AirDNA is an analytics platform providing global Airbnb data and insights with technology to help short term rental owners make wiser decisions around the world.Take Me To AirDNA!
As short-term rental investor or property owner, having access to data is a critical element of being able to make thoughtful decisions and reducing your risk.
With traditional long-term real estate market, estimating what a particular property can generate from rent is fairly simple as that information is abundant and public. Short-term rentals would oftentimes be considered a tad more unpredictable because the data to analyze them would be harder to find.
Fortunately, that is no longer the case. There are now excellent tools on the market that can extract data on all short-term rentals in every market, slice and dice it, and present it to you in a meaningful way.
In fact, these days you can gather information on all of the other short-term rentals in any given market, get a handle on their occupancy, average daily rates, total revenue on a monthly basis, overall market size, and much much more.
Armed with this information, you can confidently evaluate markets on a macro level as well as a neighborhood or zip code level, as well as predict how any particular property is likely to perform.
There are 3 tools in the market that provide you with comprehensive data on various markets around the U.S. and Abroad - Airdna, AllTheRooms and Mashvisor.
In this review, we will focus on AirDNA, which was one of the first tools on the market and have, since, built itself up into quite a resource.
Tools like these will become an invaluable part of your arsenal - providing you with data you need to make investment decisions, as well as information on your existing properties to see how well you perform against the competition.
As such, let’s dig in.
AirDNA has a couple of tools available and the one we’ll focus on here is called MarketMinder.
MarketMinder allows you to look at any short-term rental market and it will provide you with data such as:
Some of this information is available for free and some of it you have to pay for.
When you put in a specific market into MarketMinder without paid access, the first screen you would get would look like this:
The information is limited, but it’s an excellent starting point when you are just trying to figure the overall feel for a market.
There are a few key pieces of data here:
# of Active Rentals - this is relevant because a market that’s too small (e.g. under 100 rentals) may not have enough demand to justify an investment in it. On the other hand, market that has 10,000+ listings may end up being too competitive for some.
Rental Size - this highlights the type of properties that tend to be more in demand. In this case, for example, you can see that 1-bedroom and 2-bedroom listings tend to dominate. In fact, the average rental is for 1.8 bedrooms and 5.1 guests. Again, this information could help understand which properties are more likely to do better.
Rental Growth - this shows the overall health of the market by tracking the number of listings in it. A healthy market would be one that grows at a steady pace -- not too fast and not too slow. If the growth accelerates, it may be an indicator of the market becoming hyper saturated. If it drops off, it could signal some issues with zoning or regulations that caused a lot of hosts to close down shop.
ADR, Occupancy and Revenue - at the top right, you’ll also see stats for the average daily rates, occupancy rates and revenue. To be frank, this information isn’t super useful as this would range widely depending on the type of property and the location. However, it can be helpful to be used directionally. Moreover, there’s one additional trick you can use -- you can select different zip codes within a market and see how this number changes. It becomes much more useful when it’s applied to a smaller geographic area.
Rentalizer - there is one more feature available for free to every user that we really like. It allows you to put in an address for any property and see what the likely average daily rates, occupancy rates and overall annual revenue would likely be. It does that by actually extracting the data from other similar listings nearby, so it ends up being fairly accurate - plus or minus 15%. You can then tweak the data to account for different number of bedrooms, bathrooms and allowable guests.
Assuming that you’re interested in exploring a particular market or markets further, you may decide to go ahead and pay for a city or a neighborhood report. When you do, you unlock additional insights into the market.
The first piece of data you can explore are the rates. There are a couple of powerful elements here.
In the first selection, you can see how the average daily rates change from month to month and year to year. This is key to understanding the health of the market, how competitor growth is affecting it, and what the seasonality looks like.
What we then suggest is to actually filter it further for a specific type of a property you’re evaluating against. For example, if you’re thinking about starting a 3-bedroom, 2 bathroom short term rental unit that can accommodate 6-8 guests, you can filter the data specifically for this sort of a profile.
Once you have a handle on rates, you can begin to explore the occupancy trends.
As previously highlighted, you can also customize them for a particular type of a property. Furthermore, if you have a higher end property that you think will be in the top 90 percentile of all properties in the market, you can select that to get even more precise info.
In this market, for example, you can see that there is typically a winter dip in occupancy. However, the better your property is, the less pronounced the dip would feel.
Occupancy rates are important but it’s also helpful to understand the relationship that seasonality has on rates and RevPAR (Revenue Per Available Room) on a monthly basis. Fortunately, Airdna provides that data as well in a couple of interest dashboards.
Firstly, you can see at a glance which months, weeks and days - over the past 12 month period - tend to perform better and command higher rates. If you mouse over any particular day, it will actually show you the average RevPAR right there.
The next section provides you with insight on RevPAR on a monthly basis. Essentially, how much can you expect to generate per available room over a course of a month.
Airdna also gives you a bit of insight into the profiles of your guests - mainly where they tend to come from and if they are largely domestic or international. In this particular example, you can see that this market is overwhelmingly domestic with just 1% of guests coming from abroad.
When you have an existing short-term rental property or thinking about setting up a new one, one of the key questions to figure out is how much should you actually charge. Pricing is a very dynamic variable -- which changes depending on the type of a property, time of year and competition.
Fortunately, Airdna can also provide guidance on this matter using their Rate Calendar feature. With it, you can input a profile of a property - how many bedrooms, how many guests it can accommodate, and the overall quality and see exactly what the market charges for any day of the year. On top of that, you can see how many of the properties are actually booked and are vacant to gauge how the market actually responds to that.
If you already have an active property, Airdna will help analyze it and compare it to the performance of other similar ones.
Airdna recently also released a few additional features - called Pacing - that help property owners and investors see how the market is generally recovering. At its core, Pacing is a forecasting tool designed to gauge demand and the rate of bookings made into the feature.
One of the things we like the most it the Booking Trends. It look at all of the future bookings made in the past 7, 30 and 60 days and plots them out into the future. This gives you a glimpse in how guests are beginning to plan for future travel and whether they are starting to make longer term plans.
We’ve been using Airdna for our own short-term rental business quite extensively over the past several years and are pretty big fans of it.
Since we operate in several markets and constantly look for new ones to expand to, it has been invaluable to us to predict the likely demand in any given macro market (city) as well as the localized neighborhood that we’re looking at.
Moreover, we use it to actually compare specific properties against each other to see which ones are more likely to perform better. Although we typically don’t use the data at face value and assume a 15-20% margin of safety, it can be very useful directionally.
If you are comparing multiple markets against each other, you can quickly see which ones are healthier than others. If you’re comparing properties in different neighborhoods, you can see which ones are more in demand among travelers.
To recap, Airdna offers quite a bit of information with their free account and it’s an excellent way to get started and just test the waters.
However, if you are serious about any specific market, then you’ll need to pay for a monthly subscription to it.
The way Airdna is structured is this:
Keep in mind that a market can be either a city or a neighborhood or a zip code. If you are looking at a specific neighborhood within a large city, you may be better off just getting a subscription to that neighborhood to start.
A lot of people will typically use the subscription for a month to get the info they need and then cancel it to avoid recurring billing.
In short, if you are thinking about starting or expanding your short-term rental operation, there’s no reason not to spend $20-100 and get the data that will help you save or make thousands.