Author: Jae Seok An

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What is a good cap rate for Airbnb? Definition and Tips.

Post author By Jae Seok An
Post date May 31, 2024

What is a good cap rate for Airbnb?
Definition and Tips

last updated on May 31, 2024

Cap rate is useful when it comes to evaluating investment properties. Cap rate tells you how lucrative an investment property is.

Cap rate = “net operating income” / “current property value”

Notice that this doesn’t take total investment into account, but current property value. It’s not the metrics to understand the ROI of real estate investment against stocks or other forms of investments. If that is what you want to know, you need to use “cash on cash return” or “net rental yield”, and see if it’s worth buying an investment property or buying an index fund.

However, it is the metric to use to compare between other similar rental properties. This shows how good the expected return is compared to the market value of the property.

Another use case is comparing the average cap rates of different markets to understand which market has high property prices or low rental income on average. This can be an indicator of the affordability of renting in the market.

🤔 What is a good cap rate for Airbnb?

20%+ is a high cap rate for a short-term rental property. For a property valued at $500,000, if the monthly net income is above $4,200, you can say this property gives a solid return. A typical cap rate is 7-15% for a short-term rental property. This is typically twice higher than long-term rental, and 1.5 times higher than multi-family rental.

Know that a high cap rate is not always good. Often, a low cap rate could be an indicator of high property appreciation potential. The low cap rate is caused by high property prices, and it is because people are buying and holding at high prices, believing the property will appreciate further.

🔢 How to calculate cap rate for Airbnb?

for example, if:

Property Market Value: $800,000

Occupancy rate: 70%
Average daily rate: $500
Yearly revenue: $127,750 = $500*365*0.7 (Excluding cleaning fees)

Total Operating Expense: $30,000 (Excluding cleaning fees)
Total Operating Income = $97,750 ($127750-$30000)

Cap Rate = 12.2% ($97,750/$800,000)

Try Airbnb Occupancy Rate Tool

📝 3 tips to find high cap rate investment properties?

Find a location with high tourism demand. The short-term rental cap rate depends on the short-term rental occupancy rate. In a market, there are areas that are particularly preferred by tourists over locals. A common example is the downtown area or beachfront properties. Residents don’t like living in high-traffic and crowded areas due to security, and privacy, among many other reasons, but for tourists, they want to see more locations and go out more frequently during their short stay. The same goes for beachfront properties. People are willing to pay an absurdly high fee to stay in a beachfront property for a few nights. This is a cool experience that they can only have once in a while.

You can use Airbtics to see the short-term rental occupancy rate of different neighborhoods.

Try Airbnb Occupancy Rate Tool

Find the market with affordable housing. Cities like New York City and San Francisco suffer from housing shortages and high property prices. It is not a surprise that Airbnb is highly restricted in those two markets. Just like that, many big cities with housing problems aren’t good places to invest in short-term rental property. Start in a city or a town where housing for locals isn’t a big issue.

Increase occupancy rate. 95% is a typical occupancy rate for long-term rentals. However, for short-term rental, it is around 50-70%. Luckily, there are many ways to improve the occupancy rate. Here are some ways.

Add desirable amenities (e.g. hot-tub, heated pool, pet-friendly, kids-friendly, etc)
Get good reviews
Last-minute or early-bird discount pricing
Build your short-term rental brand on Instagram
Get repeat guests by offering them a discount

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Short-Term Rental Insurance – Is it worth it?

Post author By Jae Seok An
Post date May 27, 2024

Short-Term Rental Insurance
Is it worth it?

last updated on May 27, 2024

Buying a short-term rental property can be a lucrative option, as it gives you the benefit of owning a residential property with a high return, just like running a business. What stops most people from starting an Airbnb hosting business is the “what ifs.” What if guests fire my home? What if guests don’t leave the property? There are many other ifs.

Don’t worry! Just like running any other business, there are ways for you to protect yourself from a huge liability in the worst-case scenario. Yes, short-term Rental insurance is more expensive than traditional property insurance. Roughly 30-60% more expensive. However, it provides much better coverage for short-term rental-specific liability issues.

🏡 Short-term rental insurance vs traditional property insurance

If your home is often shared by guests, there is a good chance any claims you make to your traditional property insurance company will be rejected. That’s the primary reason you should consider STR insurance if you are doing this. Next, the two most important aspects the STR insurance will cover are guest liability and home damage.

Guest liability: Consider this case: your guest stayed at your home, fell down a staircase, and sued you. This won’t be covered by traditional insurance but Airbnb insurance will do.

Home Damage: Unpredictable events like natural disasters and fires will be covered by Airbnb insurance as well.

Other than these, some providers will cover various issues, such as squatters, business revenue, pest infestation, and so on.

⚖️ Which insurance do you recommend?

If you already have property insurance and like it, call them first. There is a good chance that they also have STR insurance and will upgrade your plan to cover guest liability and other STR-specific issues. Here are some insurance that’s often used by hosts we are working with.

Proper Insurance
Their main business focus is short-term rental insurance, which makes them stand out among others. They even have a special program for “rental arbitrage business owners,” which shows their willingness to work with short-term rental-specific cases.
Safely
Is another short-term rental focus insurance company. They have covered over $60 billion worth of liability since 2015.
USAA
CBIZ

📈Are you starting an Airbnb hosting?

