Which is the best tool for finding properties with short-term rental potential? Is it the AirDNA Rentalizer or the Mashvisor Airbnb Calculator?
Whether you are new to the Airbnb rental sector or have been in the business for years, you should know that the first hurdle you will face is finding a good rental home. The only way for you to know is through due diligence: you first have to research which cities get a lot of inbound travelers as a sign of high Airbnb demand. Then, you need to find which neighborhoods in that city are ideal locations for tourists or business travelers.
Finally, once you have narrowed it down to a couple of neighborhoods, that is when you look at the properties for sale in those areas. Several years ago, this may have meant that you would drive to each area and make friends with the realtors to get the Airbnb data analysis you need. But now, a few real estate websites have emerged with the mission of helping real estate investors like you.
As the number of these platforms increases, you will have to choose which one to use. But how can you make your pick?
- What these tools are and who they cater to
- Where they get their Airbnb data
- What Airbnb analytics you will get from either tool
If you are on the fence about which platform to use, then this blog post is for you.
What Is the AirDNA Rentalizer?
The AirDNA Rentalizer is an analytics tool that predicts the Airbnb earnings potential if you turn a home into a vacation rental. However, you have to enter an address. AirDNA does not let you search for properties on its platform. So you must already know what house to look into or you can use another platform to search for one.
First, the Rentalizer will ask you to type in a street address as well as the number of bedrooms, bathrooms, and guest capacity. It then gathers a list of nearby properties and creates an index based on relevance. It also factors in market-wide metrics such as seasonality, rental demand, and revenue growth in its final calculations.
The AirDNA Rentalizer will then show the following metrics:
- Annual revenue
- Average daily rate
- Occupancy rate
- 12-month forecast
- Comparable Airbnb investment property analysis
Using these data, the Airbnb income calculator makes assumptions on the earning potential of the property you looked into. AirDNA also recently added a financial calculator that allows you to input your major expenses.
There are two types of AirDNA Rentalizer users:
- Those who are already hosting an Airbnb and want to compare their rental home to other hosts in their area; and,
- Investors who are looking to expand their Airbnb business and want to determine the potential revenue of a property.
What Is the Mashvisor Airbnb Calculator?
Mashvisor provides data analysis to real estate investors who want to look into a property’s income potential before buying it. Unlike the AirDNA Rentalizer, you can also browse Airbnb properties for sale in any US market using Mashvisor’s Investment Property Search or Property Finder. When you find one that you like, click on a listing and you will find the property’s details. On that same page, you will also find the Mashvisor Airbnb profit calculator.
This tool helps you determine the income potential of investment properties for sale if you rent them out through Airbnb. The metrics displayed include:
- Airbnb income
- Expenses related to operating an Airbnb
- Airbnb cash flow
- Airbnb cash on cash return
- Airbnb cap rate
- Airbnb 10-year payback balance
Using the Mashvisor Airbnb Calculator
The data presented by default use the median prices gathered from the Airbnb platform and national average costs. But you can edit the following numbers on the calculator so you can get a more accurate estimate:
- Airbnb rental income
- Occupancy rate
- Toggle between cash payment or mortgage
- Mortgage details (property selling price, down payment, mortgage type, loan term, and interest rate)
- One-time initial costs (inspection fee, repairs, furnishing, and closing costs)
- Monthly running expenses (insurance, utilities, property management and maintenance, property and rental income taxes, HOA dues, and cleaning fees)
You can also add your own custom expenses. The calculator will use your data when assessing your cash flow, cash on cash return, and cap rate. And if you scroll further down the page, you can find a 10-year investment payback table. This projects your estimated accumulated earnings (or losses) depending on the numbers you entered.
In case you found that the property is not optimal for Airbnb, Mashvisor’s real estate market analysis can also help you determine if it is good as a traditional rental home instead. The platform also provides a comprehensive neighborhood analysis in case you want to know which areas have high-income potential.
