How To Use Airbnb To Do STR Market Research
Before we delve into the research to locate a profitable area, I’d like you to ask yourself some questions.
Are you ready to start thinking about yourself as a business owner? What kind of business owner are you going to be?
(I’ve talked about the different types of entrepreneurs here).
After you’ve tackled these high-level questions, the more important questions ensue…
Is there a market for Airbnb in my area? How much can I charge per night? How often will my listing be reserved? Will it be booked throughout the year, or will it be seasonal? What are my expenses?
But lucky for you, I have documented my expenses and my monthly income.
Where are some of the more profitable areas to start an Airbnb Business? According to SmartAsset, an online blog that talks about smart real estate investments:
- $20,619. That’s the average expected annual profit of Airbnb hosts renting out a full two bedroom apartment or house in the 15 cities SmartAsset examined. While it’s not chump change, it also isn’t enough to live off of—which is why many “professional” Airbnb hosts rent multiple properties.
- 81% of your rent. On average, that’s what you could expect to pay by listing one room in a two-bedroom home on Airbnb. That’s a lot more than a roommate would chip in, but it also requires a lot more work. (Well, depending on your roommate.)
- Miami and San Diego are the most profitable cities for Airbnb hosts. The combination of warm weather and (relatively) affordable housing make these two cities a better bet for full-apartment listings than popular but expensive destinations like New York and San Francisco. By the same token, private-room listings fare best in low-rent cities like Houston and Philadelphia.
For A private room on Airbnb, here’s a neat Infographic that summarizes the top cities
For a 2-bedroom Airbnb Unit
Why is Airbnb Market Research Important?
If you’re going to treat this as a business, you by default are in the business to make money. In order to make money, you have to figure out if your area is profitable.
By going through this exercise, you’ll gain a better understanding of your potential profits. So how much money is it possible to make by listing a room or full home on Airbnb?
The Fastest Way to Do Market Research
Go here for a quick estimate. This new tool came out in the beginning of 2017. You can literally get a rough estimate in 2 clicks. Pretty efficient, right?
While this tool is great for a high-level research, it doesn’t tell us how much we can charge per night, how much our neighbors are charging, and more importantly, how many listings/competitors are in your area?
Next, we’ll move onto a more robust research method.
How to Use Airbnb To Do Market Research
Let me break it down for you in simple steps below.
- Go to Airbnb.com.
- Look up the city that you want to do rental arbitrage. For me, I chose the Bay Area. But for the sake of simplicity, let’s pick San Francisco. Type “San Francisco” into the search on the top left corner. See picture below.
- Click on “Homes” under “Explore San Francisco”
- Scroll to the bottom and it’ll tell you how many rentals are in the market. When you have 300+ rentals, it’s a good sign because it tells you that you have a market-fit.
- Click on the “Home type” and filter out “Shared Room” and “Private Room.” This is important because it’ll further narrow down your competition.
- Go one step further and filter out places that can accommodate 4. It depends on what you’re trying to go for. I find it that in order to maximize profit, 4 is the max for 1-bedroom and 6 is the max for 2-bedrooms.
- Look at your competition with the most reviews and see how much they’re charging per night. If they’re charging 200 dollars per night and can fit 4 people, then it’s good for you to come in at 160 or 170 dollars per night to build out your reputation.
- Airbnb gives higher ranking to hosts that have the most 5-star reviews. These hosts show up on the first page of the search engine.
Use Google To Search for Hotels Near You
You can reinforce your research by doing a quick Google search for hotels.
- Pull up Google and type “hotels near me” in the search bar.
- Scroll down until you see a link that says, “More hotels.”
- Click that link.
- Google will generate a list of all the hotels in your area.
- Scroll to the bottom of the list and see how many pages Google found.
A good sign = Airbnb listings near you.
A great sign = Airbnb listings + hotels near you.
This is how you would perform market research for your Airbnb.
P.S. There’s a better way of doing this. Check out my other blog post on Airdna.
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