All Forum Posts by: Allan Pan

Personally I wouldn't bother buying an airbnb at 10-15% CoC. Not worth the headache and time requirement. 20% is an ambitious but realistic goal in today's market.

Very very credible! Bill Faeth is a large name in the STR industry and puts on one of the largest STR conferences each year with Micheal Sjogren. STR insights is the next credible STR data software after Airdna. For a bit people thought STR Insights would pass up Airdna, until last fall Airdna rolled out many new features which helped to keep them as the best. Keep doing some research and learn about the leaders in this industry before purchasing a property. Not only will it help you gain confidence, but also give guidance on the best location/property for your needs!

@Allan Pan, I understand it takes time to build up a following and name recognition, but I think it is possible.  While the marketing is key, and should certainly be factored in (influencer stays, paid social posts, video and photography work), the equally important point I was trying to make is you need a product that stands out.  These properties do it through design, unique nature of property, and the "natural pools" available on the property.  

But I have a friend that is the manager of about a dozen properties in the PHX/Scottsdale market.  Granted, I don't know how well they perform financially, but she, too, makes sure the properties are well staged with professional photography, and instagram vignettes throughout her property.  All of these are intentional thoughts to get people to stop scrolling through Airbnb and get bookings.  And I will note, my friend is very intentional about which properties she manages.  They need to have adequate bathrooms for the number of beds, since they are in PHX they have to have a pool, and then she mandates which linens, towels, etc the owners must use in order to create a consistent, positive experience for all guests.  

Think like a guest: you don't want your socks to turn black while walking through the house, have a crappy mattress with flat pillows, rough sheets, not enough paper towels or toilet paper, bad wifi, etc.  

 We have them up and down Appalachia and they are all 1-2 bedrooms. Currently we don't have anything bigger than that in the portfolio. 

So, we won't purchase anything less then 20% COC. They're definitely hard to find and you'll need lots of patience as you research and look and look! Bill Faeth has been very strict in his 20-30% COC and stills finds secondary markets that put out great numbers. Lately, on his social media account he's been letting on where the markets are, that these deals can be found. It might help you out to look him up on Instagram.

25% is acheviable, but not easy to find. Our target is 20% and above so not too far off from yours. 

When searching for deals I find it best to go in the non-sexy markets. So not Florida or the Smoky Mountains. I would look in drive-to vacation markets. Often times there is a significant amount of vacation rental infrastructure in place (cleaners, handymen etc.) but you can still easily stand out and have a killer place.  

@Allan Pan, I think the biggest thing with STRs now is: they are no longer "buy it and they will come". Can you hit a 25%+ CoC on an Airbnb? Yes. But, you need to have a well marketed, unique property.

For example, I look at places like The Cliffs at Hocking Hills (I live in Ohio, so this state park is one of the bigger tourist areas).  Or Dunlap Hollow with their A frame and Cave house.  I recommend you look at these websites.  I.e. The Cave House starts at 780/night, is fully booked for 2024 and taking reservations for 2025 now.  If that isn't a success, I don't know what is.  But this owner also has 355k Instagram followers because they have a unique property and have built a following for it.

Granted, Cincinnati is not the peak of vacation destinations, and my friends that own Airbnb's here are going okay (at best).  I also have several friends that have sold their airbnb's because they simply were not worth the headache of all the work.

So I go back to: people can achieve success in Airbnb.  You need a good property with unique features that will get people to "stop scrolling" when they are flipping through Airbnb.  But I think, like many people found out during COVID, if you just buy a tract home that looks generic in a generic area, you will get generic returns, which based on my friends and other commenters here seems to range from small loss each month to modest gain. 

Also, when you are calculating returns, don't forget that utilities are in your name, you need to pay for internet and Netflix, paper towels, toilet paper, laundry and cleaning supplies, extra sheets, towels, pillows, etc.  And more and more Airbnb guests are becoming critical of cleanliness, supplies provided, and check in and check out requirements, while also being more open about leaving less than positive reviews on your property if you charge onerous cleaning fees or don't provide enough toilet paper.