Golden Age of Airbnb? The STR Investing Playbook for 2026

Welcome to the STR Data Lab.

Welcome to the latest episode of the STR Data Lab. I am Rohit, the CEO of AirDNA, stepping into the host seat today for a special guest, John Bianchi. John is also known as the Airbnb data guy. He's the founder of STR Search. John, welcome. Are you ready to dive in?

I'm ready. Let's do it. Thanks for having me.

Yeah, let's do it. Why don't you Most of our guests already know who you are, but for those who don't, why don't you give a quick introduction of STR Search, your background, experience, and then we can dive in.

Sure. So, what I'll do is just try to build credibility really quickly. So, everything I'm saying here is just to build credibility, not to brag or anything along those lines, okay? So, within the past 4 and 1/2 years, between myself and my employees and my company, we have helped identify 426 plus properties. Every single last one of them we have purchased. They're all profitable, and we have the best track record in the entire industry for finding properties that turn out to be profitable. We are like genuinely taking over specific markets. On top of that, before I even started STR Search, which is this company that helps people do this, I was the head of data for the largest short-term rental investment fund in America. It was my job to figure out what market do we go into, what property do we buy, and how do we drive the most amount of revenue out of it. And I had $80 million to play with, and we learned a ridiculous amount in that time frame.

So much so that we have like two identical-sized properties, like the bones of the properties are the same, but one makes $100,000 more than the other, and I can like specifically tell you why, right? It's not just like like luck. It's like there is very cool data that shows as to why one did better than the other. I've also created four Airbnb data courses about you know, AirDNA software and how to use it and how to actually make sense of it and how I go about it. The last one I made was 40 hours long, and I made it after finding 120 plus properties. You know, I would have had STR search where a team of 30 now. I think we actually I know for a fact we have the largest data analytical team uh in the entire world like world I would assume uh that 100% uses AirDNA's data day in and day out. So, we are currently at eight employees. We're probably going to be jumping up to around 12 that are full-time data analysts that all they do is look for new markets, look for properties, underwrite properties, use AirDNA's data to forecast our revenue, try to figure out how to overcome our competition.

That's all we do all day every day for like 40 to 60 hours a week. So, it's That's a little bit about us.

No, I I love it, John. And a disclaimer for the listeners, um I actually worked with John and Kyler uh when I was looking to buy my own Airbnb um cuz you know, you cannot be uh running a short-term rental data company without getting into the journey yourself. So, again, a huge shout out to both of both of you guys for the work you guys did in the process. So, let's dig in there with the process. Like Or So, you know, like I live in New York City and I had a criteria in terms of what I was looking for a property. Like I was like, "Hey, like my wife and I want to be able to enjoy uh a second home. We want to get some sort of like short-term rental tax savings against our W-2 incomes and at the same time try and wear a beak with what it means to be a short-term rental host and earn some cash flow." And you guys helped us through the process. Why don't you walk me through like what is your typical inflow of customers?

Like who are you like mainly serving at STR search? Because we have listeners from all walks of life. So, if there's someone this resonates with, I would love for this to reach them.

I appreciate that. And uh I definitely want to talk about the process of working with you cuz you were a a different client, but you know, you got the special privileges, the CEO of AirDNA privileges, and we kind of got to work in like a completely different way. Um and I hope we were still helpful through the process. But um the typical route is quite different than I would say what you went through, right? So, we mainly work with people with money but no time. I think that's the best way to explain it, right? The moving being is because people who want to do things themselves. They they are DIYer. They want to learn how to understand Airbnb data. They want to be able to design the property, set it up. They want to manage it themselves. The people who want to get their hands dirty, but we have the time to be able to do so. And so, they are using their capital, they're figuring it all out, and they're going out there.

For those individuals, what STR search on our website, we have the free training that I told you about, right? I I'm not selling it for five or $10,000 and making you learn, you know, pay me to be able to get this knowledge. It's free on the website. For everyone who's a DIYer, you've got to go through that training because it will help you avoid buying a bad deal, which is like the entire mission of my company. So, that's the free free thing that we have for the DIYers. Now, for everyone else who does not want to do it themselves because they straight-up do not have the time, right? They are people like yourself and yourself or even me, right? Business owners or executives who are extraordinarily busy. And then on top of that, more than likely have a family, right? And so, if you were a really demanding job and you have kids, like I mean, I'm I'm going through it right now. I got a two-year-old and a three-month-old, like it's I call it 16-hour shifts.

