Airbnb Data: A 6-Step Guide for Investors

Starting a profitable Airbnb business requires the use of reliable real estate data and analytics. Every decision from choosing the right approach and market to buying an investment property and renting it out should be based on solid research and analysis in order to bring the expected results.

In this article, we’ll show you how to analyze Airbnb data in 6 easy steps. We’ll take you through each step which investors need to take to make their investment worth it. At each step, we’ll look at the best sources of Airbnb data and how investors can access them.

Step 1: Choose an Investment Strategy

The first step in the process of starting an Airbnb business is selecting a strategy. This decision depends on your living situation, budget, location, and overall goals. Aspiring Airbnb hosts can choose from three main Airbnb investment strategies:

Renting Out a Room in a Primary Home

This strategy refers to listing a room or space in your own home. This is ideal for first-time homeowners who live in a popular Airbnb destination and have some extra space. It’s a good option for those who don’t have enough cash to purchase an entire income property or who don’t want to commit to real estate investing in the long term. Renting out a shared room or a private room gives new hosts the opportunity to get a taste of the Airbnb rental strategy and decide if it is the right fit for them.

One of the main benefits of this approach is that it can work out even in markets that strictly prohibit non-owner occupied short-term rentals. Indeed, the vast majority of US cities allow renting out a room as long as the host is on site, while many of the most popular tourist cities prevent an Airbnb business that’s not directly supervised by the owner.

Owning a Hybrid Vacation Home

Another way to start making money from Airbnb is to rent out a second home. This can be a property that you already own and only use a few months a year or a new property that you plan to buy.

The main advantage of this hybrid investment strategy is that you get to a place where to spend your own holidays and a property that makes you money for the rest of the year. Moreover, depending on how many days a year you stay at our vacation home and for how many days a year you rent it out, you might be eligible for various tax deductions.

If you’re leaning towards this strategy, it’s important to carefully select the market where you buy the house. You have to put effort into finding a place where you enjoy spending time and that also has strong demand from visitors.

Buying an Airbnb Investment Property

The third approach is to purchase a real estate property with the specific purpose of renting it out on Airbnb and other vacation rental websites. This is a pure investment strategy where you offer your house for daily rather than monthly leases.

You can still use the property for personal reasons from time to time. But the more frequently you take your listing off the market, the less income you will generate from it.

From all three methods, this one allows investors to make the most money as they rent out an entire property all year. The key to success, as we’ll discuss in more detail shortly, is to choose a market with affordable property prices, high daily rates, and strong occupancy. It’s also important to make sure that you have enough cash for a down payment (usually a minimum of 20% of the property value for rental properties) or access to the best Airbnb loans. It’s crucial to select a location where non-owner occupied short-term rentals are legal and do not face severe limitations.

Step 2: Select an Airbnb Market

Once you know your strategy, you have to analyze Airbnb data to choose the best market for short-term rentals, unless you decide to rent out a room in your home.

There are multiple factors that go into making a city a good place to invest in Airbnb including:

• Real estate prices: An overpriced market negatively affects affordability and profitability from an investor’s point of view.
• Number of visitors: The more tourists and business travelers that come to a city, the more demand there is for short-term rental properties.
• Seasonality: The ideal Airbnb market benefits from year-round visitors rather than seasonal demand.
• Supply of Airbnb rentals: A market that is already oversaturated with Airbnb listings provides poor investment opportunities.
• Short-term rental regulations: City and county authorities should heavily regulate vacation rentals to make a market a feasible option for investors.

Evaluating the factors listed above requires gathering a mix of quantitative Airbnb data and qualitative market information. The Awning platform has two tools that can help with the provision and analysis of Airbnb data at the market level to help investors choose the best short term rental market.

These tools are:

Awning Top Markets Tool

The Awning Top Markets Tool ranks the top Airbnb markets across the US for the specific needs of individual investors. The tool obtains property-level data from the Airbnb website and calculates the city-level averages for all the must-have Airbnb data analytics to choose the best location.

Investors can use the following filters to focus their market search:

• State: You can select as many or as few states as you want.
• Market size: You can choose between a small market (with less than 100 active Airbnbs), medium market (with 100-500 active Airbnbs), and large market (with 500+ active Airbnbs).
• Average Airbnb price: You can set up the exact property price range based on your budget.

Once you’ve selected any or all of these filters, the Top Markets tool will show you the 40 most profitable US cities that meet your exact criteria. You can sort them by:

• Highest ROI
• Highest revenue
• Lowest or highest property price
• Lowest or highest number of Airbnbs

In this way, in a matter of minutes you can find the best potential markets for your Airbnb investment endeavors. However, this is not enough to guarantee a profitable market. You need to dive into a deeper Airbnb rental market analysis.

So, how to analyze Airbnb data at the market level?

