for misc. maintenance, disposable supplies, non-disposable supplies (linens, towels, etc.), property management, cleaning/turnover (mostly pass-through). One important thing I realized when I purchased the AirDNA market data is that the AirDNA nightly rate they give you INCLUDES the cleaning fee. That really elevates the nightly rate vs. what is real if you're not factoring in cleaning. I like to look at cleaning separately because then I can compare to what is listed on AirBNB & VRBO which does not factor in the cleaning until you go to book. So, keep that in mind. In my market I want to say the main AirDNA page had an ADR of like $267 when in reality, without cleaning, it's more like $175 for my size place.
Investor · Chicago, IL · Member since 2021 · 12 posts · 10 votes
5y
Make sure you account for all utility bills, pest control (if that is relevant in your area), ongoing maintenance needs (like lawn care, spa care, power washing, deck staining), % held for future CapEx, % held for misc. maintenance, disposable supplies, non-disposable supplies (linens, towels, etc.), property management, cleaning/turnover (mostly pass-through). One important thing I realized when I purchased the AirDNA market data is that the AirDNA nightly rate they give you INCLUDES the cleaning fee. That really elevates the nightly rate vs. what is real if you're not factoring in cleaning. I like to look at cleaning separately because then I can compare to what is listed on AirBNB & VRBO which does not factor in the cleaning until you go to book. So, keep that in mind. In my market I want to say the main AirDNA page had an ADR of like $267 when in reality, without cleaning, it's more like $175 for my size place.
Investor · Flowery Branch, GA · Member since 2019 · 413 posts · 412 votes
5y
There are about a million ways to analyze these. You can go super in depth, or just wing it and ask yourself are other people making money with STRs in this market and jump in. I think the magic is somewhere in the middle. The reality is your management of the property is the largest variable with STRs. Are you going to treat it like a business and dive into your PMS and pricing tools to make sure you are maximizing revenue and reviews? Are you willing to hold your cleaners and handyman to a high standard while also being fair to them? The most efficient way is to reach out to other hosts on Airbnb/vrbo and see if they will share their numbers with you. If you reached to 10 people would 1 or 2 say yes? Yep! If going with a property manager any self respecting company should be able to provide you with a quick analysis too.
Investor · Charlotte, NC · Member since 2020 · 239 posts · 247 votes
5y
@Joshua Strickland if someone wanted to go super in depth where would they find out how? I have a few SFR and small MFR'S and know how to run those numbers very well. STR is new to me and I'm struggling to find any useful resource. What are some of the metrics and I can look those up? Is there anything similar to the 1% rule, 50% rule, CoCROI, Cap Rate, etc? I did hear that 10% rule from my realtor, but have been unable to find that anywhere else. (10% of the purchase price is what you want in annual rents)
I own 3 airbnbs at this point and they all make about 3% per month. Those 'hard and fast percentage rules' are garbage, never use them. Run your own analysis and decide if this is the best use of your money, in your situation. My long term rentals never made 1%, then they doubled in value due to the neighborhood, and now they cashflow well.
If you want to run an analysis, don't use airdna. I've found it WAY off base on my own properties. I haven't found a better site either. The way I run my own analysis goes like this:
1. Find a house similar to what you want to buy on airbnb
2. Check it's nightly rate (NOT what is listed, that is a misleading marketing device), to check the proper nightly rate just find some dates (in the future a month or two, nearby dates have discounts) and do an entire week. Remove any 'weekly discounts' they give you. Take note what the weekend rates are, and what the weekday rates are.
3. Check nearby dates for that property to calculate what it's getting booked for. You'll see blocked off dates, that means its booked most likely. Calculate on average how many weekend nights, how many weekday nights per month. Multiply by your nightly rates. THis is your monthly rate.
4. Keep in mind, that some areas are VERY seasonal. I make 2.5x during summer months. This is where websites like airdna are good, for 'trends', not for 'rates'. You can evaluate which areas are seasonal, and get a good idea of what multiplier you should use to calculate the yearly rate, based on your one months rent you calculated.
Another interesting strategy to get a feel for the performance of a STR is to just contact the owner directly and ask them if they will share their numbers year over year. Some will probably not want to share but if someone asked me how my assets performed I know I would be more than happy to share.
Investor · Flowery Branch, GA · Member since 2019 · 413 posts · 412 votes
5y
Those rules are very relative and vary by market and goal. Good resources are Airdna, keydata, and mashvisor. Mashvisor has a pretty in depth calculator tool, but you have to do the work to get accurate numbers. This work would entail getting quotes from local cleaners, and reaching out to others with STRs in the area you are looking to see if they will provide numbers for electrical, water, and other utility bills. Some of that you will be able to find online. i.e. internet, pest control, tv costs. Reaching out to other in the area your looking is by far the best way. Luke Carl has a youtube video on his ENEMY method that explains this. Be careful not to over analyze. You can find a reason to buy or not to buy any property. The best learning comes from experience and have plenty reserves just in case.
Investor · Syracuse, NY · Member since 2020 · 33 posts · 13 votes
5y
An article just came out from @Dave Meyer going over what I was looking for.
Dave this article is EXACTLY what I was looking for and thank you for the free calculator (at least I hope it's free). This is a very well written, to the point, data based article.