How to Determine Public Interest in a Potential Airbnb Property?

Question

Hello Everyone! I am a young, new investor looking for some advice on a potential buy. For some context, I have been listening to Bigger Pockets for over a year now and have big ambitions to get into investing. My wife and I just bought our first condo over the summer and plan to turn it into a rental later on down the road.

I’ve been trying to learn a lot about Airbnb and want to get into that side specifically. A few months after purchasing the condo I found a property about an hour outside Salt Lake City. It’s a small cabin built off the grid within the last few years and on roughly 2 acres. I haven’t gotten a tour yet, but based on driving by and photos of the inside, it looks ready to rent right away. It has solar power, a compost toilet, and other things of that nature to be self-sustaining. It's in a newly developing area with houses being built and other lots selling nearby. It is a unique cabin and in a great location. However, there aren't many Airbnb's in the area to compare to.

Since we have recently bought a condo we don't have the capital to go all in by ourselves on this property. We have family and friends who would be potential investors. Before I try to sell the idea to them I'd like to have the best data I can on potential earnings, upkeep costs, likely occupancy, and other points like that. I have used AirDNA's free version to get some rough estimates on a few things but wasn't sure how accurate it was based on only a few comps in the area. Does anyone have any good ways or software to get better data? Or any tips on how to better back up my case for potential investors?

Thank you all,

Alec

John Underwood · Answer

I agree that is will be a gamble as to how well it will do.

Also, ask the owner if they will entertain partial owner financing to keep from dragging family and friends into this risky business venture.

Maybe even rent from owner for a year with right to sublease to see how it goes before committing to a purchase.

Michael Baum · Answer

Hey @Alec Dressler, so this is something I would probably avoid.

Off grid sounds cool to some, but it really limits your potential guest pool. Is there a possibility of getting utilities to the place? Drilling a well or building out a septic?

How is access in the winter? Is it on a serviced road or ?

Did you check with the county and make sure you can do a STR in that area?

I am with @Bruce Woodruff on the build. Check with the county and make sure it was permitted. If not, walk away.

Also, first thing, AirBNB is a platform where you list your Short Term Rental.

Bruce Woodruff · Answer

One of my first questions would be - was this straucture built with a permit? A lot of 'off-grid' places are not, which will lower their value and resale ability.

Also, you are decreasing your potential market by choosing a venture like this..not everyone will find composting toilets as cool as you and I might.

Having said that, I think it could be a great find, if it check all the the boxes. Nice place for you to enjoy as well.

Bryant Xavier · Answer

Hey Alec.

Welcome to the group and congrats on the condo purchase.

Some folks have already given good advice, and I want to add a quick tip for how to get data on potential STR properties. I'd hop on Airbnb as a guest, search the area the potential property is in, and find some properties that are somewhat comps (similar location, amenities, size, etc.) and connect with the host hosting the property. To send them a message without booking the property, click on the listing, scroll to the bottom of the page and it'll say "contact host." Ask them if they'd mind sharing their experience with you.. if they'd recommend the area or not, and lastly if they could maybe send you a P/L sheet to see their income, expenses etc.

You might run into some hosts that aren't responsive or any help, but it just takes a few people to share insight to get a good idea of the market you're dealing with. I think chatting with hosts is the BEST way to get sound and clear cut data (given they keep P/Ls, etc.) because I know I've heard from some folks rumor the idea that Airdna skews data a little bit to make numbers look better than actuality to encourage folks to invest in the area & use their platform to see data. I'm not claiming that's the case, I've just heard the rumors and think it would make sense IF that was the case.

Hope this helps!

Sarah Kensinger · Answer

I could see this property either being a home runner or a bust. And to be honest if you could get some strong social media coverage (like hire someone that knows STR to market the property), you could do very well! Eco-friendly, off the grid properties are getting to be very popular experiences out west! But you need your guest avatar who is looking for an off-grid, unplugged stay, to know your home is available. It also does help if you have a well-known lake, park, etc. in the area but since Salt Lake City is nearby that could possibly be to your advantage.

If you need help running numbers, feel free to reach out. Usually all you need is a couple really good comps to know how your property would do and that is easier to find with a paid version of Airdna.

Sarah Kensinger · Answer

This rumor on Airdna is very much just that, a rumor. In many ways that is a ridiculous claim that I would guess a competitor started. At the end of every year, they compare numbers to Airbnb and are always 95%+ accurate. We have also found looking at actuals and Airdna numbers of the same property, that they're pretty well right on once we take cleaning fees out.

Bryant Xavier · Answer

@Sarah Kensinger very well might be a rumor, that's why I prefaced that before saying it. I've looked at my own properties through Airdna and my data was skewed by Airdna. In addition to this, I've had 2 clients this past year tell me they used Airdna in '22 and '23 to see projected and estimated income and was drastically different than actual income made with very comparable properties.

Alec Dressler · Answer

@Bryant Xavier

I have had the same fear about scewd numbers, so I love the idea of reaching out to hosts in similar positions. Thank you!

Alec Dressler · Answer

@John Underwood

Very interesting idea, I wouldn't have thought of that! Is this different from an arbitrage type deal or are they similar?

How to Determine Public Interest in a Potential Airbnb Property?

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