Airdna and ways to predict short term rental profitability

[Ariel Goldenberg]

Hello all

I'm doing my research toward my first short term rental. It's going to be an entire house, 3-4 bedrooms.  Can someone share his experience with airdna as a tool to analyze a market? 

How reflective of the reality is it?

Also, since expenses predictions are quite different than in long term rentals - can someone share the way they calculate in utilities, cleaning, maintenance, gardening, tools to self manage or management company,  etc. 

For some reason my proforma scenarios are way below what i'm seeing here in the forum. Maybe i'm too conservative..

Be happy to get your take on this.

Thanks!

[Jon Crosby]

Hi @Ariel Goldenberg. In my opinion there really is no 'magic bullet' for STR rates. You can use these tools a starting points but in the end it's going to depend on the experience and quality of service you are providing the guests. AirDNA highly exaggerates the rates for my property in Tahoe because only 5% of my bookings are AirBNB (which is the primary data source for AirDNA). I wish I could make what it's telling me I could but I know in reality it's not possible.

For me, I like to use a combination of what AirDNA tells me and cross match with live rental listings on VRBO to come up with an average daily rate to pro forma against.  Occupancy rates are a crap shoot once again though so just error on the conservative side and your best bet is to reach out to local management service who can give you some of those occupancy rates stats pretty easily.  I like to use whatever the high seasons are at 80% occupancy and then drop to 20-30% occupancy in the low seasons.  If i'm really conservative I will just use 85% occupancy high season and that's it.  

For a STR/VR you should be running between 65-85% Op Ex Ratio and as far as returns that's gong to completely depend on what you put down. If you are putting 50-75% down then obviously you are going to have great cash flow, but if you are like the rest of us who are able to put 20-30% down the margins are thin and you need good operations and management strategies in place to grab profits and/or pay for itself . If you want to send me something you have I would be happy to compare it against my calculator and see if I can think of anything you are missing off hand.

Good luck! 

Cheers!

~Jon