Expand your knowledge on the most suitable ways to use Airbnb analytics to increase revenue regarding your short-term investment property.
Table of Contents
- What Is Airbnb Analytics and Why Do Real Estate Investors Need It?
- The Traditional Way of Gathering Data: Useful or Useless in Today’s Market?
- How to Gather Airbnb Data and Boost Rental Profits
- What Exact Mashvisor Tools Should Real Estate Investors Use?
- How to Use Airbnb Analytics to Boost Short Term Rental Profits: Summing Up
Collecting—and manipulating—market data means turning your attention to investment tools that can help you gather the necessary information rather than going about it the “traditional” way.
Whether you’re a first-time real estate investor or not, the following rule applies:
You should rely on a comprehensive analysis if you wish to achieve maximum profits on your investment property. Airbnb analytics can help you with analyzing potential investment properties.
If you’re looking for efficient ways to use analytics to find the ideal short-term rental property and generate a steady passive income, don’t hesitate to scroll down.
What Is Airbnb Analytics and Why Do Real Estate Investors Need It?
The question that opens the entire discussion about researching the real estate market and assessing the profitability of potential investment properties relates to one thing: Airbnb analytics.
What is Airbnb analytics—and why is it so important to real estate investors?
To start the discussion the right way, we will first need to clarify the definition behind the term “analytics” in real estate.
It’s the information gathered to analyze rental data further, interpret it, and assist the investor in coming to a conclusion of whether it’s worth it—or not. Besides the importance that the said data carries, it makes the job of real estate investors a bit easier—especially in terms of accuracy and time efficiency.
The numbers are collected to work in your favor. The data helps the investor locate the most profitable cities in the area—or a different real estate market—and pick the best short-term rentals that will generate the highest return on investment (ROI).
Another critical factor in using analytics is that they can help the real estate investor assess the potential risks associated with their investment.
For example, once you’ve found a lucrative investment property, you can check whether it will generate profit or not. Based on the findings, you can decide whether or not you want to proceed with the investment.
We should add that there are two ways of gathering Airbnb data analytics in the real estate industry. We’re referring to the “traditional” way and the newer, “predictive” way here. And to say the least, both approaches come with a dose of significance to them.
However, the latter is more likely to show reliable results in terms of profits. Using the tactics of predictability and estimation, the investor can see how their vacation home will perform in the long run.
Related: How to Evaluate a Rental Property Quickly
The Traditional Way of Gathering Data: Useful or Useless in Today’s Market?
Exploring the real estate market and locating short-term rentals was not always as easy as they are today.
Not too long ago, the “traditional” way of collecting Airbnb analytics was based on occupancy rates and average daily rates. So, let’s see how the traditional way of performing a standard Airbnb analysis holds up in today’s real estate market climate.
Are the two metrics alone useful—or useless—to real estate investors?
First off, let’s look into the actual definition behind the term “occupancy rates” and go from there.
In definition, occupancy rate is a proportion (percentage) of days over the period of one month for which a rental property was booked. Arguably, it’s one of the most important metrics for short-term rentals.
There’s a pretty straightforward formula for the metric—and it goes like the following:
Occupancy Rate = Days Booked / Days Available for Rent
The problem occurs when it becomes misunderstood among newbies in the business.
Aiming at high Airbnb occupancy rate data is essential, for sure. An occupancy rate higher than 65% is considered desirable (bearing in mind the number of short-term rentals across the US). Although it may seem like your Airbnb business is thriving, there is one other hidden fact.
The nightly rates could still be low, and therefore, the host might not be making much money.
Finding the balance between pinning down an affordable price for travelers looking to stay at your short-term rental and maintaining an advantageous occupancy rate may not be simple without any assistance, especially in terms of other relevant metrics.
For example, Airbnb booking data needs another factor taken into consideration—lead time data. Booking lead time data is crucial—and it varies by location. Ski resorts and beach-side rentals can expect higher occupancy rates during winter and summer vacations.
The next metric that was commonly used for traditional ways of gathering information would be average daily rates. Like the previous one, it is a metric that is considered highly dependable in the hospitality industry since it helps the investor measure the average rental revenue that their investment property is generating.
Calculating the average daily rate is done using the following formula:
Average Daily Rate = Room Revenue Earned / Number of Rooms Sold
The key here is to increase your ADR by applying the right pricing strategy—which is not easy to do if the only two metrics that you’re abiding by are the ones we’ve mentioned.
What’s the take on them?
In all truth, the traditional way of collecting Airbnb market data is simply not going to cut it in today’s market climate. The performance of your short-term rental depends on other factors, as well—and we’re going to mention them in a moment.
For now, it’s crucial for real estate investors to grasp the importance of relying on investment tools that are in charge of dealing with Airbnb analytics—and the abundance of data they are presented with on a daily basis.
How to Gather Airbnb Data and Boost Rental Profits
To boost your short-term rental profits, we will need to put the “traditional” way of gathering Airbnb data in the background—at least for the time being.
The best way to increase your short-term rental profits and help your strategy succeed would be to rely on real estate investor websites and, even more importantly, the incorporated tools at your disposal.
On our real estate investor website, Mashvisor, you can find a reliable way of gathering and analyzing the acquired data—and using it to perfect your investment strategy.
Suppose you chose Mashvisor’s investment tools. To which extent can you expect analytics, and how accurate are they?
Airbnb Real Estate Market/Neighborhood Data
When it comes to the Airbnb real estate market, once you access the Airbnb analytics, you’ll need relevant information regarding the real estate market that you are researching.
