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Vacation rental owners struggle to make sense of their data and don’t know how much revenue they can really generate.
Your property could be missing out on thousands of dollars in potential revenue. And if it’s not being booked as often as possible, that means you’re not making the most money from your investment!
AirDNA’s Rentalizer allows users to see how much revenue they could be generating if their properties were listed on Airbnb, HomeAway and VRBO. The data is based on the average occupancy and earnings of your local market. This tool is available for free using our affiliate link!
It shows what price points are currently working for properties like yours so that you can optimize accordingly. You’ll have an edge over other hosts because the data comes straight from the source.
However, if you take the data at face value without digging deeper, you can set yourself up for a rude awakening, like we did (check out our AirDNA review to see how we used the data to breathe new life into our property).
So in this blog post we’ll cover how the Rentalizer works, as well as some common questions! Also, watch our video review of AirDNA below, where we share our story in more depth:
Table of Contents
Unlock the Secret to Maximizing Your Airbnb Revenue
Is AirDNA owned by Airbnb?
Although the two names are very similar, AirDNA is actually owned by CEO and Founder Scott Shatford and the two companies only share the first part of their name.
AirDNA strives to be the most reliable and complete data source for Airbnb hosts. AirDNA is a cloud-based software company that collects, analyzes, and reports on all of Airbnb’s listings across the globe.
From this information they have built the Rentalizer – an analytics tool meant to help potential Airbnb hosts discover what they might be able to make with their property.
So you might be wondering, if they are two completely different companies then how does AirDNA get its information?
How Accurate Is AirDNA?
Well, the data comes from public listings on Airbnb, VRBO, and Homeaway. So theoretically the information should be pretty accurate.
AirDNA collects and analyzes this information to provide hosts with reports of their rental revenue as well as how they rank against other properties in that specific market segment or city.
However, their data has not been independently verified, so it can be hard to know what the true accuracy is.
Many hosts have commented that AirDNA seems to be a bit optimistic about vacation rental revenues by not factoring in taxes or other associated fees.
Also, the reported ranking data is only based on what AirDNA has seen in that specific market segment or city.
The problem with the Rentalizers accuracy is that it gives you a broad overview on the average of the whole market, which can be dangerous if taken at face value because the information gets skewed by top performers.
However, if you read our review of AirDNA, we concluded that AirDNA was pretty accurate since we found our own occupancy rate within the report.
But that had to be achieved by really digging into the information.
What is an AirDNA score?
Remember the college days, when you sent in your final report and your teacher sends it back with red question marks over it? No? I guess that was just me…
AirDNA’s property score is very similar in that it will assign a grade for a markets potential to rent out your property.
You’ll get a score from A-F, with F being the worst and A being best.
The AirDNA score is based on some very basic metrics like:
- Vacation rental supply (or availability) in that area by listing type
- Rents for vacation rentals similar to yours
- Average occupancy rates at those properties
Each score is on a sliding scale, which is relative to the available listings and average occupancy rates. This makes it a very valuable tool for discovering investment opportunities or monitoring the performance of your rentals.
What is AirDNA’s Rentalizer and How Does It Work for Airbnb Hosts?
The AirDNA Rentalizer has been designed with Airbnb hosts in mind and will help you create an account and rate your property based on what other hosts charge.
Think of it like looking up your cars Kelly Bluebook value, but for rental properties and vacation rentals.
If you’re a professional Airbnb host looking to expand, the tool can be used for determining how much potential revenue an investment property has at the given occupancy rate.
Or let’s say you’re a current host. You can use the tool to see how your property is performing and how you’re stacking up against your competitors.
Why You Should Use The Rentalizer
Truth be told, the Rentalizer is one of the easiest tools in AirDNA’s arsenal and Airbnb hosts should only use it for superficial validation of a short term rental.
Beyond that, it is our opinion that you can actually get yourself into some trouble if you don’t use it properly, which we’ll talk about later in this post.
As mentioned above, the data in the Rentalizer report can often be skewed by top performing properties in the local market, making it seem like your short term rental will enjoy the same occupancy rate at the same prices.
For example, if you live in a destination that has an average nightly rate of $100 per night with an occupancy rate of 50%, but there are a few luxury listings with the same number of beds charging $395 per night and an occupancy rate of 40%, the Rentalizer revenue data will be skewed towards those properties.
This is why it’s important to dig a little deeper before you can determine the true annual revenue.
How Much Does It Cost To Subscribe to AirDNA?
