Tim Hubbard (Short Term Rental Riches podcast) explains how to evaluate whether a short-term rental will perform well in a new market. He recommends three complementary approaches: (1) use aggregated STR data tools (AirDNA, Transparent for Europe, Mashvisor) to get occupancy, ADR, seasonality and market grades; (2) inspect listings on OTAs (Airbnb/VRBO/HomeAway) — check prices, calendars, and review histories to infer bookings and competition; and (3) do on-the-ground research by staying in local rentals and talking with hosts (possible co-host or manager leads). He also highlights checking regulations and having a long-term rental as a backup plan.
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There are tons, hundreds, thousands of markets to invest in and to have short term rentals in, but they're not all created equally. Some perform much, much better than others. But how do we figure that out before we invest our money there? Well, we have to do some forecasting and figure out some potential numbers. That's what we're talking about 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. Welcome back to the Short Term Rental Riches podcast. Happy you're here again. As always, we got another week. This week we're going to do some data crunching. Well, not on the podcast obviously, but we're going to talk about where you can go to do some data crunching to figure out if your property makes sense as a short term rental. It's super important to know to have a great idea before you purchase a property, whether or not it's going to return well, if it's going to be worth your money or if you maybe should look in a different market. So the beautiful thing today is in this industry is that we have so much data and there's a few companies that have compiled all this data for us and, and done statistical analysis and run comps essentially for short term rentals, but also show us historical data. Now we gotta take it all with a grain of salt, right, because sometimes we have these crazy black swan events like Covid for example, and not trying to downplay that in any way, it's been a crazy, crazy year I think for all of us. But black swan events aside, we can determine if a market is a good potential market based on a lot of different facts, right? Based on how many other properties are in the area, how many people live in the area, how occupied the properties stay, you know, how occupied the one bedrooms stay versus the two bedrooms versus the three bedrooms versus the studios. We have this data available at our fingertips and not just here in the US but also worldwide. So I'm going to talk about a few of those tools today, ones that I've used and I'll continue to use and that you can use very easily as well if you're trying to determine if a potential property is going to make sense as a short term rental. So let's jump right in airdna Co and we'll put these links in the, in the show notes. But I've used this one many times before and they have great data. They've probably been around the longest. I would say Specifically doing some statistical data analysis on short term rental properties. It's very simple, easy to use. Basically head to their website, plug in a zip code and you can pull up different neighborhoods and get the data on it. They cover, as far as I know, all the us Maybe outside of it too. But air DNA and I've got a link in the show notes and actually it's an affiliate link. So you will save 30%, I believe, off any reports that you pull. And now the reports aren't expensive. I mean, when you picture the price of a property you're buying versus a $15 report, I mean it's no brainer, right? And they have great data and what they do is they break it down pretty easy for you with just a rating like we got in grade school, like A or D or you know, market. I went into new market for me last year was Oklahoma City. I think it was listed as an A. Now again, this is an overall market picture, right? We know that these properties, well, the property itself, but also the neighborhoods can change street by street. So it really comes down to the property. But we want to start in a market that's got good numbers to start out with. So this is a great first place to go if you're looking at a new market to check out potential occupancy, potential average daily rates, what you could be charging based on the size of your property. Also seasonality, that changes in every market. It's a little different. So you want to be aware of that. Regulations, we know those are really, really important because they could essentially shut you down.
Places that already have a system in place and rules where maybe you can get a permit, those are best because you know what you're getting into. I think states in general that are more landlord friendly or countries that are more landlord friendly are going to in general more lax on regulations versus states that are less landlord friendly. So regulations is a big thing and that again is neighborhood by neighborhood. But this is a good starting place. If you know a whole city's pretty open to it, then the chances of any given neighborhood being open to it are going to be a little better. So seasonality, regulations, occupancies, average rates, and then you can go from there and figure out what the costs of these places are. Right? So that's a great tool. Air DNA. Another one, if you're listening in Europe is called Transparent. I actually met these guys at a conference in Israel a couple years ago. Just great, cool guys. But they're doing it in a different market, so they've got better data in Europe, but they've also got some other tools and pricing tools in there, so you can check them out if you are in Europe. And then another one for here in the US is Mash Visor. And this one's kind of cool because it pulls up long term rents too. So you can compare them side by side. What's the potential short term rate versus a long term rental rate? Now, these tools do a great job, but of course we want to go further than this. And there's two other things that we can do to really help make sure the data is accurate or to get a better understanding of it, I should say. So another way is to go directly to the listing sites where we plan on putting our properties. So Airbnb, for example, let's say you found a neighborhood where you found a potential property looks great. You can reassure yourself a little bit by going into that neighborhood, look for existing properties on Airbnb and see what they're renting for. Then you can also open their calendar and you can check all those gray blacked out dates to get a good idea of how booked up this property is now. Things have changed since COVID right? Our average time before someone makes a reservation has gotten much, much shorter than it used to be. Instant booking is super, super common. That's what most people use. And they're booking with far less time in advance now. So looking out ahead at the calendar for a property might not give you that good of an idea of potential occupancy, but you can look at their reviews. And how do the reviews help? Well, let's say this property has 300 reviews and you can also see when they, when they started. So that can give you a good idea of how booked it's staying. Right. Based on the reviews. So that's another way. And you can do that for HomeAway or VRBO or other listing sites as well. Pull up potential properties. You're gonna want to do this anyways just so you can figure out what kind of competition's in the area. Air DNA is pretty cool because it'll pull up a map of the area you're looking in and you can actually open listings from that map. So you can open an Airbnb listing or I think you can even open like homeaway listings on there so you don't have to actually go search for them. They can show you the best performing ones and the worst performing ones. So that is another way. So we've got these statistical tools we've got access to going right directly to these listings on a listing site to check the reviews and check their calendar. But then a third way, and this is like a must, if you're going to be investing in a new city you're not familiar with, go there and stay in some of the rentals. Now, I've done this in different markets. You know, I stay in Airbnb all over the world. It's like my preferred way of traveling. That's how I got into it. I still like hotels too. But, you know, I talk to these hosts. A lot of times I go in and you find out maybe they're managing multiple properties and they will, they'll open up to you. You'll be surprised. You know, I talk with any host that, that I know that's in my area. I don't see it as competition really. I think there's plenty of demand and the more we share together, the better our listings will be. And it's just, I think, better for everyone that way. But that's a good way to do it too. So you can talk with an existing host and if this is a new market, maybe that host is open to managing your property. If that's not something you want to do, they could become a co host. So talking to locals that already have properties there, that's going to be a great way to get good insight in a new market as well. Now, the ultimate backup plan for buying a property is just making sure that it works as a long term rental, right? I probably say this in every other episode, but long term rentals as we're used to them have been around for like forever, right? Short term rentals are also been around for a long, long time, but it's changing a lot quicker than a steady rental market. So I always prefer to find a property that makes sense with a long term tenant first, then switch it over as a, to a short term rental and make those higher returns. But I think that's a great backup plan. Gives you peace of mind and will help you stay a little more secure with your portfolio. I guess it gives you more options, more backup strategies. Those are three easy ways to get really good insight into a new market. Check out the tools, the online tools. Check out the listings on the OTAs, online travel agencies like Airbnb and Homeaway, and then talk to some local hosts. Between those three, you can get a pretty darn good idea of a new market. So until next time, have a wonderful day. 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 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.