Find out how much you can make on Airbnb with our free Airbnb calculator.

Airbnb Calculator

Instantly see your Airbnb’s estimated revenue with the leading Airbnb profit calculator in the short-term rental industry. Discover your Airbnb earnings potential.

Get Your Free Airbnb Hosting Template

Read a beginner’s guide to Airbnb Arbitrage

Read how To Protect Your Airbnb Property

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Best Cash on Cash Return Investments: Why Airbnb Tops the List

Post author By Jae Seok An
Post date May 20, 2024

Best Cash on Cash Return Investments
Why Airbnb Tops the List

last updated on May 20, 2024

Key Takeaways

The average real return on global houses from 1870 to 2015 was 7.05% compared to 6.89% for equities. The return includes home value appreciation and rental income.
Among the many rental options, short-term rental gives the highest average return with flexibility. However, it’s high risk and requires more managing.

I was a software developer in London, and whenever we had tea, our favorite conversation was about how we could “graduate” from the company by investing well. This pursuit led me to explore various investment opportunities, and Airbnb properties consistently stood out as one of the most promising avenues.

In the world of real estate, investors are constantly seeking the best cash on cash return investments. Among the various options available, Airbnb has emerged as a standout choice for many savvy investors. This article delves into why Airbnb properties offer some of the best cash on cash return investments and how you can maximize your earnings through this platform.

Typical Real Estate Investing Strategies

These are the typical real estate investing strategies:

BRRRR (Buy, Rehab, Rent, Refinance, Repeat)
Buy and flip: Quick profit
Buy and hold: Proven to work
Long-term rental: Easiest to manage
Mid-term rental: Higher return than long-term rental, with minimal managing
Multifamily: Higher return than long term rental, with minimal managing
Short-term rental: Highest cash on cash return
Wholesaling

What is Cash on Cash Return

This number tells you how much of your initial investment you will get back in the first year.

The formula is:

Cash on Cash Return = Annual Pre – Tax Cash FlowTotal Cash Invested

Cash on Cash Return = Total Cash Invested Annual Pre – Tax Cash Flow

Where:

APTCF = (GSR + OI) – (V + OE + AMP)
GSR = Gross scheduled rent
OI = Other income
V = Vacancy
OE = Operating expenses
AMP = Annual mortgage payments

Why Real Estate Investing?

Housing has been the best-performing asset class in history according to research tracking various assets over 145 years. Better than stocks. This was documented going back to 1870 in a 2017 paper from the Federal Reserve Bank of San Francisco titled The Rate of Return on Everything, 1870-2015. The average real return on global housing from 1870 to 2015 was 7.05% compared to 6.89% for equities. The housing return also came with a substantially lower standard deviation – meaning less risk. Then, let’s see why “Airbnb” is the best if you want to get the highest return.

Why Airbnb Properties Offer the Best Cash on Cash Return Investments

Higher Rental Income Potential
Airbnb properties typically generate higher rental income compared to traditional long-term rentals. Short-term rental rates are often significantly higher on a nightly basis, allowing property owners to command premium prices during peak seasons or events. This increased income can significantly boost the cash on cash return.
Pro tip! Use Airbtics to estimate how much you can earn by doing an Airbnb.
Flexibility in Using Own Property
One good reason to opt for short-term rentals is if you want to use the property occasionally. For instance, I bought a property in London because I want to visit every summer. If I rented it out on a long-term lease, I would have to spend most of my rental income on hotel stays or Airbnb accommodations during my 2-3 month visits to London.
Tax Benefits
Investing in Airbnb properties can come with attractive tax benefits. Expenses related to the property, such as maintenance, cleaning, and property management fees, can often be deducted from rental income, reducing the overall tax burden and improving the net cash flow. Additionally, depreciation deductions can further enhance the cash on cash return.

How to Maximize Your Cash on Cash Return with Airbnb

Choose the Right Location
The location of your Airbnb property is crucial. Before starting, use market intelligence software like Airbtics to see how much your property can earn on Airbnb.
Optimize Your Listing
An appealing and well-optimized Airbnb listing can attract more guests and command higher rates. Invest in professional photography, write compelling descriptions, and ensure your property stands out with unique features or amenities.
Maintain High Standards
Guest reviews play a critical role in the success of an Airbnb property. Providing excellent customer service, maintaining a clean and well-maintained property, and responding promptly to guest inquiries can lead to positive reviews and repeat bookings, enhancing your cash on cash return.
Utilize a Cash on Cash Return Calculator
Using a cash on cash return calculator can help you accurately estimate the potential return on your Airbnb investment. These tools take into account various factors such as rental income, expenses, and financing costs to provide a clear picture of your investment’s profitability.

Airbnb Calculator

Instantly see your Airbnb’s estimated revenue with the leading Airbnb profit calculator in the short-term rental industry. Discover your Airbnb earnings potential.

🏆What is a Good Cash on Cash Return?

50% is a realistic number that you can aim for.

Many short-term rental investors aim to recoup their initial investment within 18-24 months. Here’s how the numbers typically look:

Investors achieve around a 20% net rental yield. While this is a high figure, it’s attainable through high occupancy rates, premium daily rates, and special amenities like hot tubs, coupled with professional photos and top-notch listings.

