Not so long ago someone introduced AirDNA to me. It’s a service that tracks Airbnb booking data to help investor analyze where to purchase properties. They recently updated their market analysis and recommendations on where opportunities might be in the vacation rental market. This is great insight as house prices, vacancy rates, booking rates, and local restrictions vary wildly from city to city. I don’t personally use their service so I’m not endorsing them here but I do find the info useful to share here. The data is consistent with my own experience as a traveler and a host.
Basically, you want to go somewhere demand from visitors is high and supply of other rental units is low. I was personally surprised to see popular markets like New York City, San Francisco, and Los Angeles because the housing price is so high it actually yields negative returns. Meanwhile locations like Palm Springs, Joshua Tree, or Sonoma that might have higher vacancies the low supply and low housing price result in high returns to the investors.
(Credit: AirDNA)
Another strategy people use is essentially subletting their place. You’ll need to be very careful about HOA rules or your rental agreement… I’m sure landlords won’t be very pleased about people taking advantage of rent control and essentially arbitraging on Airbnb. Here the high cost big markets definitely win out.
(Credit: AirDNA)
Personally I have been loving having our place in Lake Tahoe on Airbnb thus far. In terms of percentage return on investment there are better options out there, but I have access to it anytime. Through some creative marketing and attention to fast guest response my place is pretty much rented every weekend. Let me know what you think of this data here and if there’s enough interest I might write up about my own personal Airbnb strategy.
