Airbnb Property Analysis

[Caleb253]

Hello Everyone, 

I am looking to buy my first house to airbnb and I want to know how investors run numbers on specific properties. I am new to the airbnb business but I do have a background in wholesaling real estate. I'm not as concerned about analyzing markets but more interested in underwriting specific properties. I am mostly concerned about getting an accurate estimate of the gross revenue for the year.

Basically if I gave you an address and asked you to estimate how much money it would make per year, how would you estimate it as accurately as possible? I want to make sure I don't overpay and lose money! Thank you all! 

[Mike-And-Jane0]

@Caleb253 If I were you I would look into Airdna.com. They sell data with respect to Airbnbs occupancy and rates. I am sure it won't have fidelity down to a particular house but it will have potentially useful data at a higher level

[Caleb253]

Thank you for your input @Mike-And-Jane0 ! Have you ever put in the address of your own STR just to see how close it is to how much you actually made? Just as like a test you know?  

[Mike-And-Jane0]

@Caleb253 no - i've always been too tight to pay for data!

[Helen3]

Firstly it's an STR business. Airbnb is a marketing channel. @Caleb253 

you estimate likely gross profit by carrying out your market research and putting together a profit and loss budget to give you gross and net profit for a particular property. 

of course there's lots of variables that can affect profitability such as weather, increased competition, introduction of STR restrictions.

as someone who says their background is in real estate I'm sure you know how not to overpay on a property .

[Priyanka102]

The clean way is to underwrite the exact address. Pull 15 to 30 real comps within a tight radius same bed bath similar size and similar amenities then look at actual booked nights and real ADR not projected revenue. Build it bottom up monthly because seasonality can swing this a lot. Take the median not the top performers and haircut it 10 to 20 percent so you are not underwriting perfection. After that subtract realistic vacancy cleaning management utilities and a buffer for slow weeks. That’s how you avoid overpaying. Tools can speed this up but only if you sanity-check them. I used free tool Chalet for this because it lets you stress test different occupancy and pricing scenarios on a specific property instead of trusting one shiny number. Big picture rule though if the deal only works on best-case assumptions it is not a deal.