The second I wake up to the second I go to bed, it's just no matter what, I'm I'm I'm working, right? So, the time that I have right now is just not there. And so, for those individuals, they're looking for someone to help them, right? And then if they're going to find someone to help them, they're going to look for somebody who's the expert in when it comes to finding properties, when it comes to designing properties, setting up properties, managing the properties, like whatever they need to do, they're just going to search that out, and that's who we help. We help those individuals.

Awesome. So, John, let's make make the case for like whether it's a DIYer or whether it is one of these folks who don't have the time and need your help. Make the case for someone sitting on the fence in 2026. Like you know, if you look read the stats, supply is up, the easy money era sort of over. Why is short-term rentals an asset class still worth investing in versus like parking my money in an index fund or uh even buying a home but for long-term or mid-term rentals? Like, talk to me on that.

There's I mean, there's a lot of reasons to love Airbnbs, right? So, the very first one's going to be the tax savings. And the fact that it's considered an active investment, not a passive investment, and you can use it to offset your active income, that's a very, very, very big deal. I mean, even for yourself. You you said it at the very beginning, right? So, right off the bat, you're able to offset a ridiculous amount of taxes, which actually gives you a really great return in year one on that property. A good chunk of the money that you are taking out of your bank account and putting into the property, you can actually get that back. The money that's going to like couches and pickleball courts and things like that, it can come back a good portion. Now, when it comes to a long-term rental, it's easy to explain the difference. It's all about cash flow, right? Like, if you do it right, you can make a ridiculous amount of cash flow in comparison to a long-term rental.

However, you got to put a little bit more work in, but there's nothing that's passive about this. No one I'm not trying to say it is. You got to put a little more work in, but you can make some more money, right? I mean, we have I've so many different stories that I could tell, but like we posted one recently about one of our clients making $70,000 a year from one of the four properties that she has now gotten with us, right? Well, four in total, she's on her fifth. The first one she has a full year of revenue, so we could like figure out what her profits were, right? $70,000. You're not getting that in a long in a long-term rental. Then, you also have the other side of it where it is a fun asset class to own in comparison to long-term rentals. You know, people are just like, I find that how many people come to me and they're like, I just find Airbnbs to be more fun. They're like, they line up better with who I am.

Like, a long-term rental, they're just like, it's boring and multi-family is boring. And it's like, I get it. I I get excited over this stuff. And so, it kind of becomes like a part of their life. Like, they are they're living as a as as a host and a a short-term rental investor, and they're trying to make it creative and do all these different things that is a little bit more fun. Then, when you, you know, want to compare it to the stocks, you got to compare the appreciation that you should expect over the years and the principal paid down that will come along with it. Or can I refinance and take this money out and go get another property, right? And then my favorite part about this is what happens over like a 5 to 10-year period. So, if you are making enough money right now to be able to save enough money to go buy a Airbnb, right? What happens is you buy that Airbnb and then you get this big tax savings.

And so, your bank account that you just drained to go buy that property and now gets refilled by your tax savings that go in there. But you still have the same job. You're not quitting your job cuz you're, you know, you love what you do and you're going to continue to save, right? So, you your savings account gets filled back up fairly quickly from the tax savings, your ongoing savings, and now this new profit that's coming from the other Airbnbs. And now you have two streams of of savings, right? And then you go and do it again because you're able to save up quicker. And then what ends up happening is you have three streams plus the tax savings, then four streams plus the tax savings. And so, there's like compound factor that you can create when doing it strategically over a 5, 10, 15-year period can create stuff that you just really can't create in other asset classes, right? So, like on 33, you like you know how many of these I can buy over the next like 5 to 10 years strategically and then like what my life will look like in 20 years from now.

It That's that's sort of the mindset that I have when it comes to all this.

