Investor Adam Nelson shares the tips and tricks behind building a successful short-term rental portfolio—like house-hacking, data-driven market research, and more.

Adam Nelson: Start Small if You Want to Invest in Airbnbs | AirDNA

Adam Nelson lost $160,000 on his first investment property when the housing bubble burst in 2008. But what he learned then shaped his short-term rental (STR) strategy today: Play the long game. 

Over the next 10 years, Adam gained back that equity and then some—and that’s before you consider the many properties he’s converted into successful STRs. 

Adam joined us on an episode of STR Data Lab to talk about how he transitioned from a 16-year sales career to building a successful Airbnb portfolio. And it all started when he was still working a 9-to-5 job.

When it comes to Airbnb, don’t be afraid to start small.

At 22, Adam bought a condo and house-hacked it, which is a fun way of saying he rented out the other rooms to cover his mortgage cost. Starting small in this way can lay the groundwork for a profitable portfolio. (Airbnb arbitrage helps lots of aspiring investors get their start in the industry.)

“I needed to start with a primary residence and house-hacking, and then I needed to work up to … multi-family,” Adam said. “You just have to learn where you're at and see what you can pre-qualify for, and then you'll find your niche and what you actually enjoy doing.”

Data has always been an important ingredient of Adam’s success stories. He relied on AirDNA and the Best Places to Invest report to zero in on markets that interested him and that he could afford. He then made small, strategic investments, leveraging those over time until he could qualify for the multi-million dollar investments he makes today.

Find short-term rental markets built for longevity.

Adam didn’t just look for markets he liked; he looked for markets that could support year-round revenue, even in seemingly unlikely places like Broken Bow, Oklahoma.

“You can look at all these different lake cities, and if you look them up on AirDNA and actually pull the market research in all these markets, I feel like they're very strong markets,” Adam said. “There are so many little golden pockets of lake towns where you can get a nice little lake cabin, and it's not seasonal.”

Non-seasonal destinations work for Adam, but that doesn’t mean they’ll suit every investor. Instead, use an accurate data tool to investigate revenue potential based on your own criteria. There’s no such thing as a perfect market, and each location will appeal more or less to different investors with unique goals and circumstances. When examining a market, place every key metric on a scale—supply, demand, competition, seasonality, regulations, etc.—and see which way it tips for you.

See the earning potential for any property in the world

Minimize investment risks with the right tools and technology.

For Adam, investing has always been about data. He realized early on that the right tools and technology are the best way to mitigate risk. No decision-making based on gut instinct or anecdotal evidence.

“Nobody has all the answers,” he said. “And if you think anybody has all the answers, they don't. All you can do is minimize your risk by finding tools and resources that give you a little bit more buyer confidence instead of just shooting in the dark. … There's a lot of blogs, [and] there's a lot of reviews that tell you where you can invest in Airbnbs. But I just found AirDNA very useful.”

Adam Nelson: Start Small if You Want to Invest in Airbnbs | AirDNA

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