All Forum Posts by: Tyler Divin

Oh, one more thing.  Look for gaps within the market.  Go to Airbnb and search for 1, 2, 3, 4, 5 bedrooms and run a little spreadsheet subtracting to find out how many of each there are.  I did this recently for part of our market and noticed there were half as many 3 bedrooms as 1's and 2's and in the downtown area very few 4 and 5 bedrooms.  If you find that go look at all the 4 and 5 bedrooms.  Are they performing well?  Are they competitive?  Are there any ugly duckling 4 or 5 bedroom homes for sale that could be turned into rock star properties bursting with amenities that would outperform for large groups?  Filter for pools, there might be very few if any.  Now go to Zillow and create a search for 4 and 5 bedrooms with pools.  Onto the next market. Bait lots of hooks like that and wait to see what bites.

To echo some of the other comments and provide some clarity I think a lot of people, especially STR influencers, are actually executing a fix and STR strategy but it all gets lumped into STR/Airbnb. In the markets we work in I haven't seen a house that can be purchased at todays prices/rates, furnished, and short-term rented at a profit. It's probably worse when looking to buy existing/turnkey STRs. The deals I see that work are people buying ugly/dated/problem houses, fixing them up, and turning them into incredible STRs. That takes a lot of skill, vision, construction, decorating, amenities, etcetera. It's a lot more than most people want to do.

Think about the houses with the ugly/dates front facade. Important for homeowners, insignificant for STR (just don't use it as a cover or top 5 photo). Amenities book in the markets we're in. Pools, hot tubs, game rooms, theatre rooms, fire pits with string lighting. In my mind if all of your top 5 photos are amenities your property will perform better. That's what gets people excited. Everyone knows its going to have a kitchen, beds, and a living room with a TV they can see all that after you've gotten them excited with the first 5.

We don't offer an exact itinerary. We tailor the descriptions, photos, and photo captions to give potential guests an idea of the best things to do, places to eat, and things to see.  We describe the places, then show photos of them, and further reinforce this in the photo descriptions.  Our cover photo is tested to maximize clicks on the ad.  Once someone views the ad, we want to show them the space along with the best nearby attractions, so that if they read the description or view the photos, they can see a 3-day weekend of activities tailored to the audience based on the season we're booking into.  We want them to not only see the house/property as working for them we want to make it easy to see all that there is to do nearby so they don't leave the ad to go research our location and what there is to do because if they leave the ad we're less likely to get them to come back.  The way we think about it is 'teeing up a 3-day weekend on a silver platter'.  We suspect Airbnb is seeing us doing this and promoting our listings more because we're focusing on the experiences, not just the spaces.

When times get tough competition increases so we step up our game.  We have a home in Helen, GA where competition is up and tourism is probably down.  We recently went in, made some updates, applied some elbow grease, took a new set of cohesive photos, re-did the descriptions, and bookings are up for this summer.  We believe a big mistake that a lot of people are making is their listing is a space/a house when it should serve up a vacation experience on a silver platter.  An ideal listing to us lays out a 3 to 7 day vacation experience whereas most people are showing a space and letting the potential guest figure out the experience.  Furthermore, the vacation experience changes seasonally so our listings change seasonally.  We think Airbnb's recent website redesign enforces that they're not just offering rooms, houses, and spaces anymore...it's all about the experiences.

I'm not familiar with your market but in the Gulf Coast a lot of the condo's have HOA's that require you to put your unit in the rental program with the building's designated management company. IMO that puts you at a massive disadvantage and it's basically a racket. I think a lot of the condo management companies are sister companies to the developers of the condo complexes and like you mentioned, bad websites, outdated photos, weekly minimums. I don't have first hand experience but I think those management companies are making all the money and the owners of the condos are essentially getting a small discount to the full cost of ownership especially after the hefty HOA dues. I feel confident that if you took a unit in one of those buildings, set it up well and listed it nightly on Airbnb and VRBO it's performance would far exceed the local management company.

One suggestion is to utilize ChatGPT.  It seems to get better every week at taking photos of existing spaces and re-designing and re-arranging them.  You can at least use it for initial inspiration and go from there.

I think the most comparable situation to a retail business is called STR arbitrage. One person owns the real estate (retail space or STR property) and the other person (retail store or STR operator) rents the empty space, furnishes it, and operates the business (retail or STR) out of the real estate. I have seen on BizBuySell where a STR business is being sold and it's a collection of leases, STR arbitrage, and management contracts. Here is one example...https://www.bizbuysell.com/business-opportunity/turn-key-sho...

We've used Hospitable for 4.5 years and really like it.  When we started our property management company, we looked into switching to something more robust, but Hospitable beefed up their property management features, so we stuck with them.  We're waiting for the last feature to roll out, which is a custom-branded owner's portal, which they anticipate launching in June.  Once they launch that, we're happy campers.

I like a lot of what everyone has already said.

I would add this...when shopping for a property research the top amenities in the market and make sure you have the SPACE for them even if you don't have them yet.  You can only add a firepit, hot tub, or game room if you have the space for it and by space I don't mean carve out a firepit in the side of a slope or something that's not going to make sense financially. 

In that same regard pay careful attention to the amenities other comps have.  You might have a 4 bedroom in the mountains but if they have a view and you don't you're not going to achieve the numbers they are and it's hard to add a mountain view!

BNBCalc is my favorite underwriting tool after having tried many. I also have an AirDNA subscription. I think a key in STR's is to be able to underwrite a lot of properties fast.

My BNBCalc process is open a new property, see what it says up top.  Then go down to the 40 comps it pulls in and arrange them from high to low by revenue.  Then I start opening them from the top of bottom and muting the stuff that's below and above the subject until I narrow the comps down to the properties that I think are the most comparable.  As you mute the comps and narrow them down the average occupancy and ADR of the comps will be shown above the comps (not affecting the underwriting itself).  

Then I compare the ADR and occupancy of the comp set to what it started with, open the percentile chart to see where it lands and make sure it makes sense (if it's a top performer, middle of the pack, or under).  From there tune up the expenses paying particular attention to cleaning fee.  To calculate your average monthly cleaning fee take your occupancy rate % X 365 divided by the average number of nights you expect X the estimated cleaning fee divided by 12 and make sure your cleaning costs per month are real.  

Button it up and now you have a living model you can share with others and they can play around with it.  What if we are really closer to the 75 percentile?  What if we're closer to 60 percentile?  What if we added a hot tub (go back and look at hot tub comps and unmute).

Absolutely fantastic tool.