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Quote from @Carlos Ptriawan:
Quote from @Sarah Kensinger:
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Quote from @Murray Reginald:
Hi BP,
I am looking at a couple beach house properties that looks really good on AirDNA however, AirDNA gave me the following analysis:
Beach House Property:
Annual Revenue - 121.6K
Occupancy Rate - 88%
Cap Rate - 29.51%
I have another house I see that has the following analysis:
Two Story House Near Beach:
Annual Revenue - 121.6K
Occupancy Rate - 88%
Cap Rate - 29.51%
I've ran some comps on the beach house however, I don't see any 3:1s to compare I only see 4:2s and 2:1s, I'm trying to figure how accurate are these numbers and is there anything else I can do to confirm this will be a good investment since the Beach House has never been on AirBnB/VRBO im wondering how accurate is this information and how did AirDNA come up with those numbers.
AirDNA is far from accurate. Come on, 30 cap rate doesn't exist even in LTR space. The most reliable way of finding the marketability of STR is checking their future-30-90 days online booking, that's what I found so far.
So, I assume you know STR since your here on this forum. STR cash flow 2-3 times more than an LTR, which is one of the reasons many of us just do short-term over long-term. So, no you won't find a LTR with a 30% cap rate, you can't charge that much a month. But with a STR the monthly income can double or triple if the owner has done proper research of location, market, etc. and the property is managed correctly. We won't' look at a property that is below 20% cap rate and we are part of a large group that does the same practice, it's partly why all of us can do so well. If you have patience and know how to look, there is usually a diamond in the rough.
If you buy in 2011 then you would get 20 cap rate Lol but not when you purchase in 2023
We're buying this year as well as many in our mastermind....those deals are still very much around!
There is no STR market in 2023 that has two digit cap rate, it is just impossible in math
Ok when we purchase ours, I'll add it to the review and feedback forum and maybe send some of our mastermind friends to do the same. ;p
you can say whatever you want, unless the accounting is cooked or it's in rural area where booking is only few times a year/not sustainable. Double digit Cap rate market in most urban city is simply not available/not possible. Airdna even has writing on this: https://www.airdna.co/blog/you...
I've been researching STR, the only way you could do double digit cap rate only if:
1. you use the purchase price in 2010
2. it's somewhere rural that your purchase price is close to zero and rent it for three hundred bucks a month LOL
Good Honest PM like ArrivedHomes for example, is showing with STR, the positive addition of cap rate compare to LTR is only yielding additional 1 percent, so if LTR market is 3%, actual cap rate for STR is 4%.
Also if one is reading Here PM STR "audited financial report", their actual profit loss statement is negative for all their 2022 properties, even in rural properties it is negative single digit cap rate (bought for 1.5 mil and rent for $400/night with 40% vacancy).
I'm not sure what to say but we almost bought a FL condo that required a bit of "lipstick" work that had 20% cap rate, just directed a client to a home in Ohio that had close to 27% cap rate, and as I look for other properties we may personally purchase I come across 20% fairly often. $200,000-$300,000 price range and once all utilities, taxes, insurance, supplies, furnishings, etc are accounted for, you're looking at a 20%+ COC return. That's how we are able to have successful STR without dealing with "the Airbnb bust", over saturated, low bookings, and everything else you hear. We watch, wait and run numbers like crazy to find that "perfect" numbers property. I would highly suggest checking out Bill Faeth and Michael Sjogren since they regularly teach this and have used this strategy for years.
