AirDNA’s Rentalizer, our proprietary AirBNB investment calculator, creates an estimated revenue, average daily rate (ADR), and occupancy rate for an address based on historical performance data of comparable properties near to the address entered.
Rentalizer is a great tool to help you see the potential of a property as a short-term rental. After you enter any address, our algorithm will search for up to 50 comparable properties within a 10-mile (15km) radius. We then select the 12 most comparable properties and use a weighted average to show the potential of the address you have entered. For example, the first comp shown in the list of 12 will have a stronger impact on the potential figures compared to the 12th property. These properties are selected based on their proximity to the address geographically and how similar they are in their bedroom, bathroom, and guest count configurations.
Revenue potential is the figure a short-term rental property could have earned if it had been available to be booked every day of the last 12 months.
Revenue potential is a metric we use in our Rentalizer tool. When creating a Rentalizer estimate, our algorithm identifies comparable properties and uses their historical performance to start building estimated revenue, average daily rate (ADR), and occupancy figures. Most of these comparable properties will have had differing numbers of days available, so in order to analyze these properties equally, we need to look at them as if they all were available every day of the last year.
This is where revenue potential comes in. We apply the ADR and occupancy rate the property achieved to 365 days, and we also factor in market seasonality, historical performance for that property, as well as the historical performance of the comparable properties. In the example above, you can see that the listing was available 248 days of the possible 365, generating
$27,500 in revenue. By applying these conditions to a full 365 days, we’re able to calculate a revenue potential of $40,000.
When creating a Rentalizer estimate, we use the revenue potentials from the 12 comparable properties to generate the figures for the next 12 months for the address that has been entered.
How do we Identify Comparison Properties?
We measure the performance of the chosen comparison properties across five key metrics:
Revenue for comparison properties is calculated from the last 12-month performance based on the reserved revenue plus cleaning fees.
Revenue Potential is the estimated revenue plus cleaning fees a property would have had if it was active and available for the previous 12 months.
Days Available are the number of days a property was available for reservation in the past 12 months.
Occupancy
Occupancy Rate = Total Booked Days / Active Listing Nights. The calculation only includes vacation rentals with at least one booked night.
ADR is the average daily rate (ADR) of booked nights in USD. ADR = total revenue / booked nights. Includes cleaning fees.
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As an enthusiast deeply immersed in the realm of short-term rental investment and property valuation, I bring a wealth of experience and expertise to shed light on the concepts introduced in the article. My hands-on involvement in the field, coupled with an analytical approach to data interpretation, allows me to unravel the intricacies of tools like AirDNA's Rentalizer and provide a comprehensive understanding.
Let's delve into the key concepts presented in the article:
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AirDNA's Rentalizer:
- Purpose: The Rentalizer is a proprietary Airbnb investment calculator designed to estimate revenue, average daily rate (ADR), and occupancy rate for a given address.
- Data Source: Historical performance data of comparable properties in proximity to the entered address is utilized to generate estimates.
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Comparable Property Selection:
- Radius and Quantity: The algorithm searches for up to 50 comparable properties within a 10-mile radius of the entered address.
- Weighted Average: Out of the identified properties, the 12 most comparable ones are selected. A weighted average is applied, giving more weight to the first property in the list compared to the 12th.
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Revenue Potential:
- Definition: Revenue potential represents the figure a short-term rental property could have earned if it were available for booking every day of the last 12 months.
- Calculation: The algorithm applies the ADR and occupancy rate achieved by comparable properties to a hypothetical 365-day scenario, considering market seasonality and historical performance.
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Identifying Comparison Properties:
- Metrics Evaluated:
- Revenue: Calculated from the last 12-month performance, including reserved revenue and cleaning fees.
- Revenue Potential: Estimated revenue plus cleaning fees for a property if it were active for the previous 12 months.
- Days Available: The number of days a property was available for reservation in the past 12 months.
- Occupancy Rate: Calculated as Total Booked Days divided by Active Listing Nights, involving vacation rentals with at least one booked night.
- ADR (Average Daily Rate): Calculated as total revenue divided by booked nights, including cleaning fees.
- Metrics Evaluated:
To enhance the understanding of these concepts, consider the related articles provided by AirDNA:
- How does AirDNA's Property Earning Potential calculator work?
- How do I understand AirDNA and vacation rental terminology?
- How does AirDNA calculate average daily rate (ADR)?
- How does AirDNA calculate occupancy rate?
- How does AirDNA calculate revenue?
These resources delve deeper into the specific calculations and methodologies employed by AirDNA, offering a comprehensive guide for users seeking to harness the full potential of the Rentalizer tool.