Since location is one of the leading factors here, it’s crucial to see how the area’s performing in terms of ROI. Getting the ROI information is crucial for the investor. Why?
Because it enables them to obtain a more visual representation of the market, which can not be possible by just calculating the occupancy and average daily rate.
While you are conducting your short-term rental research, you should be able to “juggle” the following data in order to get the complete picture and, hopefully, reach a conclusion:
- Median Listing Price
- Airbnb Occupancy Rate
- Monthly Rental Income
- Average Airbnb Return on Investment
- Airbnb Cap Rate
Another thing that’s proven to be of significant help to real estate investors is Mashivors’s Neighborhood Analysis.
What does it do?
Mashvisor’s Airbnb analytics on specific neighborhoods provides the real estate investor with a chance to dig even deeper into the matter of the investment property and see some things up-close.
For example, the investor can see a certain area’s performance in the last couple of months and, from there, form the prediction for the following period.
As a future host, you’ll get a clear idea regarding Airbnb cash flow—including whether it is positive or negative for the said neighborhood.
Related: How to Perform a Real Estate Market Analysis
Investment Property Data
Once you’re set on the desired location, or at least you got one in mind, you’re also going to need information on the property you’re trying to invest in here.
The first metric investors should focus on is the Airbnb rental income. And here, hosts need to come up with a number. So, think about it:
How much will you charge monthly? Will that number be affordable to visitors—and still earn you enough money?
To get an estimate of the monthly rental rate, investors need to look at:
- Monthly Airbnb Rental Income
- Airbnb Cash on Cash Return
- Price to Rent Ratio
The next thing investors should take into close consideration is the fees they are obligated to pay, including maintenance of the investment property. You will deal with tax rates, insurance, tenant turnover, and property management—among other things.
The calculations involve a lot more work—and a lot more information—that needs to be dealt with in due time. A plausible solution would be to rely on an Airbnb calculator. And by doing so, you’re bound to get accurate feedback—and a reliable estimate of your investment strategy.
While we’re at it, Airbnb comps can act as a deal-breaker in your short-term investment. Analyzing other short-term rental properties in a specific area you are interested in is never a bad idea.
Access to rental comps data will help the investor set the right nightly rate. And by “right,” we mean one that doesn’t stand out due to being too expensive even to consider or too cheap for them to profit from it.
Bear in mind that all of the above steps should be done prior to cashing out your savings on a property.
What Exact Mashvisor Tools Should Real Estate Investors Use?
So far, we’ve introduced (and explained) the topic of how using Airbnb analytics in your research could contribute to building a successful investment strategy.
Now, it’s time to mention the tools that real estate investors should use in their research and talk a bit more about their purpose.
We strongly believe that any investment search should start off with a reliable and thorough property search. And for such reason, we also think that using Mashvisor’s Property Finder will pretty much be inevitable throughout your investment career.
Here, the emphasis is on short-term rentals.
Our Property Finder tool can help investors search through any real estate market on the map. Basically, it is an online tool that can filter through Airbnb properties for sale in the desired market area.
It’s worth noting that the properties that are going to pop up on your screen are based on personal preferences—i.e., what you’re looking for in a desirable investment property. The filters we’re talking about include:
- Location of the Property
- Airbnb Rental Strategy
- Property Type
- Number of Rooms (Bedrooms or Bathrooms)
Real Estate Heatmap
Another crucial investment tool is Mashvisor’s Real Estate Heatmap. Here’s what it does for real estate investors:
The Real Estate Heatmap presents you with a visual illustration of how a specific location is performing compared to others—in terms of the rental business, that is. It relies on a color-coded method with numerical data to make it more visually pleasing—and easier to navigate.
Engaging in such type of research eliminates some inaccuracies that traditional spreadsheets can carry and helps investors obtain more precise and in-depth insight into the neighborhood they’re interested in at the moment.
It’s also helpful in comparing Airbnb bookings data in the area.
Investment Property Calculator
Last but not least, real estate investors are expected to deal with the numbers and estimates that are directly related to their short-term rentals. More specifically, the investor needs to see whether the strategy will help them generate income or not—and proceed accordingly.
An investment property calculator, like Mashvisor’s Rental Property Calculator, may come in handy here. The tool assists real estate investors in doing key calculations and determines whether they should proceed with their current strategy—or if something needs to be altered first.
Investors get the chance to compare the numbers and see how their property would perform as a short-term or long-term rental, which strategy is prone to be more successful, and what the estimates are on cash on cash return, occupancy rate, etc.
Related: What Is a Good Cash on Cash Return?
How to Use Airbnb Analytics to Boost Short Term Rental Profits: Summing Up
We’ve successfully covered the topic of the usage and relevance of Airbnb analytics in the rental business. Now, let’s just briefly go through the most critical bits we’ve mentioned so far.
Firstly, we’ve dealt with the meaning of Airbnb analytics and its importance to the real estate investor. Essentially, the two types of gathering and dealing with Airbnb market data include the so-called “traditional” and “predictive” ways.
And even though the traditional method involves calculating your short-term rental property’s occupancy and average daily rate, it’s not enough for a reliable conclusion. The real estate investor needs concrete numbers—which can only be acquired using investment tools.
On that note, Mashvisor’s investment tools provide the investor with thorough and up-to-date research on any real estate property and offer in-depth insight into estimated profits.
Sign up for a 7-day free trial of Mashvisor, followed by a 15% discount on your quarterly or annual subscription.