Mashvisor is the perfect investment property analysis platform for first-time investors who are looking for a neighborhood where they can start their Airbnb. Experienced investors who want to expand their portfolio in other areas would find these features useful as well.
Where Do the Airbnb Data Come From?
Both platforms obtain a majority of their short-term rental data directly from the Airbnb platform, though AirDNA Rentalizer also collects data from VRBO and HomeAway. This means that the analyses you see on both platforms are based on the performance of actual short-term rental properties listed on Airbnb rather than guesswork and approximations.
Where AirDNA Gets Its Data
The data that AirDNA uses comes from public listings on Airbnb, VRBO, and HomeAway. However, their data has not been independently verified, so it is hard to know if the information it presents is truly accurate. The platform also bases its data on the average occupancy and earnings of the local market.
Because the AirDNA Rentalizer looks at the means, you should not take the calculations at face value without doing more research. Otherwise, you might risk losing a significant amount of potential revenue. Many hosts who have used AirDNA think that the projections on the platform tend to be optimistic about the revenues since it did not factor in taxes and other associated costs.
Some hosts recommend hacking methods to get a more accurate analysis. This may be fine in practice, but it might raise some eyebrows since you would want the platform to provide an accurate report when you are paying for it.
However, AirDNA recently added a financial calculator that lets you input your major expenses. So far, there is no new feedback from users about this addition.
Also, the reported ranking data shown on the analysis is strictly based on what AirDNA has seen in that specific local market. Because the AirDNA Rentalizer gives you a broad overview of the local market based on means, it can be dangerous if you took the data at face value and did not dig any deeper. This is due to the information presented getting skewed by top performers.
Where Mashvisor Gets Its Data
Instead of looking at the means, Mashvisor Airbnb Calculator looks at the medians. This is more accurate and reliable since the median number eliminates outliers, which might skew and misinform the analysis.
It also collects data only from verified Airbnb listings that have 3 or more reviews on the platform. This means that we only use the data of Airbnbs that have been rented out on the platform for a long time. Our algorithm ignores properties and Airbnb hosts that are new to the website and are still giving it a try because they have a chance of discontinuing if things do not go well for them.
What Types of Airbnb Analytics Do Investors Get?
When using the AirDNA Rentalizer, you will see the following metrics:
- Annual revenue: This is the total revenue earned in one year. It includes the average price as well as cleaning fees.
- Average daily rate: This is calculated by the annual revenue divided by the number of booked nights in that same year.
- Occupancy rate: This is the total number of booked days divided by the sum of the total booked days and the total available days.
- 12-month demand forecast: This is the projected performance of the property in the next 12 months based on its comps’ performance in the last 12 months.
- Comparable property analysis: This is a summary of the property’s potential performance relative to its competitors.
The AirDNA Rentalizer also displays a score ranging from A to F, with “A” being the best and “F” being the worst. The scoring is based on the following factors:
- Vacation rental supply in the area by property type
- The rental rate for vacation rentals similar to your property
- Average occupancy rates at comparable properties
Each score is on a sliding scale relative to the available listings and average occupancy rates.
What Airbnb Analytics Investors Get From Mashvisor Airbnb Calculator
When you click on a property listing on the Mashvisor platform or enter the address of an off-market property, you will find on the property page our Airbnb calculator. This tool displays the following data:
Like other real estate websites, the property page will display:
- Street address
- Number of bedrooms and bathrooms
- Selling price
- Property type
- Lot size
- Year built
- Number of days on the market
- Listing agent’s contact information
- Tax history
These details are usually the first criteria that you look into when searching for an investment property. Once you find a house that meets the basic features that you want, you can proceed to the next section of the property page, which is all about the Airbnb investment metrics.
Airbnb rental income
Similar to the AirDNA Rentalizer, the Mashvisor Airbnb Calculator estimates the home’s Airbnb rental income based on the daily rate and occupancy rates of comparable properties in the area. It helps you determine how much you could charge as the daily rate. It is also useful for computing your potential profit margins.