For example, if an investor spends $500k to buy a property with a 20% downpayment ($100k) and an additional $50k for furnishing, the total initial investment would be $150k. With a 20% net rental yield, the first-year profit would be $30k. This setup would allow the investor to recover their initial investment in about 18 months, resulting in a cash on cash return rate of approximately 60%.

Conclusion

When it comes to the best cash on cash return investments, Airbnb properties stand out for their potential to generate high rental income, flexibility in pricing, and lower vacancy rates. By strategically investing in the right location, optimizing your listing, and maintaining high standards, you can maximize your cash on cash return and achieve significant profitability with Airbnb. professionally, understanding these dynamics is key.

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How lucrative is Airbnb? Here’s What You Need to Know in 2024

Post author By Jae Seok An
Post date May 16, 2024

How Lucrative is Airbnb?
Here's What You Need to Know in 2024

last updated on May 15, 2024

📝 Key Takeaways

Interest Rates: Shop around for the best rates. A small difference can save you a lot of money in the long run.
Average Income: The average income for a 2-bedroom property is $X. See below for the average income per continent and country.
Higher Earnings: Short-term rental hosts can make up to 3.5 times more than long-term rental landlords in profitable markets.
Growth: Airbnb’s Q1 2024 report shows a 15% year-over-year increase in supply, indicating ongoing profitability for hosts.
Starting Without Capital: You can start an Airbnb business without money through rental arbitrage.

I‘m an Airbnb host since 2015. I’ve interviewed over 100 Airbnb hosts as the host of “Into the Airbnb” podcast. I’ve talked to various type of hosts who made money from Airbnb.

✍️ Here are a few types

Youthful Entrepreneurs: Many have scaled their rental arbitrage businesses rapidly, especially during the pandemic, achieving high six-figure incomes annually.
Seasoned Superhosts: Older hosts with a passion for hospitality often receive stellar reviews and repeat guests, resulting in consistent high earnings.
Pro Property Managers: These hosts run their businesses professionally, forming LLCs and leveraging systems for efficiency, often outperforming larger companies.

🎯 How They Make Money

Case 1: Pandemic Entrepreneurs: One entrepreneur scaled his business quickly during the pandemic, capitalizing on the surge in short-term rental demand. He achieved high six-figure annual incomes by renting multiple properties and subletting them on Airbnb.
Case 2: Passionate Superhosts: Hosts who genuinely enjoy hosting tend to receive numerous 5-star reviews. Their attention to detail and local knowledge ensure guests have memorable experiences, driving high occupancy rates and profits.
Case 3: Business-Savvy Property Managers: These hosts use automation tools and virtual assistants to streamline operations, from guest communications to cleaning. They maintain high standards and guest satisfaction. They have great local connections and hands-on, often yielding higher profits than larger property management firms.

Guests systematically, and improve based on that. It’s hard for big companies like Vacassa to do better than them because these property managers are more hands-on. When bad problems happen to guests, they are there.

These are the anomalies. How about the average hosts? How much are they making in each countries? Let’s find out!

Average Annual Airbnb Revenue in US: $36,678 (USD)

Profitable Markets for Airbnb in US

Average Annual Airbnb Revenue in UK: $30,970 (USD)

Profitable Markets for Airbnb in UK

Average Annual Airbnb Revenue in Europe: $32,590 (USD)

Profitable Markets for Airbnb in Europe

Average Annual Airbnb Revenue in Australia: $40,575 (USD)

Profitable Markets for Airbnb in Australia

Average Annual Airbnb Revenue in Latin America: $10,850 (USD)

Profitable Markets for Airbnb in Latin America

Average Annual Airbnb Revenue in Canada: $26,000 (USD)

Profitable Markets for Airbnb in Canada

Case study: Long-term rental vs Short-term rental in Chicago

Chicago is one city that’s not particularly known as a vacation destination. That’s why we chose this area as an example: to show you more objective comparison of long-term rental vs short-term rental.

In the past five years, Chicago’s average property price has increased by 5.7% annually. The population grew by 0.2% only between 2017 and 2022, which is quite slow. However, average income increased more than the national average.

There are 1,932 active Airbnb listings, and an average 2-bedroom in Chicago makes $38,700 per year. That is $3,225 per month. After considering expenses, a host income will be around $2,700 per month. According to Apartments.com an average 2-bedroom long-term rental makes $2,323 per month, which gives roughly $2,000 per month to the home owner. The difference is about 35%. Not so impressive! But, with the short-term rentals, you can do better. So, I checked the listings with more than 30 reviews and above 4.5 stars. Those hosts earn $3,596 per month, and about $3,000 per month in profit. That is 50% more income than long-term rentals.

Airbnb Market Trends

Airbnb as a platform is doing well. According to the letter to the shareholder in 2024 Q1 – There are 11% more listings in Airbnb in 2024 compared to 2023. Still, their gross booking value (GBV) has increased 12% year over year (2023 vs 2024). This means that a typical listing made similar amount (or slightly more) this year than less year.

In our own analysis, there are mixed signals. There are some markets that are getting overly saturated but there are emerging markets where demand is growing. Take a visit on our platform to see if your market is getting too saturated or not. You can see this by checking the occupancy rate trends.

