Patriot Family Homes is the largest vertically integrated Short Term Rental Investment and property management company in the nation so we have learned a thing or two about what the reports state and the reality of managing that short-term rental property. Our team has expanded remotely across 30+ markets, which presents the unique challenge of how to determine if properties are worth investing via facetime and spreadsheets. In this blog, we will cover all the important factors in understanding AirDNA and additional tips for predicting if your selected property is worth the investment.
So What Is AirDNA? “AirDNA is proud to provide the most accurate and comprehensive vacation rental data and analytics in the world. Our goal is to empower the democratization of lodging and to help everyone from hosts to property managers and investors navigate their markets and achieve their short-term rental goals.”- AirDNA. AirDNA is an incredible tool when researching a potential real estate investment, it provides you with data throughout the market as well as individual property specific information. But, what’s important? And, how do you decide if your property is a good investment?
Reading the Market Report
When you first login in to your AirDNA account you can enter a market into the search bar and it will automatically provide you with a report like this:
How Many STR’s Are In The Market?
Measuring the volume and concentration of your competition can help you determine if the location can support a short-term rental, and/or if there is a significant amount of rentals in the area. If there are no Airbnb’s in the area we would consider that a red flag that the desire for short term rentals is not there.
What Size Are They?
What is their occupancy? Are they large personal homes that are only rented out during the home universities football games?
Is that why their booked percentage is so high? Or are they full-time Airbnb that are available throughout the year? If the majority of homes are 1-2 bedrooms we always aim to invest in larger 4+ bedrooms to differentiate ourselves from the competition and serve to fill the holes in the market. If you look to the example you can see the supply of short term rentals in Chattanooga are primarily 1-2 bedroom homes and 5+ bedroom homes only making up 3% (27 Airbnbs) of the supply. Rentalizer Another great tool that AirDNA offers is Rentalizer In Rentalizer you are able to plug in your prospect address and get a projected annual revenue, ADR, and occupancy rate based on the area and size of the property.
Rentalizer will also show you the properties that it is using as comps. I would recommend double checking them to ensure that they are truly comparable or if they have factors like a pool, or unique feature that are adding to there profitability.
AirDNA, is an incredible tool but is is not perfect. It primarily relies on data from other properties and doesn't equate from guest experience. We recommend to go on google maps and walk the neighborhood to determine if there are any attractive features that might add to value to your listing? Local coffee shops, Restaurants, Attractions, Etc.
Ruling out promising properties is just as important as identifying potential leads, as it could save you from a costly mistake. One key things to consider is, how much liquid cash the property will require to become operating? If you are only running your numbers based on monthly costs and projected revenue without considering initial start up costs you might be out of the game before you even get to the starting line.