There is another Awning tool that helps you with this:

Awning Airbnb Market Data Tool

The Awning Airbnb Market Data tool allows vacation rental investors to analyze the Airbnb investment potential of any US city. If you’ve chosen a certain city with the help of the Top Markets feature, you can click on it to access this detailed analysis. If not, you can simply enter the name of a city you have in mind and see how well it does in terms of short-term rental property investments.

You are able to analyze all the must-have Airbnb data points including:

• Market overview: This is a quick summary of the performance of the local vacation rental market and the main drivers behind it.
• ROI: This is arguably the most important piece of data as it shows what return on investment an average Airbnb host is able to generate. Of course, depending on your property, strategy, and management method, you may outperform or underperform the market, but this is a good indicator of what to expect, on average.
• Revenue: This is the average annual Airbnb rental income in the area. The data is available by bedroom count (from studio to 5+ bedrooms) and rental type (shared room, private room, or entire home).
• Average Airbnb price: The average cost of real estate properties reveals how affordable a market is.
• Market size: It’s important to know whether you’re getting into a new Airbnb market that’s still developing or into a market that’s already full of listings.
• Number of Airbnbs: This is the most direct measure of the competition you will face from other investors, including by number of bedrooms and type of rental.
• Occupancy: The Airbnb occupancy rate is one of the two determinants of rental income and ROI, together with the average daily rate. The data is available as an aggregate and broken down by rental type and bedroom count.
• Average Airbnb daily rate: You can see the ADR for all properties in the market as well as a breakdown by rental type and number of bedrooms.
• Amenities: This part of the Airbnb market analysis reveals the boost in annual rental income by the availability of a swimming pool and a hot tub on site.

The Airbnb data on average daily rates, occupancy, and rental revenue is available per month too. This helps investors check if a market is seasonal or enjoys short-term rental activities throughout the year.

With the help of these two Awning tools, future Airbnb hosts can select the best market for their needs before proceeding with the rest of the needed Airbnb data analysis.

Step 3: Find a Profitable Airbnb Investment Property

The third step in the process of analyzing Airbnb data for profitable investments is searching for money-making rental properties for sale.

There are many different ways in which an investor can find a potential Airbnb property. Some of these include newspaper real estate sections, real estate agencies and brokerages, word-of-mouth, house hunting apps, real estate websites like Zillow and Redfin, and others. The main downside of all these methods is that they don’t provide the necessary Airbnb data to analyze their expected profitability, so investors need to resort to third-party tools.

To circumnavigate this challenge and access listings for sale with available analysis, investors can use:

Awning Top Deals Tool

The Top Deals section of the Awning real estate investing website offers always up-to-date listings across the entire US market that have a strong potential to turn into profitable Airbnb rental investments.

Airbnb hosts can use multiple filters to narrow down their property search based on the Airbnb market data obtained from the Awning Top Airbnb Markets tool, including:

• Property price range
• Number of bedrooms
• Number of bathrooms
• Year built
• Property size range in square feet
• Lot size range in square feet
• Monthly revenue range
• Cap rate range
• Cash on cash return range
• Appreciation range
• Maximum HOA monthly fees
• Amenities
• Neighborhood score
• Schools score
• Renovation budget
• Days on Awning

With the help of these filters, you can find an investment property that is affordable, strategically located, appreciating, and profitable. These are the main factors when analyzing Airbnb data for buying a rental.

Step 4: Analyze the Investment Property Financials Using Reliable Airbnb Data

When learning how to analyze Airbnb data for investors, the next step is to look at the expected financial performance of the property. Once again, this step requires access to reliable, up-to-date, nationwide short-term rental data which usually comes from multiple sources.

The traditional method of analyzing rental properties for sale entails using spreadsheets to enter the gathered data and perform different calculations with it. The problem is that collecting all the necessary data takes weeks or even months of hard work. Moreover, calculations in spreadsheets are prone to human error as any mistake gets multiplied across the spreadsheet.

So, what’s the best way to analyze the financials of an Airbnb investment property?

Using yet another tool available on the Awning rental property investing website:

Awning Airbnb Estimator

The Awning Airbnb Estimator helps investors analyze the investment potential of any residential property in the US market before buying. Savvy investors know that rental market analysis is a must before purchasing an income property. It simply doesn’t make sense to put your money in a deal that does not promise to bring good outcomes.

One of the best things about the Awning Airbnb Calculator is that it is extremely easy to navigate. You can use this tool to check out the expected performance of both properties that you have found through the Awning Top Deals and off market properties that you get from somewhere else.

