I’m asked all the time what about how to estimate your short-term rental’s potential without buying the furniture first. So, here’s my answer:
Estimate Your Short-Term Rental Income
1 – Check www.RoomScore.org. Is your city short-term rental friendly?
Are 30-day stays allowed? What are the limitations? As you can imagine, your local government wants a piece of the action. So factor this into your revenue projecgtion.
2 – Check your profitability with Airbnb’s Earnings Estimator
Click HERE to quickly see what Airbnb estimates your weekly and monthly income will be.
Enter your city, housing type, and number of guests you plan to host. The calculator will give you an estimate of your gross income.
3 – Count how many Extended Stay hotels are nearby?
Create a list of your local extended stay hotels by name and number of locations.
If corporations have concluded your town is viable, then if nothing major has changed, you can act off their conclusion as well.
4 – Calculate the average monthly rate Extended Stays charge in your area?
Assume 80% of the average monthly rate to be realistic. Consider this to be the upper limit on what you can expect.
5 – Check the going Craigslist price for sublets?
Can your create something that can compete with what you see? Is your rental in as nice of a location? Consider this to be the lower limit on what you can expect.
6 – Buy your city’s data report from Airdna.co (optional)
Airdna puts together wonderful reports that tell you what’s really going on in your state, county, and city. They tell you about the past – of course. But if you’re still nervous after taking the recommended steps above, then you should invest in their report. Click HERE to check out an example of their report for your area.
Consider All the Factors All at Once
Consider all these factors at the same time. Let all the predictors tell you the whole story.
For example, I find that unfriendly city ordinances indicate you’re in a strong area for monthly rentals. So overlay all the factors on top of each other to get a true picture of your potential.
Take These Steps
- Determine your gross income
- Determine your net income (accounting for any taxes or fees you need to pay)
- Then make a decision
And if you’d like my help with this, check out my Niche Rental course.
I”m always happy to help owners break out of the cycle of spending all the rent they earn just to maintain their rentals. If you have a typical 80% loan-to-value mortgage on your rental, then you can rest assured that it’s perfectly normal to barely break even before taxes (with all real life expenses accounted for).
Landlords don’t like to talk about this, but you’re not alone.
If you want to earn a lot of side income, then consider how housing temporary residents sets the stage for you “rening” them all the other things they need for their stay. And this can really add up.
If you want to buy more rentals to create passive income, but can’t seem to save up the down payment, then here’s good news. Operating short-term rentals can allow you to make money “renting” low and “re-renting” high.
Let me know what you think? Please leave a comment below.