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You’re here on YouTube and you’ve probably seen a couple of videos about how to analyze properties for Airbnb. Well chances are they’re doing it wrong and exposing themselves to a lot of risk.
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Buying a home is an expensive thing. And in this market, one thing is for sure: analysis has never been more important.
Home prices are on the rise. In order to create a proper return on investment (ROI), we need to make sure we will bring in more money than we spend.
So when we’re spending more, we need to make more. Easy concept, everyone gets that.
But too often, I see or talk to people who are analyzing in the total wrong way. You’re going to get burned. I’ve seen these people get burned.
I don’t want that for you.
I see three main reasons why people mess up the analysis on their short term rental investment.
In today’s video, I’m outlining the three biggest mistakes people make when analyzing for short term rental properties.
The first mistake we go over the most common one by far. But I break it down with simple logic as to why you don’t want to do it that way.
Second involves occupancy. Let’s hope you haven’t been guilty of this one.
And third we discuss how accurate you should be, and what you risk by being inaccurate.
By not making these three mistakes, you can scale more quickly and substantially decrease your risk and downside.
Watch the video now.
Hey, what's up guys, it's James here. And in today's video, I'm going to break down the three most common Airbnb analysis mistakes that I see people making and how you can avoid them, these three mistakes are really detrimental, they can lose you a lot of money if you're not careful. So I want to break those down so that you don't have to make these three mistakes. Because frankly, I have seen some people on YouTube talking about how they analyze properties, talking about how they decide what properties to invest in short term rentals. And their strategies are nothing short of absolutely in sane. So you want to make sure that you're analyzing properties the right way, I've got other videos on this channel that break down how we do in depth analysis. But honestly, there are just too many people out there that are leaving way too much to chance. They're doing risky investing, and they are going to get burned. I don't want you to be one of those people, I want you to invest the right way, I want you to analyze properties the right way. And I want to make sure that you are avoiding these top three mistakes that I've seen time and time again, fuel make that is going to burn people big time and that I've already seen people get burned big time from. So again, if you want to if you're interested in learning more about how to actually work with us and how to invest successfully in short term rental properties. Make sure you check out the link in the description down below. There's a free training that's going to walk you through step by step by step exactly how to avoid all the common pitfalls with Airbnb investing, and how to make sure that you invest successfully, that your property cash flows really well, you buy the right property, do the right renovations, you know, get it up and running, optimize it and manage it as efficiently as possible, have time freedom, everything else. So that training is free, it's in the description down below, make sure you check it out. And when you do that, we're also going to send you our analysis spreadsheet completely free to help you actually analyze properties and make sure that you're not making these three mistakes I'm gonna be covering in this video. So without further ado, let's jump into it. The first mistake I see people making is looking at prices on Airbnb. At no point during your analysis. Should you ever look at people's prices on Airbnb? I've seen people that you know are going and doing that repeatedly. And I constantly speak with people who say yeah, I'm just looking at prices on Airbnb. And there's a few massive mistakes that you're going to run into when doing that. Mistake number one with looking at price on Airbnb is that Airbnb marks up the prices right Airbnb marks those up. That's how Airbnb makes money. And you don't know how to calculate that and you can't calculate it effectively. And so you're going to be overestimating how much money the property can make per night on Airbnb, because you're factoring in that Airbnb markup that you as the property owner, if you purchase the property would not actually get to see. So that is mistake number one with that part. The other big challenge with looking at price on Airbnb is that they're whatever we want them to put Yeah, right, you can go on Airbnb right now and list a property for $9 a night or $9,000 a night. That does not mean that is the optimal price to set, it doesn't mean it's the right price to get set. It does not mean the property is going to get booked. It doesn't mean anything, it just means that you set your price at that amount. And so the reality is most people on Airbnb in a lot of markets are amateurs, they don't know what they're doing. So if you're looking at what they're pricing their property at, it's just a case of the blind leading the blind. So that's the other big issue that you run into is that those prices don't really mean anything. Now the other big challenge with looking at prices on Airbnb is that you're only able to look at the price of properties that aren't booked right now, ultimately, those properties are not the best indication of how your property is going to perform. Because ideally, you want your property to be booked, right, you actually want to get it booked. And you want to know what properties are actually getting booked for