Considering you can get some really great insights into the average daily rate of short term rentals in your area and find out which neighborhoods are the most popular, it can be worth subscribing to AirDNA.
Outside of the Rentalizer, AirDNA is the king of vacation rental data on Airbnb and has many other features and revenue forecasting algorithms.
The Rentalizer service itself is free to use, but if you really want to get valuable data and insights on your property, you’ll need to subscribe.
There are different pricing tiers for AirDNA and the more properties that are included in their database, the higher the price will be. The basic package starts at $19.95/month and goes up from there:
- $19.95/mo For markets with less than 100 active listings
- $39.95/mo For markets with less than 100-1000 active listings
- $99.95/mo For markets with less than 1000+ active listings
What we did for our property was to simply sign up for one month, get the data, and cancel our subscription, so it really isn’t all that expensive.
If you have an Airbnb rental property, it is worth paying to have access to this data and all of these insights about your vacation rental market. At most it’s a hundred bucks and you can avoid some snares with the information you uncover, just like you’d pay for a home inspection before buying a property.
How To Use AirDNA’s Rentalizer:
As we mentioned previously, the Rentalizer can give you data that is potentially skewed by top performing short term rentals in your market.
In order to get the most realistic data, you’ll want to run the Rentalizer with a property type that is a bit smaller than your actual offering.
As an example, if you are renting out an apartment with 3 beds and 2 bathrooms that can accommodate 6 people, simply under report it. To do this, do the following:
- First, use our link and sign up for AirDNA’s free Rentalizer account.
- Next, enter your property address.
- Then make sure you lower the number of bedrooms, bathroom, and accommodations to (1 Bed, 1 Bath, 4 people).
- Finally, select Analyze and you’ll be given the average annual revenue for that market.
If you have an above average property, you can expect to perform at or above this number, sometimes significantly. The idea here is to get a realistic view of the average daily rate and occupancy you can expect.
What is a good occupancy rate for Airbnb?
Speaking of occupancy rates, it is one of the most important metrics for Airbnb hosts. It tells you how desirable your space is to guests and helps set prices that will make them happy.
Think about occupancy rates as a measure of success or failure.
The higher the number, the more people who want to stay in your property. Lower numbers indicate that something needs adjusting, such as your pricing or your offering (which can simply include your pictures and how you present your space).
Of course, everything changed with Covid, but the market is starting to pick back up and the principals remain the same.
A good occupancy rate for an Airbnb rental is 75% and above. It means that three out of every four nights you rent your space, someone stays there.
If you drop below 50%, then it might be time to lower your prices and see how things go. If they don’t pick up after a few weeks, think about making changes in the other areas mentioned above.
AirDNA reports occupancy rates on a sliding scale using top percentiles, and this is what is truly important within your market.
If you have an occupancy rate of 50%, but are performing at the 95% percentile (that is, you’re doing better than 95% of other listings with the same type of property), then you are actually overperforming in your market.
We discovered that the hard way with our 2 bedroom apartment, as explained in our review of AirDNA.
We couldn’t figure out why we were only getting an 18% occupancy rate and saw that we were actually top performers. We also discovered in the data that 1 bedrooms were performing better, so we locked off a bedroom and updated our listing. Magically things immediately improved!
How To Maximize Occupancy and Revenue
Of course, maximizing your annual revenue for your short term rental is a balancing act. You will need to slowly discover how much you can rent out your property and what the market will tolerate, and this can take a long time.
Eventually you will get to a point where your occupancy will go down, but revenue is staying the same or moving up. The goal is to make the most amount of revenue by hosting the fewest people possible, because that means less work.
For example, a property with a 90% occupancy rate at $60 per night doesn’t make as much as a property with a 50% occupancy at $150 per night.
Here’s how to do this:
- Set prices until you achieve an occupancy above 90%
- Increase your daily rates on a monthly basis until occupancy starts to fall. This is your average market value.
- Continue increasing your prices until occupancy hits 70% and look at your numbers.
- Continue raising your price until your occupancy hits 50%. At this point you will be able to determine what your optimized revenue is for that property.
If you want to learn more about optimizing your short term rental, I highly recommend checking out this book on Amazon.
Final Thoughts on The Rentalizer
We hope this article has been helpful in showing you how to use AirDNA’s Rentalizer program.
AirDNA’s Rentalizer is a great tool to use for your business if you know how. We have seen it help businesses discover more realistic goals and maximize revenue, but we also recognize that the program can be harmful when used superficially.
In the meantime, check out our blog for more tips on maximizing your Airbnb revenue!
