All Forum Posts by: Adam Kindwall

Hi Edgar, I don't have any experience with properties this small, but I pulled some comps from Airdna. It looks like in Kenosha there are about 17 1bdrm STRs currently active. Average Revenue for the year was $10,235 with the best properties being closer to $15,000. That is definitely more revenue then $725/mo but the expenses and work that goes into running an STR is far greater and less passive. At those revenues it may be unlikely that you could find an STR manger that would want to take them on, which means you would be doing all the work.

There may be viable ways to increase the revenue on a property like this if you explore furnish finder and market to monthly stays. Traveling nurses and business professionals would possibly pay more than your average yearly leased rate. You could still list it on Airbnb but if you only book longer stays then it would mean less turn over and less work for you.

Hope this helps.

ADR and Occupancy can be affected by many different aspects. Specific amenities, exact location as well as how many guests you accommodate can all affect the numbers. You may need to do a deeper dive into the listings to see what is going on. There is also the possibility that days available is a factor. If one listing is only available for a small portion of the year they may be offering it on the best weekends of the year demanding a very high ADR and occupancy for those limited days available.  The individual property data in Airdna are extrapolations and not 100% accurate but they help to give you some averages for the area and type of property when you have enough relevant data points to compare and contrast.

Airdna is one of the best tools for analyzing markets available for STRs.  It is not perfect but it can you give you the overall feel for an area. Like any form of statistics the more data points you have the more confident you can feel about the averages and trends. So areas with more active listings will tend to have more accurate overall numbers. Using the paid version to get these averages for occupancy, ADR and revenue can really help you to hone in on more profitable areas. That being said individual Property stats that they post can be way off when they try to extrapolate the potential of STRs that are only offered for small portions of the year.

For example my first STR was my primary residence that due to local regulations I am only able to offer 30 days out of the year. We only make it available on the most profitable weekends out of the year and when we go on vacation. Because of that our ADR is much higher than what it should be if we rented the full year and on slower weekends.

If I am looking at specific comps and not market averages I tend to trust more the property data that show more than 300 days available and more than 20 reviews. That tells me that they are running this listing as a full time STR and have been active for a full year. Even with that I will still dig into the actual listing and try to corroborate the numbers on Airdna.

Where are you planning on building?  The Short Term Rental regulations can vary widely in central Wisconsin.  I've been researching the area extensively and happy to answer any questions you may have.

It looks like they require an in person check in agent and a 24/7 Response agent registered with the city. This could be STR property management, or possibly even a local maintenance/ cleaning person that you make an agreement with.

@Patrick Sullivan I'd say 25% is pretty standard for the industry. There is much more involved with STR management compared to LTR which you can get at 10%. It is basically a mini hospitality business built on top of real estate. This involves continual guest relations, turnover coordination, and listing optimization among many other things.

You may be able to find a lower percentage if you use a large nationwide company, but the level of attention and care for your property may not be what you want to ensure it is performing at it's best. If you want it to be passive, then management would be necessary. If you factor it into your numbers when searching for places you should still be able to find an STR that cash flows much more than comparable LTR investments.

@Patrick Sullivan After looking at a bit closer it appears the revenue being lower may be due to the seasonality of the area. Many places may even shut down and not offer their rentals in the winter months. Active listings for the area went from 270 in the summer to 170 in the winter. For 4 bedroom houses it went from 43 to 19. You could still be profitable overall. Just make sure to factor that in for budgeting to get you through the slow season.

When I mapped out the past 12 months of revenue for the 43 4 bedroom houses, the 50th percentile averaged $38,158, the 75th percentile averaged $63,890, and the 90th percentile averaged $96,273. If you don't plan on managing it yourself plan on subtracting 20-30% off your projections along with all other expenses to see if it makes sense for cash flow.

@Patrick Sullivan according to AirDNA specifically 4 bdrm houses there are 43 active rentals. In Nov, Dec, Jan they averaged $175/night at about 36% occupancy. In May, Jun, Jul 2021 they averaged $353/night at about 81% occupancy.

The top 3 performers in that area were all 4 bedrooms and did around $73k for the year with an ADR closer to $600.

I am a bit surprised, because at a glance those top properties should probably be over $100k in revenue a year, but I am not familiar with the area.

Are there limitations or restrictions to how often you can rent it out?

Always do your due diligence and check the local STR ordinances before you purchase.

I own 8 LTR units in Wisconsin and have been Airbnbing my primary residence since 2016. The potential revenue for the STRs is far greater but as stated above can be a little more hands on unless you hire out a cohost/manager.  Even after accounting for management, if you are in a good spot, it can still have a better cash on cash return.

My next investment will for sure be an STR property. I've been analyzing much of the Airdna data to see where it makes the most sense. There are many vacation spots and lake homes through out Wisconsin that have a lot of potential. I also plan on managing for other investors in the area. If you have questions about the Airdna market analysis for your area I'd be happy to help.

@Noah Spitzer, A cpa could definitely be worth it depending on if you are renting it out full time and generating good revenue. You should be able to deduct most of your expenses that are associated with Airbnbing it out.

Rental arbitrage of an apartment is doable as long as it is allowed by your municipality and with the apartment owners/ managers. Always be clear about your intentions when signing a lease. Don’t try to do it with out the owners consent.