I love that. So, then let me let me break that down. So, I get the thesis of what you're saying is like, hey, if you invest in an index fund, you can get 8 to 10% in a very bullish case. And if you invest in short-term rentals as an short-term rental as an asset class, you have basically what you said is you get your tax return which adds to your return. You get your cash flow. You have the natural appreciation from the property and you have your principal paid down. When you add the four together, like there is material sort of IRR compounding that happens in this asset class and it's fun and it's like uh it's something you can do with your family. It's just more it's just more interesting. So, how many folks, customers do you get calls from that come to you and are like, hey, like this is a purely business investment decision versus how many of them struggle with like oh I could have a vacation home and an investment property and do a business and try to balance it all or how many are just purely like this is 100% just a tax W-2 write-off game for me and anything else is plus delta.

Like walk me through that mix because you deal with hundreds of these calls a week and for all of our 80/20 customers they are by extension also like potentially asking questions your customers are asking so would love to know more.

Okay. So, I'm kind of laughing a little bit when you say this cuz we have everybody under the sun that comes to us, right? So, many different things that they want and and and there are people that come to us where like this is strictly a business. I just care about the numbers. Just show me the data. We're just going to buy the property. We have about zero people who actually follow through with that, right? I swear that if you put a property in front of you you can have like three options all of the sudden they have preferences. All of a sudden they care. It's no longer just about the number like ah, you know what? I feel like I'll take this lower return because of this market that it's in in comparison to this other one. Like nobody sticks to the 100% I only care about the numbers, right? There's all because the reality is like the difference in one market to the other market may be like a 1% cash on cash difference, but like how much you like that market in comparison to the other one will be like a gigantic leap.

And so, nobody sticks to it. But we when it comes to people who are looking for a vacation home that they can stay in as well, those people tend to not work not work with us because they're ready to lose money and they have a very specific market that they want. I, by the way, have no problem with these people whatsoever because I hope to get to a point where I have enough money to have a family vacation home that loses money. That's literally like every American's dream, right? Oh, it's the family cottage, right? It's like well, who pays for the family cottage? You know, somebody has to pay for it. So, those people come through all the time, but they really want like I just want to be in this market. We go listen like we can help you find a property within that market. It's not what we typically do and I'm not going to promise you it's going to cash flow because we've probably already looked there and we've already found properties don't cash flow there.

So, um I don't know. We get everybody in all reality. Everybody comes through the doors.

Who should not be doing this, John?

Airbnb in general or working with us?

Airbnb in general. Airbnb short-term rental uh investing as an asset class.

Uh so, I would say if you stress easily, it's probably not the thing for you. Because this is physical real estate and hospitality. So, if if when you get stressed out, you are just not a good person, you know what I mean? You don't like operate well. I know people like this. Like they get stressed and then every everyone has to deal with their stress. It's like you're going to go through a lot of stress to get the right property, even going through the purchasing process, getting it set up is going to be an absolute headache, right? And and then on the ongoing basis, like you're going to, you know, the guest said they needed something and your instant reaction is to stress rather than like find a solution and just like be a good host. Those are the people that I think probably struggle the most and maybe should just park their money somewhere else where it's there's not going to be like fires that they have to put out.

But if you're somebody who a problem happens, I'll find a solution, perfect. This is great for you.

Awesome. So, let's dig a little bit into the numbers given that you're the Airbnb data guy. In 2026, what are what is in your view like like still good Like like let's walk Use this to walk us through your method. Like how do you So, like how do you evaluate a deal? What's a good market? Like walk us through the thinking of like We've heard your uh general take like, "Hey, like there's a 20% rule in terms of like purchase price to rent." Like give give us give us some guidelines around how you think about underwriting and then give us some examples of like what are still some interesting markets to walk for where you guide some customers to.

So, even for you, I still have to say this. I cannot share any of the markets that we recommend, and here's why, okay? Because we have literally hundreds of market of clients that we have put into those markets, and we don't want to create create increase competition for them. That'll make it harder for them to hit their numbers. And uh this the Anyways, it'll make it harder for them to hit their numbers, which would be bad for them, but then also bad for us cuz then they don't hit their revenue numbers. So, the one thing that I meant to say this is like that's the one thing I can't mention. All right, that's All right. So, the the methodology has not changed in 4-plus years of looking for like which market to be going to. It's I'll I'll give some more tangible steps of of how I'd be able to figure this out, right? So, the first thing is always regulation. It's You just don't forget that you can't get to the data until you get to regulation.

