How to analyze a short term rental property

Question

Hello BP,

I live just outside of Boston and am interested in purchasing a short term rental property in the North Conway area (for those not from New England), North Conway is a popular destination, as it is within 30 minutes of 3 large skiing mountains, close to summer hiking, as well as family attractions such as Storyland and Santa's village. In addition the town is fairly well populated, thus there are a number of restaurants, shops, etc.

I have a pretty well built Excel calculator I use for valuing traditional long term multi-family rentals, but am not sure the best way for determining estimated rental income for a short term rental property, which would be listed on something like VRBO or AirBNB.

My question is, how can i determine my expected annual and monthly income for a rental property accounting for vacancy, weekend vs. weeklong rentals, peak vs. off-season rates, etc.

Any help would be greatly appreciated!

Al Williamson · Answer

Hi @John Armando

I spend a lot of time talking about this topic. You basically need to ditch your old spreadsheet except for calculating your baseline. You need to have a good idea what your net income would be if you operated a traditional long term rental.

One good sources of info is airdna.co   (not dot com)  and the GSA rates for your area. ... That's if you plan to do quick turns and weekend rentals. The Airbnb Dude @Patrick Diamond can fill in on that path a lot better than me.

I suggest rental owners who don't plan on personally using their property for vacations etc. aim for long-shorts (term of 1month or more). This gets you into what I consider to be a sweet spot of profitability for most cases. It's more corporate housing that vacation rentals.

A quick word on vacancies...I suggest you look at them completely differently than a traditional landlord would. Your objective as an Airbnb/VRBO/TripAdvisor Landlord is to get a year's worth of NET income in as few months as possible. If you operate with this as your goal, then you won't fool yourself about "profitability."

You're only profitable as a short-stay landlord IF you exceed the income of a traditional landlord. Otherwise you should revert back to traditional landlording.

That's just my opinion. Best to you.