How To Run The Numbers On A Potential STR

[Lucas Schlund]

Hello all! I have tried finding post regarding this question but couldn't really find what I'm looking for. I'm new to STR's and was wondering, from a big picture view : How do you run the numbers on a potential STR? Any help is appreciated as I'm trying to get a better grasp on evaluating short term rentals including the steps you go about to finding your target markets. Also any book recommendations on STR's are appreciated.

[Garrett Brown]

Hey Lucas! You should definitely check out Avery Carl's BiggerPockets book "Short-Term Rental, Long-Term Wealth" https://store.biggerpockets.com/products/short-term-rental-l...
There is a lot of amazing insight into everything to think of while operating an STR. When starting out, I think you should at least be able to get to your property several times within the first couple of years to en reasonable amousure everything is set up and functioning properly. No one will care about your property more than you, but building a good team will get close.

For analysis, you need to identify a market that interests you using tools like AirDNA, Mashvisor, Pricelabs, etc. 

After you get some basic information from there, you should use the enemy method to identify how well competitors do in the area. 

If you plan on purchasing, talk with an investor-friendly lender and STR-centric real estate agent to get more information to help you analyze the deal. Alot of details go into pricing out income and expenses so using the BiggerPockets Airbnb Calculator could help see what expected expenses you can expect.

[Ian Tyndall]

I am a big fan of bnbcalculator and rabbu for quick analysis and screening of properties 

[John Underwood]

Check out the Carl's "Enemy Method "

[Erwin Sham]

Quote from @Lucas Schlund:

Hello all! I have tried finding post regarding this question but couldn't really find what I'm looking for. I'm new to STR's and was wondering, from a big picture view : How do you run the numbers on a potential STR? Any help is appreciated as I'm trying to get a better grasp on evaluating short term rentals including the steps you go about to finding your target markets. Also any book recommendations on STR's are appreciated.

First thing I always ask people who ask me about doing STR is do you have a regular w2 and do you want to do another job?

You want run your numbers as LTR. Will it cash flow as LTR? What a lot people failed to do is underwrite as LTR. Then used Airdna numbers solely now with saturation and inflation. A lot of newer unexperienced hosts are underwater. Also laws change and hosts didn't have a backup plan or know how to pivot. Finding a STR isn't hard but evaluating your competitors will take time. You want to find properties that are missing amenities that you can add and then offer. Pricelabs can do that analysis for a small monthly fee or you use STR Insights. You also need to pick type a guest avatar and then design your place to attract those avatars. I would suggest looking into your local market first obviously you need to find out STR restrictions or permit needed. Out of state you will need boots on the ground so building a team is key. 

[Andrew Steffens]

There are quite a few posts that do cover this, but my personal method is using AirDNA (paid veersion) analysis and then double check the results using the enemy method.  AirDNA is good for looking back over last 12 months and enemy method is good at looking at competitions occupancy and rates in near future.

[Collin Hays]

Quote from @Lucas Schlund:

Hello all! I have tried finding post regarding this question but couldn't really find what I'm looking for. I'm new to STR's and was wondering, from a big picture view : How do you run the numbers on a potential STR? Any help is appreciated as I'm trying to get a better grasp on evaluating short term rentals including the steps you go about to finding your target markets. Also any book recommendations on STR's are appreciated.

Regardless of target markets:

1.  Estimate what the yearly rents will be

2.  Estimate what the yearly costs will be.

3.  Subtract 2 from 1.