All Forum Posts by: Jaeseok An

This article summarises the top 10 short term rental data providers (https://datarade.ai/top-lists/...).

As @Michael Baum mentioned, the results may be skewed due to the region definitions on their platform. I can guide to a platform where you can define your own region, feel free to PM me.

What is your net operating expense ratio? and how much of the operating cost is paid out to cleaner? So I have this number for example. 

Revenue $90,000 ($75,000 from nightly fees, $15,000 from cleaning fees)

Operating cost: $40,000 (Including insurance, tax, utilities, supplies). Cleaner expense is $12,000. 

So operating cost is around 44% of revenue. And, 30% of operating cost is cleaners fees, which I believe is the biggest expenses for most STR owners.

I'm curious what number you've got and knowing this would be useful for people who are just starting out. 

Data is gold but misinterpreting or having bad data is worse than no data. Here are a few things you need to check before using the data.  

1. Do you agree with the boundaries that AirDNA has set for your region? Do you think the majority of the properties within that boundaries are fairly similar (in terms of short-term rental attractiveness) to the property you are thinking of running Airbnb? 

2. Typically, 20 - 40% of listings in a neighbourhood are owned by supehosts, and their properties definitely make more money. If you are just getting started out without any reviews, your expected ADR and Occupancy Rate could be lower than the average. 

3. The revenue probably includes cleaning fees. The percentage of cleaning fees in the revenue could be up to 15%, and as you know, those cleaning fees are at the same time operating cost.

With your kind of budget, I'd look into buying a block of units to run them as a short-term rental. A lot lower operating cost. 

A few kinds of research you need to do. Better if you use data. 
- You need to find out average occupancy rates and ADR in your area to see if it makes sense to do the short-term rental. 
- Which type of property has the highest cash on cash return in your area. Is it a studio? 5bed room houses? 

I think you are looking for this kind of short-term rental profit simulation (image attached). Message me, I can share access to this tool. It's an open-source project as well, so you can read the codes behind it too. 

While doing due diligence, I  mainly look into cash on cash return and net profit yield. 

The short-term rental data you'd like to look for as an investor are two things
    1) 12 months occupancy rates 
    2) 12 months ADR 
Also, you would want to compare the potential revenues between two investment options, such as 2bed vs 3bed house etc. Or, 2bed in area A vs 2 bed in area B.  

You should also read carefully on what the ADR includes, as it means differently in different platforms. AirDNA includes cleaning fees and additional guest fees in ADR, I believe. But there are companies that show those two numbers separately. 

I suggest you shop around for different data providers, as AirDNA isn't the only option.

Finding out long term rental rate is easier and more predictable - you can just find them on Zillow or Gumtree.

Lots of things to consider, But. Let me ask you this question, do you want to spend around 3 hours every week on managing property for extra $1,000/mo income? 

If you are willing to exchange your hours / efforts putting on a property for extra cash flow, you won't regret doing STR.

@Luke Carl @Dev Paul

Seen people getting above 0.1% from mobile houses, tiny houses and mud houses. The number was something like 30-50k to purchase the entire thing and they are getting 50 - 130 daily rate. 

I've also seen similar returns in many parts in Asia. Like purchasing 2 bedroom house at below 50k and renting them out to English speaking foreigners at $60 or higher. 

This is a calculator I use for short-term rentals, and you can get an idea on what are the typical variables you need to use to build your own financial model. 

Boathouses are typically a very good investment for short-term rentals as they are relatively cheap, but their daily rate is relatively high for the boathouse valuation. 

One thing I'd make sure is guest satisfaction. You will eventually get high occupancy rates with a good daily rate to achieve high net profit if you consistently get good reviews from a platform like Airbnb. 

If you can't see the image clearly, these are the variables you need to consider. 

ADR, Occupancy rate, monthly recurring expense, yearly expense, profit tax, annual appreciation in ADR and house value, renovation cost.  

The two metrics I use are cash on cash return and net rental yield to decide if it's worth putting money down. 

Maybe you can screenshot the part where the guest explicitly mention that they are willing to change to 5 stars, and ask the Airbnb support? 

I believe they will change it to 5 stars if your guests contact them and follow up with them.

Urban short-term rentals (eg. San Francisco) are doing bad now, but vacation rental destinations (Big Bear Lake) are doing well, some of them are doing better than past few years. 

If you are looking for distressed assets, you can refer to below graph to see which states are doing poorly, also hotels are suffering hard now. 

You can also join the Airbnb hosts FB groups and ask people there if anyone willing to sell.