Airbnb Revenue relief in sight??

Question

This summer has been the toughest I can remember to keep all our Airbnb listings occupied and rates up. It makes sense with the number of active listings (single family homes) going from 7K in Phoenix metro to over 9.5K in just over a year span. That number slightly went down in Q3 but still much more competition from the previous year.

With all that in mind the recent uptick in both occupancy and rates is much invited. My plan was to ride it out through the upcoming peak season here in AZ and then make a decision early next year to decide if I wanted to switch strategies or even sell a few of the properties. Thankfully looking forward to 2024 the calendar is filling in nicely so far.

Here is what I've seen for last few months across 4 listings that are all in the mid range. July: $10,015

Aug: $12,631.53

Sept: $11,365.54

October MTD: $13,098.06 Thankfully looking forward to 2024 the calendar is filling in nicely so far. How is everyone one else doing and plans to adjust on strategy?

Gabriel Graumann · Answer

@Andrew McGuire I believe it's a 2-part answer:

1. Market: the reality is that the local Phoenix market is by in large over-saturated by STR's. While there may be limited pockets that have a shortage, the overall market has an abundance of hospitality options which STR's fall under. The vast majority of people utilizing STR's are coming here during the peak months. That trend changed for a few years during the COVID situation, but that era has ended. We have a STR in the East Valley and saw numbers go to "historical" norms this summer, but our peak months are hitting higher occupancy and nightly rate numbers than last season. This leads to number 2.

2. What was your strategy getting into STR's, and what was your exit strategy? If you were basing your NOI on historical highs created in COVID years, your numbers will never look the same if you can't make substantial changes to your rentals. I believe one person referenced the value of pools (an absolute must for larger properties for summer and swing months from my perspective...and the data supports this). However, if you got into a STR prior to the COIVD craziness, then this past summer shouldn't have been a surprise at all. Assuming your nightly rates aren't dropping significantly in the peak months, then you're simply back to normal occupancy rates in a seasonal marketplace. I would look to what numbers you are trying to achieve and then weight that against how yours are performing under NORMAL conditions, and if they can't hit your NOI requirements then move on to an investment type that can.

I've done everything from fix and flips, buy and hold, STR, land entitlement then wholesaled and/or sold to developers, and commercial value-add projects. There is money to be made in every market, you just need the right plan and know when it's time to enter a segment of the market or when to exit it, and it usually comes back to the numbers of the deal. Happy to connect further if it's helpful.

Colleen F. · Answer

@Andrew McGuire It's not new travelers could always do it both ways on furnished finder Furnished finder is bringing more visibility to the request housing option now.  I also suspect a more crowded market decreases booking because of the listings the traveler has to sift through if they want to do a booking request. Do search for your own listing to see if it is coming up properly. You need to keep adjusting the calendar to get visibility. They also added a search radius feature recently that may help some.

Noah Corwick · Answer

Thank you for the great insight Andrew!

Very specific question here, but what percentage of your AirBnBs have pools here in the valley?

If you don't mind me asking, for the ones that don't have a pool, what areas are they located in?

Ty Coutts · Answer

@Andrew McGuire

Furnished Finder is definitely more leaning towards you having to reach out to tenant leads.

That being said, you can have CRMs or AI integrations automatically reply to all the leads that come in since most have their email and phone number attached to their inquiry.

For instance I use Follow Up Boss to automatically recognize a FF lead come in and automatically send out a basic template reply about my property and asking for them to call or text with questions or find a time to connect on a call. This has reduced a lot of my time commitment towards the platform and increased a lot of occupancy since I seem so responsive to the leads coming in

Andrew McGuire · Answer

Thanks for sharing Ty, I've used FF/Traveling Nurses twice with great success but had a listing last month on their platform but it didn't do well. Maybe it was the way I listed it but FF would tell me somone that meets my properties criteria is looking and it was on me to reach out to them. Where on the previous listings they reached out to me. Is this new or did I mess up listing the property?

Ty Coutts · Answer

@Andrew McGuire Love the insight and the willingness on your end to share your personal insight and numbers!

My wife’s entire family is from Chandler and we have actively looked to invest there ourselves but certainly have clients there doing short term and medium term rentals.

From their experiences and also my own here in Colorado, it seems like medium term traveling nurses have been super steady throughout this year and very low maintenance and respectful tenants. Plus I love the fact that over 30 day rent avoids a lot of different short term county restrictions!

Do you ever rent to traveling nurses through furnished finder by chance?

Noah Corwick · Answer

Even more impressive. AirBnB is the one investing route that I have not ventured towards namely because none of my properties have pools and the summer months worry me.

Thanks for the insight!

Andrew McGuire · Answer

@Noah Corwick No pools on my listings. They are in Mesa, Chandler, Gilbert and Casa Grande.

Andrew McGuire · Answer

@Colleen F. I have not tried that but great tip. I once a week or so adjust pricing and seems to do the trick outside of getting the rate I need.