Conclusion

Airbnb can be highly lucrative, but success depends on the market, hosting style, and timing. Whether you’re considering rental arbitrage, becoming a superhost, or managing properties professionally, understanding these dynamics is key.

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Top 7 Airbnb Loans & How to finance short-term rentals

Post author By Jae Seok An
Post date May 16, 2024

Top 7 Airbnb Loans & How to Finance
Short-term Rentals

last updated on May 15, 2024

Buying a short-term rental property can be a rock-solid investment. You get the stability of
owning a home, one of the most reliable asset classes, plus the chance to make a profit by essentially running a small business. It’s the best of both worlds!

Most folks use traditional mortgages to buy properties they plan to list on Airbnb, and this works just fine as long as you stick to local short-term rental regulations. However, there are some good reasons to look into short-term rental financing instead.

🎯 Here are a few:

Higher Loan Amounts: Lenders who focus on short-term rentals understand the earning potential of these properties and may offer bigger loans based on expected rental income.
Faster Approval and Funding: These lenders often have quicker approval processes, which means you get your money faster.
Industry Knowledge and Better Support: Specialized lenders know the short-term rental market well and can offer valuable advice and support.
Projected Rental Income Consideration: These loans take your potential rental income into account, which can help you qualify for a larger loan.

✍️ Ready to explore your options? Here’s a list of some top short-term rental loan providers:

Top 7 Airbnb Financing Providers

Visio Lending
Visio Lending is a go-to for many Airbnb hosts. They offer loans tailored for rental properties with competitive rates and flexible terms.
Google Review: 4.1 (137)
Host Financial
Host Financial specializes in vacation rental financing. They understand the unique needs of short-term rental investors and offer loan products that fit those needs perfectly.
LendingOne
LendingOne offers loans for real estate investors, including those buying short-term rentals. Their process is smooth and they fund quickly.
Google Review: 3.9 (70)
Kiavi (formerly LendingHome)
Kiavi provides competitive rates and flexible terms for property investors, including those focusing on short-term rentals.
Google Review: 4.1 (306)
Better Mortgage
Better Mortgage has a straightforward online application, competitive rates, and clear terms. They cater to various real estate investors, including those financing short-term rental properties.
Easy Street Capitals
Easy Street Capitals is a boutique investment firm specializing in personalized wealth management solutions for high-net-worth individuals and families.
Google Review: 4.17(177)
KRAM capital
Google Review: 3.0(2)

✍️ Did you know that Airbtics works with certain lenders to help them project short-term rental revenue? Try out our Airbnb Calculator to see how much a property would earn!

Airbnb Calculator

Instantly see your Airbnb’s estimated revenue with the leading Airbnb profit calculator in the short-term rental industry. Discover your Airbnb earnings potential.

🎯 5 Important Considerations

Interest Rates: Shop around for the best rates. A small difference can save you a lot of money in the long run.
Loan Terms: Check the length of the loan and the repayment schedule. Make sure it fits your financial plans and rental income.
Fees and Costs: Be aware of any additional fees, such as origination fees, appraisal fees, and closing costs.
Customer Support: Good customer service is crucial. Choose a lender known for being helpful and responsive.
Approval Time: If you need to act fast in a competitive market, consider the approval time.

Conclusion

Investing in a short-term rental property can be a smart move, especially if you pick the right loan. Specialized short-term rental loans can give you the flexibility, support, and higher loan amounts you need to succeed.

Airbnb Investment All About Airbnb

3 different types of Airbnb APIs and how you can get them?

Post author By Jae Seok An
Post date August 3, 2023

Accurate Revenue Estimates with Our
Airbnb API – Start Today!

last updated on July 3rd, 2024

Are you looking for an effective way to estimate short-term rental revenue? You’re in the right place. Our Airbnb API, also known as the Airbnb Revenue Estimation API or Airbnb Calculator API, provides accurate and reliable data to help you find out your potential rental income.

*If you want to manage Airbnb hosting page programmatically, you need to contact Airbnb for an official partnership, or you can use the unofficial APIs found on Github.

What is Airbnb Revenue Estimation API?

The Airbnb Revenue Estimation API answers a crucial question: ‘How much can a property earn as a short-term rental?’ This powerful tool provides estimates based on several input parameters.

Example:

Input

Coordinates

(43.2621, -13.4832)

Bedrooms

Bathrooms

Pool

Yes

Hot Tub

Number of Comparables

Radius Used

5 km

Output

Yearly Revenue

$14,520

Average Occupancy Rate

54%

Average Daily Rate

$356

See Full Documentation

How do you get the data?

Airbtics’ primary data source is attained through a web scraping software that directly takes data points from Airbnb. We also have secondary data sources from Airbnb hosts via iCal or vacation rental managers.

How accurate is the data?

Airbtics is dedicated to providing the most accurate data available in the market. Through the application of data science and machine learning algorithms, we train our various classifiers to consistently improve our data’s accuracy.

In addition to this, we make predictions based on Airbnb’s total revenue and it is 97% correlated with Airbnb’s official statement. Read more about our data accuracy in this blog.

How do I get started?

