🚨 4/6 How to Analyze your first AIRBNB property

Jun 26

Okay, so you're on Zillow looking for property to start your Airbnb empire.

You've read the first 3 parts of this series on the overview strategies, how to get started with little or no money at all, and our step by step on how to pick a market

It's finally time to start analyzing deals to make offers.

But how do you know what is a good property? How do you know if a property will do well on Airbnb?

I’ll preface all of this by saying…

If you have no interest in actually plugging numbers into a calculator, in a lot of cases, its actually good enough to just see other people on that same block with successful Airbnb

But I don't recommend that strategy

If I am buying a property or negotiating a lease with a landlord, I want to know if the property will actually make money - and you should too...

And you may not want to hear this, but for most people, even after reading this,

The hardest part of actually analyzing deals is sitting down every day and inputting the numbers.

If you can do that, you will be able to make offers and purchase the property, but for some reason, people just struggle to sit down and analyze.

But don't worry, at the end of this blog, I am going to analyze an actual property with my spreadsheet and explain a trick I recommend to overcome not wanting to analyze deals every day.

So let's go over the 5 steps to analyze properties to make offers effectively!

Step 1 - This is always about stalking some properties in the area and looking at the information about them

The most important things at the beginning are looking at properties’ average daily rate, and occupancy, and understanding what makes them perform well.

The most underrated way to get free information is just by creeping into other people's listings and seeing how busy their Airbnb calendar is. You can see what they charge, what type of discounts they offer, the cost of cleaning and sometimes even speak to them. This is probably the best way to get information, it just takes more time

Then there are a few options for sites that collect data based on what is already out there. Some are free and some are paid

The first and probably my favorite source of information is Airdna. It’s more popular in some areas than others but if exists in your area I recommend it. What it does is pull all the data from Airbnb, VRBO, and other listing services to curate information about areas.

You can use the market mynder tool to see area grades, market analysis, and a whole bunch of other tools.

You can also plug in addresses you're considering and see what their projected returns look like.

A lot of people ask if you need to pay for Airdna. My personal opinion is that you can do a lot of research for free but when you are getting to the point of making offers and analyzing a deal or 2 a day, it makes sense to get the market mynder month subscription. You can always cancel at the end of the month but there is so much information in there, it’s worth investing in.

Step 2 - Create property criteria based on your ideal visitor

After you do some stalking, you should have an idea of what type of properties perform well, we also covered a good portion of this in part 3 which is linked in the summary.

Ultimately we are going to be targeting a specific person or type of group for your property.

Everyone may have a different preference on the size of properties or be able to qualify for different loans but from a high level.

Smaller properties typically have higher occupancy and lower average daily rates AND larger properties have lower occupancy but higher nightly rates.

Each has pros and cons. Right now, since I have built a system to manage many properties and focus on creative financing, I am looking for larger properties where we can max the head count. By doing this it will lower your cost per person and also put you in a different category of properties in an area - which there are usually less of.

But when you have the criteria either from doing research or speaking with people, you need to set up a search on a few sites. I prefer Redfin, but Zillow, Trulia, and Realtor all work the same. But also some sites don’t cover certain areas so watch out for that

When you are looking at some properties for sale in make sure that they are similar to the ones you saw performing well on Airbnb and Airnda, and near any of the attractions that people are coming to that area for.

Step 3 - The Actual Analysis

My favorite rule to analyze 1 deal a day to make 1 offer per week. This is probably the most underrated skill in real estate investing and business in general. Knowing the numbers. If you don't know how to analyze a deal, every deal will be the same.

I feel bad - Sometimes a friend will reach out to me excitedly saying they are under contract on a property. I usually am excited for them and ask about the returns they're expecting...

So it’s definitely cool that people are taking action but if you cannot answer general questions about the cap rate, cash on cash, and return on investment projections about the deal you are about to purchase, it's extremely risky. Typically for me, I analyze 20-40 deals before ever making an offer. Just because there are so many factors that go into it and it takes practice

Here is what a deal analysis looks like. It’s pretty straight forward

Here is the spreadsheet I use to analyze deals. Here's the deal:

Most other Airbnb instructors are charging $50-100 for this sheet. I am just looking to grow the channel so anyone who subs to this video, comments on it - 'template' and sends me screenshots of those things on IG or FB will get a free template to start analyzing deals ASAP.

Just to tie off on what I look for on a property from an investment standpoint. I look for at least 15% CoC return. And since I am looking at larger properties typically, the returns can be hired and shake out to at least 2-3 thousand in cash flow per month.

Step 4 - Time to focus on the team

At this time, I recommend getting a realtor/property manager involved after you have done some research for a few reasons:

Its good to come to them with a base knowledge so you can actually validate what they tell you
It’s important that they don't think you're a complete beginner because they may not want to work with you. Beginners can be hard to work with for a lot of reasons
You are less dependent on them

Brokers/Realtors are great - but ultimately when they find a deal they are likely sending it out to 20 other buyers just like you. In a perfect world if you follow a system like this or the one we teach in our mastermind - you will be able to analyze deals quickly before a broker needs to send them to you. And you can have them write the offer on your behalf before they are sending it to the rest of their clients.