How useful is the AirDNA Market Grade?

Question

Hey all - I'm new to the game and am starting to get some reps with the analytics tools, specifically AirDNA.  Here's a question for you all...

How much weight does the AirDNA Market Grade have when you all choose markets?  Do you only go for B+ and above, for example?  For markets with worse grades, how do you find the areas within these markets that perform better (or is that possible)?

I'm trying to get an idea of how I can use this rich data source - especially since they have an API! Maybe it's possible to automate this analysis such that I can generate a list of markets/areas quickly to focus on.

Thanks so much!

Lauren Kormylo · Answer

No, not if a large quantity of days are blocked. There are some beach places in my area that are only listed for 60-90 days a year, all in the summer, and AirDna shows that when you click on the listing on the map. It will show “days available“ per year, then the average daily rate, then occupancy percentage (of the days available), then total revenue for the year. So for example, it will show a house that had 68 days available in the last 12 months, average daily rate of $767, occupancy 97%, total revenue $50,622.
On the free version of Airdna, you can see the days available and average daily rate, but you have to pay to see the occupancy and total revenue.

Joseph Cacciapaglia · Answer

My market, San Antonio, tends to fluctuate between A- and A+ over time (I've been tracking for 3-4 years), so I'm not sure how useful the current grade is at any give time. If you pick a B+, and it fluctuates the same about, you could end up with a B-. A lot of my clients have found great STR deals here, so I think the A rating is probably justified, but I don't spend a ton of time looking at other markets anymore.

I picked San Antonio for myself about a year earlier, looking at a number of factors related to real estate investing, but not STRs in particular. Frankly, I think people spend way too much time trying to pick the perfect market. There are deals to be found everywhere. Start with the first A market that catches your eye that also has a median home price within your budget, and start talking to professionals in that market.

Michael Baum · Answer

I don't hate AirDNA @Lauren Kormylo. I know I preach about it, but I always say it is a tool. Like any tool, it can and will give misleading info if there aren't enough data points.

Use it if you have it, but add more info from directly searching. :)

Michael Baum · Answer

Hehe @John Underwood. You crack me up.

What they all said! AirDNA is just an algorithm. The idea of using it for general research would put it at it's weakest. You will have the least number of data points to compare.

You are better off drilling down to areas you like and then use it as part of your research toolkit.

Looking at AirBNB and VRBO directly will give you the best data.

Lauren Kormylo · Answer

Unlike a lot of people here, I like AirDna. But in my beach market, I think they are way off on the grade. In fact, my area went down from B to B- to C in the time I was looking for a place. I could see nothing that changed, so don’t know what caused it. Remember that they are looking at the calendars of places listed on AirBnb and VRBO only. If an owner blocks off the winter for their own use or gets a direct long term booking, AirDna doesn’t know that. It thinks the rental is sitting empty, and will ding the market grade worse in seasonality than it is. But if you look at places that have their calendar open all year, they do very well. In my market, many rentals have been handled by local real estate companies since the 1940’s. And if they don’t have them listed on Airbnb or VRBO, they aren’t counted by AirDna.

John Carbone · Answer

I would start out looking at the "A" markets. Spend some time researching manually and see if you can find something that makes sense. Also check to see if the market that has the "A" market is sustainable. AirDNA uses historical data, a lot of phantom airbnb markets were created during covid. People needed to escape cities and restrictive states. It is a lot of trial and error, and an algorithm can only provide an overview. This is not a "cheat code", if you treat it as such, your "investment" may not end well.

Bruce Woodruff · Answer

AirDna is not as accurate as doing the research yourself. Think about it, how could it be? It's just an algorithm....

Jack Cannon · Answer

Thank you all for the great replies - your time is much appreciated!  I have a lot to think about and will keep the thread updated as I learn more.

Andres Murillo · Answer

I found a great way to quickly make the grades more meaningful is to dig into the areas you already know.

Check out the markets where you vacation regularly and compare how AirDNA grades them with how you would personally grade them.

Think about what drives the demand there, the supply of STRs available to you, and how demand might fluctuate.

William Beck · Answer

@Jack Cannon If you talk to the right people you'll probably get a lot more food for thought and information than a generic grade on AirDNA. What markets are you thinking? DM If you want to chat.

How useful is the AirDNA Market Grade?

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