I can't tell you how many times I studied the data on a market just to go you know like through a whole day I'm like, oh like I figured all this stuff out, then I go check the regulations like, why did I waste my time? For him, I had to make it like a hard and fast rule for myself. So, check the regulations. The next thing is you want to know

it's about regulations. What is Do you like regulated markets? Do you like unregulated markets?

Love regulation market. I hate unregulated markets.

If if a regulation market like let's say the Hamptons, right? They have a minimum 14-day stay rule, uh 60 days of beer. What's your view on like different regulations?

So, I love a market that is regulated and lets you still manage however you want to manage, right? To a certain degree. There are the property that you got tons of regulation. It's very restrictive. It's hard to be able to like do your thing to make your money, right?

Yeah.

Whereas the markets that I like that have regulation in place, they're like, just follow our rules and pay your taxes and do your thing, right? They may say like you can only have so many guests depending on the size of the bed or you know you can only have a home within this distance from another Airbnb, and those things are fine, but they're not like you're only allowed to manage for 180 days out of the year. Those ones are like, I'm screwed, right? Um and so, I want there to be regulation in place because if there's no regulation, then there's this constant fear of what if they put in regulation, right? Now my entire investment is wiped out. So I always try to find the places that have regulations in place and allow for it. Does that make sense?

Make sense. Make sense. So regulation step one, there's no bar on like criteria's on like days of stay or like limitations. And if that's great, you can at least control the intangible that is like regulation. And now let's get into the next step.

Yep. So at this next point, what I'm always doing and what I'm always looking for first is just cash flow. Simple as that. I'm not looking into see like, you know, how's the market appreciating or what do the properties look like? How old are the properties? I don't I'm not looking at any of those things. I'm just simply going, is there cash flow within this market? And the reason being is because like and cash flow is what separates an Airbnb from a long-term rental. Obviously there's a tax savings which is awesome. Um but if you're able to get a property that has a good amount of cash flow, then you're going to uh the time that you were going to put into manage that property, you'll be getting a return on that rather than just like working for an entire year making nothing and like all the property appreciated. It's like, well, you might as well just bought a long-term rental, right? So let's find cash flow first.

And the way that I do this and I'm going to explain the 20% rule here and I'm going to clarify a lot of things for because a lot of people have misinterpreted this, okay? The 20% rule is something that I've talked about a lot. This is not the 20% cash on cash rule. It's not what I'm saying here. I'm not saying I'm looking for a property that has 20% cash on cash. What I am saying is that I am looking from a 10,000 ft view to see very quickly if a market has the potential to meet the 20% rule. The 20% rule says, if I buy a property for 500,000, it has the ability to make 100,000. To me, that's so so 100,000 is 20% of 500,000, okay? If I see that ratio, then I know there's a very high likelihood of the property being able to cash flow. Okay? It's not saying it's going to cash flow at 20%. Maybe it will, maybe it won't, but I'm just saying that it has a really high likelihood of cash flowing and I only use this rule from 10,000 foot view down, not on an individual property basis because I'll I'll go deep here with this, okay?

When you get the lower the purchase price, the higher the price rent ratio needs to be because some things are fixed expenses like your internet on a one bedroom compared to a five bedroom is almost going to be identical, right? But the the the cost can be spread out. So on a $400,000 home, you need to be like a 30% price rent ratio depending on the market you're in, right? If you are um buying a $1.5 million home, the price rent ratio can be like all the way down to like 12, 13% in some cases depending on like how much cash flow you're looking for. So it varies a lot. However, majority of properties in America are between the prices of 400 and like 600 or 700. So the 20% rule works really nicely there. So what I'm doing, does that all make sense? Did I clarify that well?

Yes.

Okay. So after So the way you use this is let's say I'm going into the the downtown Scottsdale, okay? I'm going to walk downtown Scottsdale, I'm going to use the filters on AirDNA and what I'm going to do is narrow it down to just like a very small subset of properties so that it's easier to be able to see consistency across these different properties, right? So I'm going to look at four bedrooms with a pool in the downtown core of Scottsdale. And then what I'm going to try and do is see if I can find a relative like consistency or pattern of how much those properties are making. And what I'll probably end up finding is let's say, you know, I'm going to use easy numbers here, these aren't like actual numbers. I can see that the properties are making between 80 and 120, okay? Now what I'll do is go Okay, I'm just going to take the middle there and go 100,000. So I'm like, okay, these properties are have annual revenue roughly around 100,000.