All you have to do is to enter the:

• Street address of a property
• Number of bedrooms
• Numbers of bathrooms
• Number of guests the property can accommodate (make sure this is in line with local short-term rental regulations)
• Availability of a pool
• Availability of a hot tub

As soon as you add the specifications of your property, you will get all the must-have Airbnb data points to know how well - or not - it will do as a vacation rental. The analysis is based on the actual performance of similar Airbnb listings in the area, known as comps.

The estimated Airbnb data analytics include:

• Annual revenue
• Average daily rate
• Occupancy

Moreover, the Airbnb Estimator provides a list of Airbnb listings in the market that you can sort by similarity to your property, distance from it, occupancy, daily rate, and revenue. Investors have the option to view each of these listings on the Airbnb platform to examine what amenities and features do the best in the local area.

It’s important to keep in mind that all three Airbnb data points vary widely from one market to another. It is not possible to generalize what makes for a good ADR or a high Airbnb income. These numbers depend largely on the property price, the total size of the investment, and the operating rental expenses. At the same time, things are less nuanced with the Airbnb occupancy rate. Regardless of the market and property features, you should aim for an occupancy above 50%. If your rental stays vacant for more than half the time it is available for bookings, it will be challenging to generate positive cash flow and good Airbnb cap rates.

Step 5: Analyze Legal Compliance and Guest Profile

With the four steps described above, you have covered a big part of the process of analyzing Airbnb data for making profitable investment decisions. However, that’s not all. The next step requires more qualitative rather than quantitative research.

There are two main things you need to look into prior to buying the property and listing it on Airbnb: 1) The legal environment in the market and 2) The typical guest profile.

Airbnb Laws Research

Over the last decade, most US cities and many US counties imposed specific laws aimed to stop the quick spread of Airbnb properties in residential areas, to counteract the growing problem of housing unaffordability, and to prevent the negative impact of short-term visitors on the local population.

Thus, when starting an Airbnb business, an investor needs to check out the state, county, and city level regulations. These can take many different forms from having to pay transient occupancy taxes (TOT), through limiting the number of adult guests who can stay in a property per night, all the way to prohibiting non-owner occupied short-term rentals altogether.

In most cases, this kind of information is available on the official websites of city and county governments. To analyze the laws pertinent to your selected market, you can visit the city website and search for “short-term rentals”. It is important to find the most recent versions of relevant ordinances as some cities frequently change their requirements.

The most important factors to take note of are:

• Documents required to launch a business
• Specific documents pertinent to an Airbnb property, such as short-term rental licenses and permits
• The zones where short-term rentals are allowed/prohibited
• Restrictions related to the positioning of new rentals relative to already existing rental properties
• The number of guests per bedroom
• The number of nights allowed to rent out per year
• Whether property owners need to be on site during guest stays
• Various taxes and fees that need to be paid to local, county, and federal authorities

Another source where you can obtain detailed information about the vacation rental regulations across the US is the Legal section of the Awning real estate blog. We’ve covered some of the top states and best cities to buy a rental property nationwide.

Yet another good source of knowledge on local short-term rental laws are property management companies specializing in this type of rentals. They know what is legal and what is not, and the top property managers can assist owners in obtaining the necessary documents and permissions.

Airbnb Guest Profile Analysis

Before you invest in Airbnb, it is important to understand what kind of visitors frequent the location and what properties and amenities best suit their needs and requirements. This will help push up the occupancy rate of your rental.

The most useful resources for this part of the Airbnb data research include the websites of local companies or non-profit organizations that promote the city, either as a tourist destination or a business hub. Some examples of such websites are Visit Miami and Visit Palm Springs. You can use the information available there to compile a profile of the typical Airbnb guest. Try to find the answers to such questions as:

• Does this place attract mostly tourists or business travelers?
• Do local attractions bring families, couples, students, or solo travelers?
• What are the most popular areas among visitors?

You can also try to connect with local Airbnb hosts on online real estate investing forums, like BiggerPockets. Most investors are more than happy to share their experiences with and guide beginners. You can use these spaces to ask what guests stay at local short-term rentals, what extras they demand the most, and what experiences they require. This will inform not only the purchase of your investment property but also your management style.

Step 6: Purchase, Furnish, and Manage Your Airbnb

After you have completed all the above-listed steps of the Airbnb data analysis process, it’s time to finally buy your investment property and get it ready to welcome your first guests. While this is an exciting time for investors, you have to continue executing this step with the same level of diligence and care as before.

Buying an Airbnb Investment Property with an Investor-Friendly Agent

There are a lot of considerations that go into the purchase of a real estate property, whether a home or an investment house. The process can be rather challenging for first-time buyers who have not closed real estate deals before. And even if you have already bought a real estate property, you should keep in mind that the requirements vary from one state to another.

That’s why it is usually best to work with investor-friendly real estate agents. They will be able to negotiate a good price and favorable terms, guide you through the purchase, and help you close quickly.

