🚨3/6 - How to Analyze and Pick an AIRBNB Market 🤷♂️
Here's the good news if you're feeling really stressed, more places than you think allow "Airbnb" and more places are profitable on Airbnb than you may think.
Not to say that every area will make money but you'll see what I mean in a sec.
Is it Legal?
The first big disclaimer here.
Airbnb itself is pretty much legal anywhere.
By definition, Airbnb is just a connection site between people who are looking for housing and people who have housing to offer.
Not really different than Facebook, Craigslist, Apartments.com or Zillow
The thing that makes Airbnb illegal in some cases is the fact that they are nightly rentals.
Some areas have a problem with this and others don't. That is what you are trying to understand depending on the strategy.
And something to mention, which I’ll make a completely other blog about, 30-night rentals are extremely underrated and even better for beginners in my opinion, it just depends on the area and type of property.
So how do you understand if an area is legal?
Not sure if anyone claims to have secrets about this. But it’s as simple as it gets. Just google the city name and then Airbnb restriction or nightly rental restriction. This will get you started down the path of learning what the deal is in that area. Usually, you will end up on a city or county website. It should outline the information.
If you’re more of a people person and don’t like Government websites, which is understandable, you can just connect with some investors in Facebook groups or realtors in Facebook groups / Zillow.
Like for example - in Asheville, you have to be outside buncombe county. But there are some interesting shapes on the county line that make it less obvious than you think of what is in or out of county limits.
Are people coming and why are they coming?
Since most people are looking to start where they live.
Not because out-of-state investing isn't possible, it definitely is - in the beginning, it may be easier to start nearby. What are the things you are looking for?
Okay so the first thing is always after you check the restrictions/permitting in your area:
Who is coming to your area and why? Do you live in the mountains where people are coming for hiking/exploring trips? Are you in a college town where students might be looking for the quarter to quarter housing? Or faculty might be looking for contracts or people come for tailgates? Are you at a beach where people are looking for an escape?
These are important to understand for a few reasons
They will help with understanding the seasonality of your area.
They will help with the decorating of your property. Some areas need to be more suited to a certain area with design to do best, others just need to be clean and simple.
Do the numbers work?
We will get into a few easy ways to know if they do. Basically, a good rule of thumb to know if a property will cash flow quickly is: The 15% rule
When you divide the projected revenue from Airdna by the list price, is the number over 15%
If it’s close, I’d say it’s worth analyzing, if it’s way off, it’s probably a pass.
And if it’s close, that means it’s probably worth inputting into the spreadsheet.
For the most part, you will get a lot of info from Airdna and you will be able to even compare markets there.
We have a spreadsheet we use to compare markets.
To get the information you need for analyzing - you can gather information here from 2 places. Airbnb itself and Airdna.
Airbnb is an obvious tool but some people don’t use it properly to analyze areas.
If you get good at studying and tracking comps on Airbnb, that could be the only tool you need. What you’re looking for are comp properties with similar finishes or designs to see how busy they are and at what daily price. I recommend tracking these in a spreadsheet to know what they are doing week to week. I even recommend reaching out to them or staying in their properties as a learning experience. It will be good to understand these when you move on to Airdna.
Airdna and now Rabbu, are great tools to understand the data more simply for an area. I recommend using the free version for a while before paying. You can learn a lot before paying. And when you’re ready to be more serious, I recommend getting a monthly package of market minder.
It will help confirm any hunches you had and show you more relevant information about neighborhood grades, future projections,
If you are looking to do Airbnb arbitrage - you can use a similar process to understand if there is there enough profit between rent and what you can get nightly.
Instead of a monthly mortgage, you have monthly rent. There are also just a few different expenses
CONCLUSION
At a certain point, you have to take the leap. There is never going to be a perfect deal or way to know exactly what will happen when you go live.
Yes, by doing these steps, you have a way better handle than someone who doesn’t, but the bottom line is, if you price your property right, design it well, and showcase it with good lighting and pictures, it really just comes down to how well you do as a host.
You would have done something incredibly wrong to not make at least a few hundred a month in almost any situation.
Watch the video on my YouTube channel! 👇
