Estimating income for short term rentals can be difficult and intimidating. However, we need to know what the ANNUAL income would realistically look like to see if we have a good investment. Due to seasonality, and different events specific to that local area, the income can be drastically different throughout the year.
Any time we look to a new market, we have to do this kind of evaluation. We look at current listings on any short term rental platform, and look at other properties in the to see what they are charging, how many days of their calendar are booked (occupancy rate), what kind of amenities are standard for that area (will we need to provide many amenities or few?) So, by looking through these listings we can get an idea, but it takes a lot of time, and we may not be able to capture the ANNUAL income picture basing our decisions off of information we are gathering at one specific time period.
To collapse the time frame, we’ve found it is much easier to reach out to the hosts from the listings in any potential new market to get the info directly from the source, versus trying to decipher it all on our own. So, we focus on building relationships to generate strong data rather than search through all the listings for information on our own.
“Hi, my name is Bradley, I’m a real estate investor who specializes in short-term rentals. I am starting to look at investing in your area and was wondering if we could maybe sit down/ have a phone call to discuss what you’ve experienced and how you’ve done in this market? I MAY ALSO NEED SOMEONE TO HELP ME MANAGE THE PROPERTIES. Please let me know when you might be available for a conversation. Thanks, so much for your time!”
With this script, we are now offering a benefit to anyone who has the info we need to share it with us, in the hopes that they may get another property to manage.
“Help enough other people get what they want, and you will get everything you want!”
As management company owners, we would take anyone’s phone call/meeting if it means we might be able to grow our portfolio. This way they will hopefully share their information (annual income and annual occupancy, with a monthly breakdown), so that we can make an informed decision and run our numbers based on that info as we would any other deal.
With short-term rentals, your expenses and monthly costs will certainly be higher than traditional rental as you will be responsible for cable/internet/Netflix subscriptions/lawn care/ electric/water/pool/supplies/etc. As long as we account for all of those costs (including a management company if you aren’t going to do it yourself) then we can break it down to see if the cashflow will outweigh a traditional rental.
This should be a good start on how to at least get the income/expenses so we can analyze a short-term rental property. Apply this method anywhere you want, good luck!