Are You Renting Your Airbnb For The Right Price? | The STRR Podcast #58 | Tim Hubbard

Are you pricing your short term rental properly? Are you getting the most revenue that you can? There's a lot of factors that go into it and that's what we're going to cover this week. Stay tuned. Welcome to Short Term Rental Riches. Quick, actionable ideas to help you along your real estate investment journey, but with a specific focus on short term rentals. I hope you guys are doing well out there wherever you are. This week we're going to dive into determining whether or not you are pricing your short term rental properly. Are you getting the most revenue that you can? There's a lot of little factors that go into that and there's a lot of things that we can keep an eye out for to make sure that we're earning maximum revenue and we're not leaving any money on the table. I'm still learning in this industry. I learn a lot every day. At least I like to learn something every day. And so I surround myself with people that are doing the same things as me. And in a recent call with my mastermind group, we had the founder of Wheelhouse on and we discussed pricing in depth. Wheelhouse is a dynamic pricing tool similar to Price Labs, which I've mentioned in prior episodes and the one that I personally use. So we broke down some really interesting data, but also a way that we can make sure we're not leaving any money on the table. And that's what I want to share with you this week. So we have three demand factors that impact our short term rentals and, and thus impact the amount that we can charge for them. All of the economy is based on supply and demand, right? So these are pieces of information that we need to figure out. And so the three components of the demand for our short term rentals are, number one, seasonality. And this changes by city, by state, by country, anywhere across the world really. We have seasonality. Now. Some places can stay pretty well booked year through, but it just totally depends. So we want to be aware of this. We want to know the seasonality of our properties or where or of our locations. There's a website called weatherspark which we'll leave a link in the show notes, but that brings up the seasonality trends for a certain market. So if you're looking for new properties, make sure and check that out. So it'll give you a good idea of the seasonality or the climate, which you probably already know in your market, but also give you a tourism score and how that is affected by seasonality as well. So that's something good that you can check out and then the other thing you can do, just depending on how long you've had your rental, is just go back and look at historic occupancy. So see where were things diving down. I know a lot of my properties are in Memphis and around January, February, those are our slow months. Now in Sacramento and California, things stay pretty steady. So that is one big piece that impacts our demand. Now, the second piece is day of the week. When are your properties most booked? For a lot of mine, it's usually on the weekend and that's usually the case for a lot of urban areas. Vacation rentals, where someone's running for a week at a time, that's probably going to be a little different. But we need to know this information so that we can adjust our prices accordingly or so we can have our dynamic pricing tool do it for us. Which, as you know, if you've listened to prior episodes, I highly, highly, highly recommend using a dynamic pricing tool. I'll leave a link for Price Labs, which is the one I use, and then Wheelhouse, which is the one that we just discussed. So day of the week definitely has a big impact on your demand. Now what I do with my pricing tool is I have the weekends automatically adjusted. They automatically increase in price. So if someone books on a Friday compared to a Tuesday day, it's going to be a higher average daily rate. The third demand piece is events or holidays. And these can greatly impact the demand on our market and our prices. So we need to be aware of what the big events are. A good tip for finding these out. If you don't already know if you're market, go on Ticketmaster if you're next to event venues. Now if you're listening to this in real time, I know we still got a lot of COVID regulations going on. So events unfortunately aren't something that a lot of us have been going to. But when they do open back up, or if they are already open in your market, fantastic. Go to Ticketmaster and check out what the most popular events are or when they're going to be happening. Ticketmaster only lists the biggest events. They don't do tiny little things cause it's just not worth it for them. So you can find the biggest ones there and make sure that you are either adjusting your prices for those events or you are having your pricing tool do it for you automatically. Now a little tricky thing with events is that let's say you've got a five day festival in your city. That's very common and it books Up. Well, you don't want someone to book one night of that, right? And jack up the whole potential for renting all five days out at prime rates. So use your pricing tool. You can set minimum stays for specific dates. So check that out if you haven't already. That can really make sure you're not leaving any money on the table or screwing up your calendar in the future. So those are three big components of demand. We've got seasonality, we've got day of the week, and we've got events and holidays. Make