Airbnb occupancy rate
Short-term rentals typically face fluctuations in demand depending on the location. Some towns get more tourists during summer or winter, while other cities tend to be popular year-round.
Having the Airbnb occupancy rate data in your desired area will have a huge impact on your revenue. Obviously, the more days you can book in one month, the more revenue it will generate. But even if you cannot find a property with a 100% occupancy rate, there is a chance that the property you wanted would still provide profitability. Including the occupancy rate in the calculator helps you estimate your projected profits and avoid cash flow problems.
When you put your property up for short-term rental, you will encounter costs and fees that will be deducted from your gross income. Mashvisor’s Airbnb calculator will give you estimates on one-time startup costs and running expenses that you likely have to pay for as part of your operations. This will help you plan for them, manage the expenses that you can lower or avoid outright, and determine profitability after deducting these costs.
Even if the calculator has provided numbers for each expense, you can also modify these values if you already know how much you are spending on each category. You can also just play around with the numbers to see how the costs will affect your potential returns as the calculator will reflect the estimated numbers in real-time. You may not be able to do this on the AirDNA Rentalizer.
Airbnb cash flow
As a real estate investor, you are not starting your own Airbnb rental for fun. You are in the business to make money, and hopefully a lot of them. So an ideal scenario for you is to make out of each month with a positive cash flow instead of losing money. Using your projected rental income and costs, the Mashvisor Airbnb Calculator will show you the estimates of your potential cash flow.
Airbnb cash on cash return
If you are planning to finance your purchase with a mortgage, the cash on cash return is an important metric that you need to look into before committing to your purchase. A cash on cash return is the rate of return that calculates the cash income you earned on the cash that you invested in the property. It measures the annual return that you make on the property in relation to the amount of mortgage that you paid during the same year.
This metric calculates only the return for the current period, usually one year, rather than for the lifespan of your investment. You can also use this metric to forecast and set a target for your projected earnings and expenses. You would want a property to have a 2% cash-on-cash return or more.
Airbnb cap rate
Unlike cash on cash return, the cap rate is computed by dividing the net operating income by the property asset value, regardless of whether you paid for it in cash or with a mortgage. You would also want to buy a property with at least a 2% cap rate.
10-year investment payback balance
When you scroll down below the Mashvisor Airbnb Calculator, you will find the 10-year investment payback balance table. This section summarizes the property’s metrics based on the projected income and expenses you typed into the calculator. It provides a detailed breakdown of your expenses and income, with the bottom showing your accumulated earnings.
What is great about this table is that it tells a more complete story about your investment. For example, if you are buying a property using financing, then you might not be in the green until 5 years later. If you want an easier way to visualize your investment or need to pitch the property to your partner or prospective financier, you will have an easier time by showing them this table.
Airbnb rental comps
When you analyze the market, you do not just look at one property. You would also want to see how other homes similar to the one that you are looking at would perform if they are turned into a rental. So if the house that you are looking at does not seem to give you the projections that you want, you can look at the rental comps to find the one that would.
Conclusion: Which Is the Best Tool for Airbnb Investors?
The AirDNA Rentalizer and Mashvisor Airbnb Calculator have certain similarities. They are both analytics tools that predict how much a property would earn if it became an Airbnb rental. However, they also differ in the following ways:
- AirDNA requires you to type in an address, while Mashvisor lets you browse properties that are for sale and off-market anywhere in the US.
- The Rentalizer gets both verified and unverified data from Airbnb, VRBO, and HomeAway. Meanwhile, Mashvisor collects data from verified Airbnb listings with at least three reviews.
- AirDNA looks at the mean numbers and factors them in its calculation, while Mashvisor bases its calculations on the median numbers.
- You will only get a 12-month forecast from AirDNA, but you will get a comprehensive investment payback balance that ranges 10 years with Mashvisor.
Now that you know how both tools work, you should be able to decide on which one to use. If you have determined that Mashvisor has everything you need to start or expand your Airbnb business, you can sign up for a free trial today.