How to know if a property is good for airbnb
Calculate AirBnB Rents in 5 minutes
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calculate your airbnbs fast this does
not have to be too hard we're going to
do this in five minutes or less here on
the fearless investor channel if you're
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dropping tons of value bombs here in the
short-term rental industry
[Music]
all right this is something that i get
really excited about i kind of geek out
on the numbers but if you're not a
numbers person i'm going to make this
super simple and then we're going to go
a little bit deeper at the end into how
you can really solidify these numbers
but let's go ahead and just look at this
from a 5 000 foot overview so first of
all
expenses expenses are right up here and
i've got the income in blue down here
but let's just say that you have a place
that's 1500 that you are arbitraging and
the rent is going to be like i said 1500
a month let's say that it costs you
about 500
in utilities every month uh pool pass
lawn gas electric water sewage
these are averages okay so if you have a
month at 7 50 and then a month it's 250
it's just going to be basically kind of
evening itself out so
if you have 1500 i call this the rule of
three in short-term rentals typically
you're going to get two and a half to
three times whatever the long-term
rental is for your short-term income for
that month so that's 4500
if you are doing the rule of three
do the math here this is two grand
okay
and we're going to take that out
of the 4 500
that leaves us with a profit
of
20 500
on a place we don't even own that's
what's so cool about this industry and
this is real i just actually got another
property right now here in fresno i'm
making 3 500 on so 2500 is still pretty
conservative so if we look at this this
is just the nightly rate what about
those extra fees that we do maybe the
cleaning that we make a little bit of a
profit on maybe that's you know 100 for
the month maybe we are getting some pet
fees and
there's a lot of other things within
this that we can make extra money on
i've got some scooters at one of my
places i've got um you know early
check-in fees there's a lot of different
ones but that could be an extra 300
for the month
add that to the 2500 we're now at 2 800
of net profit for one month
and if we
purchased a property on that purchase if
we went ahead and did a
an arbitrage our initial expenses
what are they well for furnishing and
consumables
okay we've got maybe 12k
on a three bedroom four bedroom place
and then a deposit
and that deposit is probably about one
to two times the rent so let's just say
that our total investment is 15k
we just made rounded up say three
thousand dollars a month we just made
our money back in about five to six
months
all right this is what's so amazing is
most people are chasing eight to ten
percent returns we're chasing right now
at 200 percent return on an arbitrage
this is why the short-term rental
industry is so profitable this is why i
get it so excited but the 4 500
let's go ahead and show you how to
solidify that by using my profit
calculator and air dna so we're going to
use two different tools here one is air
dna and then one is my airbnb profit
calculator which you can get absolutely
for free by going here to get your first
airbnb in the next 30 days if you fill
out this form you'll get an awesome 40
minute master class that's going to show
you exactly how to get that first airbnb
and it'll give you the calculator
but if you know right now i'm gonna give
you like a three minute version of how
to use both of these if you want the
actual training super simple go to
airbnb on my website fearlesskyle.com
and go to the
market eval kit for just 97 bucks you
can learn how to
properly evaluate a property and a
market and that can save you hundreds of
thousands of dollars to be completely
honest because
one mistake can be detrimental so
here is what i'm going to do though
i'm i'm probably going to assume that
you're going to start with a free
membership on air dna which by the way
if you want to start an air dna
membership the link is down in this
video in the description
a free version is a great place to start
because you could save money and you
also can get a majority of the
information that you need already if you
notice a majority of this is locked up
but all we really want to find is what
is the average occupancy rate for this
city
and if we have called a three bedroom we
just want to look at three bedroom
locations that are similar so if i had a
lead let's say in northern phoenix right
now
and it was up around here next to the
101. uh then i'm just going to find
three different
like properties similar properties so if
mine has a pool i want to make sure that
i'm finding ones with pools like this
one for example is a phoenix
pool
or north phoenix home with a pool and
i'm gonna find three of those that have
legitimate data how do you know they
have legitimate data well that's also
going to be in the airbnb market eval
kit which once again you can find on my
website at fearlesskyle.com but there's
good data and then there's bad data just
like anything out there and so you want
to be able to figure out the good data
find the good data from three different
properties
divide those three or find find the
amount so let's just say for example if
this one you call it is 220 this one is
you know 460 and this one is 180. those
are all probably not good comps but i
would add all three of those together
then divide them by three and see what
the common price is and that would
probably put us somewhere around like
270-ish
is what my assumption would be so i'm
going to take that information
that i just got and then
i'm going to apply it to my airbnb
calculator so air dna again is helping
us to find that nightly rate again this
is a very quick overview of it but you
can even if you find ones you can click
on them and and take a look at their
link
live to make sure they still are live
make sure they have great data you know
108 reviews at a 4.75 that's a really
good piece of data to collect but if i
if i find that out and say okay great
i've got one that's going to go at 270.
well
on the free version once again all i'm
going to base on is this occupancy rate
of 71 percent and so if we go and we do
a 71 occupancy out of 30 days that's
essentially about 20 to 21 days so i can
now apply that to my airbnb calculator
so i've already filled out a few things
on this airbnb calculator for you
including initial expenses um i've
included all the monthly expenses
minus the rent and then i'm also leaving
the estimated cleaning fees because i
just want to assume for a second that
we're not going to make any money and
we're not going to lose any money on
cleaning but that is another great way
that you can earn some income so let's
just say that 270 that i got right
and uh then
20 days is what it's going to be on
average booked every single month in
fact i think 21 is probably closer to 70
percent
now it calculates it over here to show
you hey after all expenses except for
the rent i'm making five thousand seven
hundred thirty seven dollars per month
and what i can now reverse engineer is
how much can i pay for rent in order to
make this make sense so if i put in and
let's just say this is twenty five
hundred dollars of rent look at that
three grand on a place that i don't own
and then i'm arbitraging and what a
great return here and this is one thing
that i would definitely recommend taking
a look at this is going to measure your
risk it's dividing your net earnings
which are right here
into your gross earnings and if your net
to gross is at least 33 as you see this
one's 51
if we do find a place that is rentable
for 2500
then we know that it's a pretty good
deal so what does that mean that means
that i can now kind of mess with this a
little bit and say well what if my rent
is three thousand dollars what do those
numbers look like
twenty seven hundred dollars and we're
still over that 33 mark what about 3 500
still right on and bordering that 33 so
i would say if i am confident about
these numbers and i find a pool
in this area in northern phoenix um then
i am pretty comfortable with knowing
that hey this is a good deal i'm making
pretty good net profits right here
but what i would also do is go in and
now say okay i think i have a a pretty
good overlying view of this but let me
get the real data by upgrading and
purchasing an actual zip code to make
sure that i do have these numbers right
so once again
really high
5000 foot overview your best bet is to
go over to fearlesskyle.com
get over to the airbnb tab go to the
market eval kit and you can go ahead and
just for 97
make sure that you're making the right
decisions and the right analysis
on a property and a market
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