not what they're listing for the same reason when you're buying houses, you don't look and compare the value of the property based on what other properties are priced at. You look at past sales that have actually already closed in the area. Because again, you can list the property, whatever you want, it doesn't mean it's actually going to get booked for that amount. So for those three reasons, you really never ever, ever want to be looking at prices on Airbnb. And that goes in equally. So for VRBO or any other platform, you never want to be looking at those list prices, because they mean nothing and you're going to run into a lot of mistakes, overestimate how much you can bring in and run into a world of trouble. Now, the other the second really big mistake that I see people making when it comes to analysis is guessing out their occupancy. A lot of times people just haphazardly just throw a number out there and they just say well, hey, you know, if I'm able to get 60% occupancy, this nightly rate then I'd be at breakeven so great. Who knows? Right? There are some markets that Do you know have 60% occupancy rates, there are others that are have 80% occupancy rates, other ones have 50% occupancy rates, and we have to know the nightly rate that's actually going to cause that occupancy rate. You can't just take a best guess and say Oh, I
think I'm gonna get booked in a worst case scenario for It's a week that's absolute insanity to operate that way, because it's really just guessing you're not doing any kind of analysis that at that point, you're just guessing you're just randomly blabbing about numbers and throwing things down. And just, you know, guessing it's all it is. And so you really want to avoid that you want your analysis process to be way, way more dialed in. And that kind of leads to point number three, the big mistake that I see people making, which is just overall inaccuracy. And I think that people really underestimate the impact of inaccuracy when they are analyzing properties. Now, the obvious really big pitfall with inaccurate analysis is that you are going to be over analyzing how much a property can perform potentially. And that means that if you buy the wrong property, you're gonna lose money. And now I know a lot of people overcorrect for this by being ultra conservative with their investments. So I know a lot of you guys watching if you've done a this, or if you've seen other people, you go, Well, no, if I just, you know, estimate that it's going to be occupied 50% of the time, in a worst case scenario, then I'm covering myself, because even if I am inaccurate, I'll be really, really conservative to accommodate for that. But that's equally crazy, because there's a huge opportunity cost that you're missing out on there, you have to be ultra conservative with every single analysis that you run, because you just can't take the time or don't have the tools to be able to run an accurate analysis, and therefore you have to be way over conservative, then you're going to be constantly passing up on deals, that would be really fantastic deals simply because you're being way, way, way too conservative. And that's why a lot of people right now are looking at deals and they're going wow, these properties are way overpriced. I'm there's no way the people buying them are crazy. Well, no, the real buying them aren't crazy. They may be emotional buyers that aren't buying them as a vacation rental, or they may just be your competitors who are snatching up deals from under you because they actually know how to analyze properties properly. And they don't need to give a $30,000 a year, you know, 30% margin for error, they can really dial things in a lot more effectively than that. Ultimately, that means a few things it means if you're running accurate analysis, it means you can buy more properties you can scale quicker, you can find deals much more easily. And you really substantially decrease your risk when you're investing because you know how well that property is going to perform. You can run different scenarios, and you can run them very accurately so you know that your downside is protected and you know what your upside is actually going to look like. So I hope it's been helpful. Make sure you avoid these three mistakes. If you want to learn exactly how we analyze properties, then make sure you check out the link in the description down below. We're going to walk through that step by step as well as give you our analysis spreadsheet that's completely free the training and the spreadsheet, we're going to give those both to you. So thank you very much for checking out this channel. I hope you enjoyed it, make sure you check out that link in the description down below. It's only going to be available for a limited time where we'll help you to put together a game plan for successfully investing in short term rental properties. So if you're interested in getting all that stuff for free, make sure you check out the link in the description down below. Again, like I said, it's not gonna be there forever it is for a limited time. Last but not least, make sure you like this video if you liked it. If this is gonna help you to avoid some mistakes, avoid some pain in the future then make sure you let me know by hitting that like button it really does help me out a lot as I'm growing this channel. So I'd really appreciate if you could just take a quick second and hit that like button. Also if you have any comments, thoughts, questions, anything you want to know anything you want to talk to me about, just let me know in the comment section down below. I'd love to hear from you. With all that said I hope you have a great rest of your day. I hope you invest successfully LP invest profitably and I will see you in the next video.