How to Know if My Home Can Make it As an AirBnB

[Wes Short]

To all the STR property managers out there or people who have had success in turning their home into an AirBnB, what kind of analysis did you do when making that leapt or what kind of analysis do you do on clients homes who are considering the transition? I'm guessing you looked at other listings/comparable homes that were already up in the market but what exactly did you look for and how did you justify the transition.

Also how did you estimate all of your costs before making that leapt? 

I currently have one AirBnB that is running successfully but it was not based on much analysis and I want to be more sure when considering a new market. 

Thanks in advance for all the help!

[Julie McCoy]

Originally posted by @Wes Short:

To all the STR property managers out there or people who have had success in turning their home into an AirBnB, what kind of analysis did you do when making that leapt or what kind of analysis do you do on clients homes who are considering the transition? I'm guessing you looked at other listings/comparable homes that were already up in the market but what exactly did you look for and how did you justify the transition.

Also how did you estimate all of your costs before making that leap? 

 I didn't turn my home into an AirBNB; I've purchased three houses in two markets for the specific purpose of using them as STRs.  My houses are in tourist-driven vacation markets, and I chose properties that have desirable elements that make them stand out from competition (all of which are location-based - e.g. one is on a river, one has a view, one is very private but also very close to town).  

You're on the right track - look at what the successful competition is doing and emulate it.  Every market is different, so there's not one list of criteria to pull from.  So bottom line is: know your market, understand what a short-term renter is looking for, and find an appropriate property.  (or, zoom in on what kind of short-term renter you want.  One of my properties caters to families, the other two focus on couples; if I had an urban property I'd cater to traveling professionals, etc)

As for expenses, there's a decent amount of guesswork involved unless you already have a comparable property (because how do you really know what your power bill is likely to be in June?), and overall it's more tedious because there's more expenses to consider.  But think it through and map them out same as you would with a LTR, use conservative estimates, and remember to factor in a monthly allowance for the occasional thing like replacing broken glasses or ruined sheets.  Always remember to include an estimate for furnishings and household items in your initial budget - I've generally spent about $10k up front, per property, on furnishings, replacing old appliances or HVAC (I've replaced the HVAC at all three of my properties), and generally making them nice, updated, and inviting.  None of my purchases have needed significant rehab.