Review Our Documentation: Ensure you understand the API capabilities and integration.
Test the Data Accuracy: Use our Airbnb calculator to see the API in action.
Subscribe to Our API: Start with our standard plan at $99/month.
Custom plan: For larger plans or custom solutions, contact us at [email protected]. A minimum commitment of $750/month is required.”

Tags Airbnb Investments

All About Airbnb Hosting Tips

3 Things to look for when choosing the best Airbnb dynamic pricing tool

Post author By Jae Seok An
Post date January 10, 2022

Table of Contents

Add a header to begin generating the table of contents

Dynamic pricing tools adjust your pricing depending on market demands to maximize rental revenue. Airbnb already offers this with their Airbnb Smart Pricing. But while many Airbnb hosts tried Airbnb Smart Pricing, they quickly realize the tool set their prices too low. It’s no wonder that many avid Airbnb hosts rely on third-party dynamic pricing tools to meet their needs.

A well-designed dynamic pricing software should give you the flexibility to set custom pricing rules based on the market supply and demand data they have. It should allow you to transparently see the market data they are basing their pricing recommendations on, and it should be adjustable if you don’t agree with them. Other important things to consider are whether they support your market and your PMS if you use one.

The six dynamic pricing tools currently in the market are:

Airbtics Bright Pricing
AirDNA Smart Rates
Beyond
DPGO
PriceLabs
WheelHouse

Here’s a quick rundown of these tools

Airbtics Bright Pricing offers highly customizable pricing settings and covers all markets in the world.

AirDNA is a market intelligence software with a pricing recommendation feature covering all markets globally.

Beyond Pricing is a San Francisco-based dynamic pricing tool founded in 2014 – it offers integration with over 50 PMS and their product is suitable for professional vacation rental managers.

DPGO is a relatively new software offering highly customizable pricing settings with an intuitive user interface.

PriceLabs employees are based in India and Chicago – it offers integration with over 50 PMS and their product is intuitive and easy to use.

WheelHouse is another San Francisco VC-funded company offering experimental features and is built by PhD holders.

Custom Pricing Rules

Top Recommendations: Airbtics Bright Pricing, DPGO

Runner up: PriceLabs

Both Airbtics Bright Pricing and DPOG are relatively new software, yet they offer the most amount of flexibility on top of their pricing algorithms. If you don’t completely trust the AI recommended rates, this is a crucial feature.

Last-minute discount

There’s no doubt that you need to lower nightly rates as it gets closer to the date. Yet, when and how much to give a discount is depending on your market and guest type. For instance, if you are running a hotel in a busy street, you may not need to lower the price until the evening of that day as the majority of your booking may happen during that time. However, if your vacation cabin is located in a mountain with a low population density, most people will book well in advance. When to start lowering the price and how aggressively you’d like to give a discount should be at least configurable.

If you’d like to fine-tune your last-minute discount, we recommend you to use DPGO or Airbtics Bright Pricing.

Day of the week or seasonality

It’s not a secret that weekend pricing is higher than weekday pricing, yet depending on many factors, the day-of-the-week pricing needs to be adjusted. Typically, in a market that heavily relies on vacation tourists, weekday occupancy rates will be significantly lower than the weekend, and you may want to set pricing aggressively during the weekday and conservatively for the weekend. For the same reason, you may want to play different pricing strategies in different seasons.

These are common features offered by all dynamic pricing providers.

Competitor based pricing

Being able to set a custom pricing rule based on competitors is what an ultimate dynamic pricing software should look like, even better if they show the competitor lists and allow you to edit them. This is what we are developing at Airbtics currently, but PriceLabs provides something similar. It allows you to set a rule to drop or increase prices if the market’s occupancy rates hit certain thresholds.

PMS connectivity

Top recommendations: Beyond, PriceLabs, Wheelhouse

Runner ups: DPGO

The first three tools started their service in 2014, hence they support various PMS like Guesty, Lodgify, and so on. AirDNA and Airbtics only support connecting with your Airbnb – AirDNA changes pricing to iCAL and Airbtics directly changes on Airbnb.

Market coverage

Top recommendations: Airbtics, AirDNA

Runner ups: DPGO, PriceLabs

According to our analysis, Beyond and Wheelhouse only cover major cities. When our analysts tried using it for less known locations, we got the notifications that the markets are not available. DPGO and PriceLabs cover the markets we tested. Both Airbtics and AirDNA, being market intelligence software, cover worldwide markets regardless of the location.

Summary

There’s no evidence that a specific software will increase the highest amount of revenue, but we’ve tried our best to address important points you need to consider when it comes to choosing a smart pricing tool.

All the solutions (apart from AirDNA) give you a free trial. Should you try them all out, you’ll have five months to find out which one is the best for you.

But if you want to save time switching and learning new tools, you should take a look at 1) whether they support all of your listings 2) whether they have integration with your PMS and 3) whether they allow you to override your current pricing strategy on top of their software.

Tags Hosting Tips

Alternatives & Reviews

Wheelhouse Pricing In-depth Review: A VC-funded vacation rental technology, is it any good?

Post author By Jae Seok An
Post date December 30, 2021

Wheelhouse and why am I eligible to give a review

Wheelhouse Pricing was founded in 2014 by Andrew Kitchell, a co-founder of Beyond Pricing, which is another similar Airbnb dynamic pricing tool. As a tech-savvy Airbnb host, I have tried out all the dynamic pricing solutions available in the market.

