“Glenn, I need your help!” My friend Max texted me, seemingly desperate, late one night.
This can’t be good, the last time Max seemed this frazzled, he and I were searching for a parking spot at Costco on a Saturday afternoon.
Max continued, “how much can I rent my house for?”
“You’re the sharing economy guy, you know…on Airbnb, how much can I rent my house for?” Max clarified.
Oh! Great question Max, and a relatively straightforward answer as well.
I split my time between the real estate and sharing economy worlds, so I get this question a lot. “How much can I rent my house for?” or “Should I list my home on Airbnb?” or “Are short-term rentals worth it?” All excellent questions, with one simple answer.
“Go check out Airdna,” I finally responded to Max after a quick chuckle about our Costco parking lot fiasco.
Let me explain.
Home-Sharing: The Roots of Airdna
In August of 2008, an event occurred that sent waves of change throughout the travel industry. This event was the launch of Airbnb. Since that time, the now juggernaut of the sharing economy has accumulated over 2 million listings in nearly 200 countries. In total, Airbnb has served an estimated 60 million guests.
Airbnb has become so popular in fact, that it’s the largest hotel chain in the world.
As Airbnb hosts, you already know all this. You are well acquainted with Airbnb popularity and income potential. You’re living it!
But we at the Casual Capitalist are always on the lookout for tools to help Airbnb hosts, like ourselves, step up their home-sharing game. And today, we are going to talk about one of our favorite Airbnb tools: Airdna.
When asking yourself, “how much can I rent my house for?”, Airdna is your best friend.
Introduction to Airdna for Airbnb Hosts
Airdna is a data and analytics tool for Airbnb hosts, and real estate entrepreneurs more generally.
Airdna tracks the performance of Airbnb’s over 2 million listings worldwide. By doing so, Airdna provides data products and market reports on everything related to a short-term rental market. This includes occupancy rates, seasonal demand, and potential revenue.
This information is invaluable to the success of your small business. And, as an Airbnb host or real estate entrepreneur, you are certainly a small business owner.
With the power of Airdna analytics, Airbnb hosts and real estate investors can:
- Adjust pricing to seasonal demand.
- Gain competitor insight.
- Understand the occupancy rates of your market.
- Conduct revenue analytics based on various investment scenarios.
- Understand the typical amenities of your market.
- See the top listings in your area.
- And, a lot more!
Let’s get into a bit more detail.
Putting Airdna’s Data to Work: Free vs. Paid
Check out the Airdna site and explore their free data services discussed above.
I live in Montreal, Canada, and when I input this into Airdna, I get some amazing free insight. For instance, I know that there are over 8,000 Airbnb hosts in the city, that only 3,000 of those have 5-star ratings, that 4,000 of those listings are only 1-bedroom, and that occupancy rates hover around 50%.
And, most importantly, that the average daily rate (ADR) for 1-bedroom is $65, $93 for 2-bedroom, or $132 for 3-bedroom.
So, how much can I rent my house for in Montreal? Based on Airdna’s data, I could expect between $20,000 and $30,000 yearly for my entire place if I rent it full-time.
Any real estate entrepreneur understands the value of the above information, but there’s more. For a fee, you can order a city market report, or a more in-depth neighborhood report.
How Much Can I Rent My House For? Airdna’s Market Report
The free services offered by Airdna are invaluable, but the paid report is even better.
As a small business owner, I have a simple rule when it comes to spending money. I pay for things that will help me increase my bottom line. I don’t see it as ‘paying’, but rather ‘investing’ in my business. So, the $79.99 fee for a market report I view as an awesome investment in my business.
For instance, the following data points from the Montreal market report will allow me to increase my bottom line. The market report fee will pay for itself in a matter of days!
The median occupancy rate is 53%. And, I can find out whether my property is low, medium, or high performing based on my rates.
Historical occupancy rates which give me invaluable seasonal data. These percentages are also broken down by property type (Amazing!).
Seasonality of a property market is also very easy to understand with daily and weekly RevPAR (Revenue per Available Room) charts which even take into account nightly rates and occupancy.
I can also view revenue by guest count, property type, day of the week, and much more. This will give me a solid estimation of how much income I can expect to earn based on how often I rent my house of for.
And, I’m only on page 5 of 16 of Airdna’s Market Report. I think you get the picture.
One of the biggest selling points of Airdna’s Market Report is that it contains the revenues of the top 10 properties of a market. This gives aspiring hosts and investors insight into what the most lucrative rentals are earning. You can then set your own goals based on top-performers in your market.
But, most importantly, you can view those listings to see where they’re located, what types of photos they use, how they decorate, how they write their descriptions, and more. This information is gold!
Remember, investing in your business is never a bad idea. The more actionable information you have access to, the better your business decisions will be. If I can use the report to tailor my prices effectively, or market my property better, I don’t see why I wouldn’t use Airdna’s services. Well, as a matter of fact, I am using them.
Airdna: The Future of Rental Property Analytics
Although currently in beta mode, Airdna has a new investment explorer tool I want to discuss briefly. Since my background is in real estate investment, this tool is very exciting to me.
Airdna’s investment explorer tool helps real estate investors analyze the potential profitability of a short-term rental investment in a particular area. According to one study, an estimated 1 million real estate investors purchased properties in the U.S. last year with the intention of renting it out on a short-term basis. Thanks to platforms like Airbnb, this investment practice is increasingly popular. And, Airdna aims to help us achieve maximum cash flow in our investments.
The investment explorer tool benchmarks an initial survey of 60,000 year-round vacation rental properties to identify the areas in the U.S. with the greatest potential for rental profits.
You can search by city, state, or zip code to filter properties based on overall annual revenue, occupancy rate, average daily rate, total days listed, booked days, and Airbnb reviews. You can also do a search by property type (bed and breakfast, cabin, house, condo, etc.) to compare your new investment opportunity against established vacation rentals.
For the first time, real estate investors can eliminate many of the unknowns involved in pursuing short-term rental investments in markets across the U.S.
This forecasting ability becomes particularly critical when evaluating potential investment rental properties, especially in cities where you have less knowledge.
How Much Can I Rent My House For? Putting it all together
Airdna empowers entrepreneurs with the tools and insights to grow their rental and Airbnb business. Whether you are renting out your house, managing other people’s properties, or targeting new residential investments, Airdna helps us make smarter data-driven decisions.
“$108 a night!” Max responded excitedly to me after a few minutes. He continued, “that’s amazing! I’m going to list my property tonight on Airbnb.”
It has been a successful endeavor for Max so far. According to his recent revenue statement, he’s earned exactly $17,487 since listing his property a year ago.
In sum, there is nothing more stressful in the world than trying to find parking at Costco on weekends. Pricing your home to list it on Airbnb shouldn’t be stressful. Leave this type of important work to the experts at Airdna, and consider their paid service. Remember, there are few things in life worth paying for, good data for your small business is certainly one of them.
Happy listing everyone!