How To: Determine If A Property Will Be Profitable On Airbnb 🏡

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Many people are exploring the idea of starting a short-term rental business. However, determining the profitability of a property on Airbnb can be a confusing task, affected by various factors such as location, market demand, and property-specific attributes. In this guide, I'll dive into essential strategies and tools—such as Airdna & Mashvisor— that I use to evaluate the potential profitability of a property!

Understanding Property Analysis for Airbnb Profitability

1. Location, Location, Location

Proximity to Attractions: Properties located near popular tourist attractions, business centers, hospitals, schools or key points of interest often have higher demand and better overall rental potential.

Local Regulations: Understanding the local regulations regarding short-term rentals is crucial. Some cities have restrictions on the number of days a property can be rented, impacting potential revenue and others require permits before you can even go live on Airbnb. Both are important things to keep in mind before moving forward with a lease.

2. Market Demand and Seasonality

Market Research: Analyze the demand in the area by assessing occupancy rates and average nightly rates. Tools like Airdna and Mashvisor (my personal favorites) provide valuable insights into market trends and performance BUT you cannot solely rely on these softwares, you must do additional research on the Airbnb platform itself and examine similar properties in that area.

Seasonal Variations: Consider how the property performs during different seasons, as this can significantly impact it’s profitability. Would you prefer to make a consistent amount of money all year around or would you prefer to make a lot of money 6 months out of the year & then the other 6 months barley be breaking even? This is important to note.

3. Property-Specific Considerations

Property Type and Size: Different property types (apartments, houses, condos) and sizes can attract diverse clientele. Analyze what's in demand in the specific market you are looking at and find a property of your own with similar comps for best results.

Amenities: Properties with unique amenities like a pool, hot tub, exceptional views, grills, saunas or specific features tend to command higher prices and attract more guests overall leading to more profits!

Step-by-Step Market/Deal Analysis

1. Pick a market of interest (Local or remote)

2. Go on Airdna or Mashvisor to gather data on that area of interest, and see existing Airbnbs in that area.

3. Look for seasonality, occupancy rates, ADR (average daily rate), projected revenue.

4. Consider which property sizes perform best there, 2 beds, 1 bed, do all the top performers have something in common like a pool? or hot tub?

5. Once you find an area you like google “Does X city allow Airbnb/STR” to figure out if you need a permit or if they allow STR.

6. From there go on Zillow, Trulia or apartments.com and start pitching leads in that area!

7. Once you get a “YES” from a property that they allow Airbnb, then run that specific properties numbers.

8. Airdna and Mashvisor both have the option to paste the exact property address and output their projections that the property will do such as potential revenue, ADR, Occupancy etc.

9. Avg. rule of thumb is you want to make 2x the rent per month to leave room for expenses and profit!

10. rinse and repeat!

The biggest thing I’ve learned over the year is to outreach to as many leads as possible, then once you get clarification that they even allow STR and Airbnb THEN you run the numbers. I wasted a lot of time stressing over numbers on properties that didn’t even allow me to perform my business model. Secondly, do not only rely on these softwares - although they are great and some of the most accurate out there, do your due diligence and research additionally on your own for clarification!

I hope you found these tips beneficial & happy searching!

See ya Monday 👋

Hailie