This short blog will show you some customer reviews of Wheelhouse and my technical review on this pricing tool as well. A list of good alternatives will be at the bottom as well.

A side note: I tried it out for a couple of months for my rentals in London and Sokcho (Korea). Even though Wheelhouse was built by an ex-CEO of Beyond Pricing, I prefer Wheelhouse slightly more, and I will explain this in the blog.

Product Features

Dynamic Price: Ease of use?

To get started, you need to set Base Price, and you are given three pre-defined choices, which are powered by the Wheelhouse Pricing algorithm.

Once you select the pricing strategy choice, you can start pushing the pricing suggestions to your listings.

Custom Price Settings

It’s a critical feature and usually, it is the deciding factor of choosing the right short-term rental dynamic pricing tool, since every markets and listing have unique demands and customers patterns.

You can further improve Wheelhouse’s pre-defined pricing strategy within the following parameters

Minimum and maximum prices based on day of the week and specific range of dates
Weekend pricing
Seasonal pricing
Long-term discount
Last-minute discount
Far Future premium

Wheelhouse gives plenty of options for you to customize pricing strategies based on their template. Being able to give a further premium for weekend pricing is a handy feature because many vacation rentals are only filled during the weekend but not during the weekday. You may set your base price relatively low for the weekdays and set more competitive rates for weekends to optimize your pricing. This exact feature is why I prefer Wheelhouse over Beyond Pricing.

Market Insights

One interesting market data they are showing is their market pricing recommendations. They have three different models 1) Recommended 2) Reactive and 3) Predictive. However, as a non-professional Airbnb host, I barely understand them and know what models will give me more bookings. I don’t want to test out their three different models as I simply want to increase revenue and get more bookings today!

Competitive Sets

It’s an analytics dashboard showing the stats of your competitors.

The following data is available

Key Metrics, such as average occupancy rate, nightly rate, and booking lead time
Competitor’s daily rates over next 365 days

Booking lead time is a useful data point to know, as well as the ability to edit the pre-made CompSet. However, unlike Bright Pricing, it doesn’t show the breakdown of key metrics. For example, Bright Pricing shows a breakdown of key metrics in more granular form, such as next 7 days, 14 days, 21 days, or in percentile.

Pricing

The cost of using Wheelhouse Pricing is 1% of revenue or $20/mo per listing.

How does it compare with others?

PriceLabs: $20 or $10 / month

Bright Pricing: 0.5% of revenue

DPGO: 0.5% of revenue

Beyond Pricing: 1% of revenue

Existing Customer’s Wheelhouse Review

1. Trustpilot

2. G2

3. Capterra

Wheelshouse Contact & Support - Click to Expand

One Embarcadero Center, Unit 26859

San Francisco, CA, USA 94126

Email Address: [email protected]

Conclusion

As someone who managed up to 10 listings at a time as an individual part-time Airbnb host, I liked Wheelhoue’s customized rule options. Their Competitive Sets dashboard stood out amongst their competitors. There market future pricing graphs are interesting but not sure whether a non-professional Airbnb host can leverage it correctly.

In 2022, there are more new dynamic pricing tools out there. I’d like to introduce you to Bright Pricing – it’s built by software engineers and the pricing engine is based on Airbtics’ 2 billion short-term rental nightly rates data. Bright Pricing has some advantages over Wheelhouse. 1) it’s four times cheaper 2) you can adjust your competitors 3) the market dashboard is fantastic 4) and it supports all locations in the world.

PriceLabs in-depth technical reviews – (From software developer & Airbnb host perspective)

Tags Alternatives

Alternatives & Reviews

Beyond Pricing In-depth review: Still useful in 2022?

Post author By Jae Seok An
Post date December 30, 2021

Why am I eligible to give a Beyond Pricing Review?

When Beyond Pricing (now just called Beyond) was launched back in 2014, it drew a lot of Airbnb Hosts’ attention. It is one of the three dynamic pricing tools out there at that time. They are based in San Francisco and have secured Series-A funding.

I also tried out Beyond for a couple of months for my rentals in London and Sokcho (Korea).

Sadly, it didn’t support listings in Sokcho! They cover most of the markets in the US but they are missing many less-known vacation destinations in the rest of the world. Regardless, I connected my UK listings with Beyond and my first impression of their user interface was delightful! Well, I will also tell you about my last impression later in this blog.

I’ll try my best to show as many reviews of existing customers and their overall thoughts on Beyond. Also, I’ll list down all the features to help you get started. A list of good alternatives will be at the bottom as well that have recently been providing more accurate data and great service.

What Is Beyond?

Beyond is a dynamic pricing tool with a market insight dashboard and a direct website builder (Known as Signal). They use their proprietary AI algorithm to determine the right pricing for your short-term rentals and update your pricing automatically. Just like Uber’s surge pricing, if your market demand changes rapidly, the Beyond Pricing engine will adjust your pricing accordingly. It can be useful for both professional and casual Airbnb hosts.