sure you know your market and you are considering considering those three pieces. Now, how do we determine if our property's doing well? You know, if we're beating the average or if we're doing worse than it really just kind of overall how we're doing, we need to have some competitive rentals to compare ours to so we can call this our comp set. And there's two things that we need to include when we're looking for potential comps properties. One, first of all, they need to be similar to our property. So we need to be comparing apples. Apples. We can't take a one bedroom studio and compare it to a four bedroom beach house. We need to make sure we're comparing the same. So in terms of bed count, in terms of amenities, does it have parking? Does it have a workspace? Is the size similar? So just make sure that you're comparing apples to apples. That's the first thing. Then the second thing is proximity. Especially if we're in one of the cities that I recommend that aren't super suburban or super dense, we want to make sure that we're within a good distance. I would say for my properties, you know, maybe within a mile or a couple miles. Again, this is going to depend on the density of the area that you're in and also depends on the type of property. So just make sure that you are comparing apples. Apples and you're comparing properties within a similar area that are close to each other. It's not a bad idea to have maybe 20 comps, 20 other properties. You can put them in Excel sheet, you can put their average rates and cleaning rates down. This is a good way to decide how much you should charge for your cleaning rate as well. Maybe take an average. We need to know how we're doing against our competition. And we want to consider those two things. Proximity and similarity. A third piece that we really need to consider, and I learned this one recently, is called pacing. And that is essentially, are we running our rentals too soon? Are they getting booked too soon? Are they getting booked too late? So most markets are going to have an average window of when most guests are making their reservations. For me, that's about seven days. What happened in the past is I had a discount set to automatically start lowering my prices within like three weeks. Well, really, after looking into the data and knowing that the majority of my guests are booking within seven days, I was discounting the price for like two weeks before I even had the bigger part of my potential pool, booking my rentals. So I was just giving money away essentially. So I have lowered that now. So now instead of maybe starting to discount 3 weeks out, I'm only discounting out 6 days, 5 days, 4 days, etc. Etc. So decide and figure out when your average guest is booking to make sure that you're not discounting when you don't need to be and that you are targeting your price increases or decreases to fit whenever that average booking happens. That's called pacing. Pacing is basically the lead time. How far out in advance someone's booking your properties. Again, I highly recommend using a dynamic pricing tool. They're super affordable. Price Labs charges per unit less than 20, you know, like 13 bucks a unit. I think it might depend on how many you have. Wheelhouse charges a small percentage. I personally use Price Labs, but I know lots of people that use both of them. And using one of these tools versus not using it. Just make sure you're using one, okay? Just make sure you're using one. They're easy to plug in. They'll integrate with your Airbnb account or your VRBO account. They make it really easy for you. And they also have a lot of this data for you on the back end about your market to make sure that you are pricing your properties as best as you can. You know, the best hotels adjust their prices like every three to five minutes. Now, their software is probably doing a lot of that, but the best hotels have people that are monitoring the software too. Same with airlines. We know those prices change all the time. And the tools are here. So let's take advantage of them. Let's use them. Hopefully those tips helped. If you haven't looked at your pricing lately, go back and take a look. Hopefully you're not charging the same amount every day, and hopefully you're using one of these pricing tools. Otherwise, guaranteed 100%, you're leaving money on the table. So figure out those three demand factors in your market. Just to recap, that's seasonality, day of the week, and local events. And holidays. Figure out how those are affecting your short term rental. Find some comps so you can compare yourself to the market and you want to do that by finding maybe 20 comps and you're going to find those based off proximity, how far they are from your property and similarity. Making sure you're comparing apples to apples and then finally take a look at pacing. Make sure that you are pricing your properties properly but at the right time so you're not doing it too late or too early. Consider those things, hopefully boost your income and hope you guys have wonderful holidays and you're doing well wherever you are in the world. Want to get on the fast track to financial freedom through short term rentals? Well, it all starts with the properties you acquire, but you want to make sure that you acquire the right properties. I want to give you my ebook that will show you how to do just that. There is no charge. It's my gift to you for being one of our subscribers. Just go to restmethods.com that's R E S T methods dot com.