But where can you find the best agents and brokers with experience in investment properties?

Once again, Awning can help you out. There are two ways in which Awning can connect Airbnb investors with top investor-friendly agents:

First, Awning has its own in-house brokerage specializing in rental properties. Interested investors get paired with the broker that best corresponds to their needs. The broker helps investors identify their criteria, search for properties, and analyze Airbnb data to choose the best opportunity. Moreover, Awning agents are qualified to educate investors on the ownership and management of vacation rentals so that they can get started on the right foot.

Second, through its Partner Agent program, Awning is able to connect future Airbnb hosts with agents and brokers throughout the entire US market. These agents are vetted by the Awning team to make sure they have strong experience in working with rental property investors, not only homeowners.

As a buyer, you don’t have to worry about paying additional fees when hiring an agent. In the US market, the agent fees are covered by the seller.

Furnishing a Vacation Rental

After you buy your Airbnb investment property, it’s time to get it ready for listing and renting. While you don’t have to spend a fortune on furnishing your short-term rental, how you furnish it will play a crucial role in attracting guests and generating positive reviews.

Unless you have experience in interior design or know an expert in the local market, you can resort to the Awning vacation rental furnishing services. These are comprehensive services which include everything from complete interior design aligned with your vision, all the way to installation. You should keep in mind that the process is managed by the ex-Head of Design at Airbnb, so rentals furnished by Awning are able to generate between 15% and 50% more revenue, on average, than comps in the same market.

The average cost of furnishing an Airbnb property ranges from $15,000 and $45,000, and it depends on the number of rooms and the host expectations. Partial furnishing is also available for rentals that are nearly ready but need some final touches. The Awning fee is included in the total budget. The entire process from design to completion takes an average of four weeks.

Managing a Short-Term Rental

The final piece of the Airbnb analysis is choosing the best Airbnb rental property management strategy.

There are two main styles:

• Self-management: Self-managing a short-term rental means becoming a DIY Airbnb host. This option is feasible for those who invest close to home and who have enough free time. Managing a vacation rental requires significantly more work than managing a long-term rental. Some of the day-to-day tasks include optimizing the Airbnb listing, adjusting the daily rate, communicating with guests, cleaning and restocking supplies between guests, coordinating check-ins and check-outs, fixing and repairing issues with the property, paying utility bills, reporting taxes, and ensuring legal compliance. Investors who prefer to manage their Airbnbs on their own have access to online Airbnb pricing tools and third-party platforms like Evolve and RedAwning, which help streamline and automate many of the tasks.
• Professional management: Investors who buy remotely or who have full-time jobs outside real estate can hire an Airbnb management company that will take care of all the aspects of running an Airbnb business. On the downside, you would need to part with some of your rental income, which can reach up to 45% in some cases. But the remaining income that you get to keep will be passive. Moreover, the best property managers are able to boost performance in a way that compensates for their fees.

In case your Airbnb analysis shows that you are better off working with a full-service short-term rental company, you need to choose a good one that will take care of your investment property and optimize its earnings.

The best vacation rental management companies in the US market are:

Awning

Awning is the top vacation rental management company in the US. It offers full-service management at an industry-low fee, starting at only 15% of revenue. Awning-managed listings have an average rating of 4.8 stars on Airbnb and generate 10%-30% more income than similar properties. Awning provides national coverage by setting up local teams of vetted experts in each market before onboarding rentals there. In addition, Awning is able to manage most types of residential properties such as single-family homes, townhouses, condos, apartments, cabins, duplexes, triplexes, small multifamily homes, and even boutique hotels.

Vacasa

Vacasa is the largest Airbnb property management company in the North America market. While the company provides comprehensive services, some of the core services are not included in the monthly fee and are paid separately. Vacasa does not publish its fees on the company website, but property owner reviews reveal rates reaching up to 35% in some markets. Moreover, Vacasa operates in 35 states only.

AvantStay

AvantStay is another popular choice among Airbnb investors looking for passive income. The company offers full-service vacation rental management. The limitations though are that they only work with properties with 4+ bedrooms as they focus on group travels. Furthermore, their services are present in 13 US states.

Casago

Last on our list of the top Airbnb management companies is Casago. They provide full-service management which excludes interior design and furnishing and vacation rental insurance. Casago works with condos and beachfront houses as well as resort communities in 21 states and DC. The company charges a single property management fee equivalent to 18% of income.

Takeaway

A successful short-term rental investment requires a 6-step process of collection and analysis of Airbnb data. While this sounds like a lot for beginner investors, the Awning platform can help you along the way. Our website has a few different tools and features that allow investors to choose the best market and property, buy under optimal terms, get a rental ready for guests, and manage a vacation rental business. That’s why Awning is the answer to the question of how to analyze Airbnb data in the most efficient way.