For casual Airbnb hosts, you are not likely to have in-depth market knowledge, so this specialized tool will set better pricing for your rental so that you make more money. The best thing is it only takes a few minutes to set up, so compared to your time-invested, it has a good ROI. (E.g. You only need to spend 25 minutes to set dynamic pricing and it can give you 1 additional booking/mo)

For professional hosts, you will have to override their pricing rules frequently since you have your data and system, but it can sometimes catch events that your company didn’t know. It will be a good addition to further optimize your pricing.

Product Features

Dynamic Price: Ease of use?

To get started, you need to set “Base Price” and “Minimum Price”, which are also calculated by the Beyond pricing algorithm.

The biggest bummer to me was that they don’t help me figure out the right base price. It suggests a base price but I have no idea how they came up with that number and there isn’t any further information for me to verify it. Other dynamic pricing tools typically show this information and allow you to adjust them. Furthermore, I found this tool a little bit difficult to navigate around because of many less important features, such as stats, filters, and health, and their in-app ads for a referral program.

Custom Price Settings

You can further implement your own pricing rules, such as below:

Last-minute
Seasonal minimum and maximum prices
Reservation Gap Adjustments (Aka Pricing rule for orphan days)

I agree on the importance of last-minute pricing. I also thought this reservation gap adjustment is not only a cool idea but they made it super easy to set custom rules for it. However, they don’t have custom pricing settings for the day of the week or market occupancy based.

If your market or listing has different demands for specific days of the week, Beyond Pricing may not be the perfect tool. But if you are a professional revenue manager who has set all the prices, but looking to squeeze out the last few more bookings from orphan days, this tool will save your life!

Market Data

Their insights dashboard shows two main things:

Competitor’s next 30 and 90 days occupancy rates
Competitor’s next 30 and 90 days daily rates
Past year occupancy rates (only market-level data)

I’d say their market data is basic. I’d wish to see booking lead time, next 7 days or 250 days occupancy rates, or real-time bookings in the market, it would be a lot more useful.

Signal

It’s a direct booking website builder. This is an interesting but questionable feature. It is interesting because this definitely can help some Airbnb hosts to get more bookings. It will bring more traffic to your listings which will lead to more bookings. Sadly, I had to request a demo to see how this works, and I couldn’t bother to do that.

Pricing

The cost of using Beyond Pricing is 1% of bookings.

How does it compare with others?

PriceLabs: $20 or $10 / month

Bright Pricing: 0.5% of bookings

DPGO: 0.5% of bookings

Wheelhouse: 1% of bookings

Existing Customer’s Beyond Review

1. GetApp

2. G2

3. Capterra

Beyond Contact & Support - Click to Expand

425 2nd St, Suite 602, San Francisco, California 94107, US

Email Address: [email protected]

Conclusion

As someone who managed up to 10 listings at a time as an individual part-time Airbnb host. I don’t think Beyond is tailored for individual Airbnb hosts. This tool may be more suitable for revenue managers from professional vacation rental management companies. Out of many features, one thing that differentiates Beyond is the orphan day pricing setting.
In 2022, there are more new dynamic pricing tools out there. I’d like to introduce you to Bright Pricing – it’s built by software engineers and the pricing engine is based on Airbtics’ 2 billion short-term rental nightly rates data. Bright Pricing has some advantages over Beyond. 1) it’s four times cheaper 2) you can adjust your competitors 3) the market dashboard is fantastic 4) and it supports all locations in the world.

Wheelhouse Pricing In-depth Review: A VC-funded vacation rental technology, is it any good?

PriceLabs in-depth technical reviews – (From software developer & Airbnb host perspective)

Alternatives & Reviews

PriceLabs in-depth technical reviews – (From software developer & Airbnb host perspective)

Post author By Jae Seok An
Post date December 28, 2021

Why am I eligible to give a PriceLabs Review?

When PriceLabs was launched back in 2014, it took the market by storm. It is one of the three mainstream dynamic pricing tools.

I also tried out PriceLabs for a couple of months for my rentals in London and Sokcho (Korea). The best thing about PriceLabs is that it was the only solution that supports listings in Korea. Both Wheelhouse and Beyond Pricing still don’t support listings in Korea, but, in 2022, the new pricing solutions, DPGO and BrightPricing, cover my location.

I’ll try my best to show as many reviews of existing customers and their overall thoughts on PriceLabs. Also, I’ll list down all the features to help you get started. A list of good alternatives will be at the bottom as well that have recently been providing more accurate data and great service.

What Is PriceLabs?

PriceLabs is a dynamic pricing tool with a market insight dashboard feature. They use their proprietary AI algorithm to determine the right pricing for your short-term rentals and update your pricing automatically. Just like Uber’s surge pricing, if your market demand changes rapidly, this tool will adjust the pricing accordingly. It can be useful for both professional and casual Airbnb hosts.

For professional hosts, you will have to override their pricing rules frequently since you have your own data and system, but it can sometimes catch events that your company didn’t know. It will be a good addition to further optimize your pricing.

Product Features

Base Price Help

One distinguishing feature is PriceLabs’ base price help. I like how it uses bar charts to visualize the number of other listings in the same pricing bucket. It shows “recommended” and “median market” rates. If you think your listing is more attractive than other listings, you can increase your base price accordingly.

The major limitation is that it doesn’t really show who are your competitors and example of listings consisting of the bars. So, we wouldn’t know which listings are included in their competitor list. From the looks of it, it only distinguishes properties by their number of rooms. If it’s the case, I’ll be quite disappointed because there are a lot of other factors to consider other than just the number of rooms and location. (Bright Pricing on the other hand shows the entire list of competitors that are used to calculate your base price).

By the way, do I agree with their base price? Personally, it did not recommend me the right rate for my listing in Sokcho, but I would say their rate isn’t too far off. My listing is quite unique in a way that it’s a studio but with a loft, so up to 4 people can comfortably stay.

Dynamic Price: Ease of use?

It’s easy to use. You set your base price, min-max prices, and a few other customization options, then it’ll set your pricing dynamically. The min-max price-setting comes in handy. It ensures my prices don’t go below certain rates, and it’s very useful because some of my clients specifically ask me to not receive guests below certain rates due to their own rules. Some other dynamic pricing tools, specifically DPGO in my case, continually dropped prices too low which caused me to reject a couple of bookings in a row.

Custom Rule Settings

You can set four different types of custom pricing rules.

Last-minute
Orphan day
Day of the week (Mon, Tues, Fri, etc)
Occupancy based (I think this is cool)

I agree on the importance of last-minute and day of the week pricing, but I’m not really sure how orphan day pricing can be leveraged. Adjusting pricing based on occupancy rate seems interesting, but I don’t understand how to set this setting correctly to earn more. I wasn’t able to find any tutorials around this.

Core Algorithm

At the core of their pricing algorithm, they define my listing’s competitors on their own to figure out what prices to recommend. They have a feature where I can see my competitor list, yet, I can only see up to 10 listings’ calendars only. I went through their competitor list but a lot of them are not accurate, and not really my competitors. Foremost, they seem to get my location wrong. My listing is located at Daepo-dong, but they’ve pulled competitors from a center that’s a KM away.

It would be nice if they transparently show how they came up with the competitor list and potentially allow me to adjust the competitor list. If my prices are based on wrong competitors, the supply, demand, median nightly rates, I at least want to know that.

Insight Dashboard

Their insights dashboard shows three main things:

Competitor’s future prices over next 365 days
Competitor’s future occupancy rates over next 365 days
Which competitors they use for the above two data

I’d say the insights they are showing are quite basic. If they show booking leads to time, individual listing’s booking statuses, or real-time (or past) bookings in the market, it would be a lot helpful for me to understand the market.

Pricing

Dynamic Pricing: $20/mo / Prices are slightly lower for listings that are not in the USA, Canada, or Europe.
Market Dashboard: $10/mo / Prices are slightly lower for listings that are not in the USA, Canada, or Europe.

Existing Customer’s PriceLabs Review

1. Trustpilot

2. G2

3. Capterra

PriceLabs Contact & Support - Click to Expand

73 W Monroe St Chicago, IL, 60603-4955 United States

Ph: (918) 826-3941)

Email Address: [email protected]

Conclusion

If I have to choose from the three dynamic pricing tools (Pricelabs, Wheelhouse, Beyond) that have been around the market for a long period of time, I will choose PriceLabs. It’s because 1) it supports less known cities like Sokcho 2) good onboarding experience and 3) easy to use.

However, it’s 2022, and there are more new dynamic pricing tools out there. I’d like to introduce you to Bright Pricing – it’s built by software engineers and the pricing engine is based on Airbtics’ 2 billion short-term rental nightly rates data. Bright Pricing has some advantages over PriceLabs. 1) it’s four times cheaper 2) you can adjust your competitors 3) the market dashboard is fantastic 4) and it supports all locations in the world.

🎉 FREE WEBINAR - July 24th, 11am / 8pm CET - Learn Airbtics in 7 Minutes - Revenue and Market Analysis Tips and Best Practices!

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🎯 How They Make Money

Average Annual Airbnb Revenue in US: $36,678 (USD)

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Conclusion

Accurate Revenue Estimates with Our Airbnb API – Start Today!

What is Airbnb Revenue Estimation API?

Input

Output

How do you get the data?

How accurate is the data?

How do I get started?

Here’s a quick rundown of these tools

Custom Pricing Rules

Last-minute discount

Day of the week or seasonality

Competitor based pricing

PMS connectivity

Market coverage

Summary

Table of Contents

Wheelhouse and why am I eligible to give a review

Product Features

Dynamic Price: Ease of use?

Custom Price Settings

Market Insights

Competitive Sets

Pricing

Existing Customer’s Wheelhouse Review

1. Trustpilot

2. G2

3. Capterra

Conclusion

Table of Contents

Why am I eligible to give a Beyond Pricing Review?

What Is Beyond?

Product Features

Dynamic Price: Ease of use?

Custom Price Settings

Market Data

Signal

Pricing

Existing Customer’s Beyond Review

What is a good cap rate for Airbnb?
Definition and Tips

Short-Term Rental Insurance
Is it worth it?

Best Cash on Cash Return Investments
Why Airbnb Tops the List

How Lucrative is Airbnb?
Here's What You Need to Know in 2024

Top 7 Airbnb Loans & How to Finance
Short-term Rentals

Accurate Revenue Estimates with Our
Airbnb API – Start Today!