The next thing I do is hop over to Zillow and say, okay, on Zillow, are there properties that look similar to the ones making $100,000 a year? Meaning the ones making $100,000 a year can't be luxury homes. Then I go and look at cheap homes on Zillow, right? So it's got to be similar like for like properties. And so when I go over to Zillow, can I find four bedrooms with pool in downtown Scottsdale that are like the same as the ones that are Airbnbs for 500,000, right? Is it for sale for Is it for sale for 500,000? The reason I love this rule so much is because I've studied 600 plus markets at this point, and I can't tell you how many markets don't meet this rule or don't even come close. You go You You go and look at it and you're like, "How much are they making? 100,000? Great. Let me go see how much the properties are selling for." Oh, a million dollars? Okay, there's no cash flow to be made here.

And I'm done. I'm done analyzing the market right then and there, right? Like I don't need to go any further. And so that's why I love that process of the 20% rule. Once you have like found a market that has the 20% rule, what you really want to do next is rip it to shreds, okay? Get into like the needs of the data and find the best price-to-rent ratio. So what that means is, how do I then What What if I were to go downtown Scottsdale, and what I do is I look at the three bedrooms without a pool, the three bedrooms with a pool, the four bedrooms without a pool, the four bedrooms with a pool, and I do this and then the luxury ones, or the ones closer to downtown, or the ones a little bit further away, and I start doing all these combinations. What will end up happening is I'll find the specific combination that has the best price-to-rent ratio. So maybe I find like 26%, and that's where the most cash flow is to be made in that combination, but I also am Once I find that, I'm also trying to understand why, right?

So now I'm When you build the buy box for a market, you are simply trying to figure out where is most money to be made, and how do I outperform my competition? You figure out how to outperform your competition by figuring out what all the revenue drivers are. What do the top performers have that the underperformers do not have? And then just simply make a list of all those different things, and then when you open up a listing, you add all of those things. And now your property will be dominant in the comparison to everybody else, which it's a super simple formula, and it's been working on hundreds of properties.

That's amazing. And that And And And And the track record you speak to speaks for itself, right? You You guys say you don't have a single unprofitable property that you guys

We've yet to have a client reach out to us and say their property is not working.

Well, that's that's that's great. So, one one question I have is, you know, like your data research that you're talking about, your process, works really well when there's listings with long consistent track records that you can underwrite. What happens when the comps fall apart or you have a thin market with very few of them?

You're the guy who provides the data. I'm the guy who analyzed the data. Now you're saying, "Hey, if there's no data, what do we do?"

Let me ask you the point is there will be data, but there's limited data. So, like, what do you do in cases like in in in markets where there's a certain statistic amount of data, like, you can you can make the conclusions and you can make them about it, but like

So, I'm I'm going to go deep to explain this. I I usually like graze, like, go over this stuff very lightly, but this is the podcast to go deep into, right? So, that the what I will say is um I usually tell people if there is no data, I am useless. But the reality is like there's usually there's usually some, right? There's like a handful of little things. So, here's one of the the strategies that I literally posted a video about like almost 3 years ago now. Okay, let's say you wanted to get like my my A-frame that I have, okay? I'm going to use this as an example. You know it, I know it. It's in an area that is super remote. Um there are barely any listings around it, and if you were to use the data that was like within a 5-mi radius, you would think I was going to make $30,000 a year, where we're on track to make 120. All right? So, like, a significant difference between the two. Now, the the the reason the reason I got the confidence about that property is that I wasn't looking in the exact area.

I was looking at the entire drivable market of anyone from the major city that we are around. Now, that process isn't that on it like a lot of people know about that at this point, right? It's like, "Okay, we have a city. Where can those people drive to? Where do they typically drive to? And where can I maybe pull them to drive somewhere else? A build it and they will come type scenario, right? And that what would that property have to have to be able to do that? So, what you do is you let's say we're in this scenario, you have a city and you got a 2-hour radius. You then look at every single last property around that entire area and you try to find any outlier within that range, okay? And typically in a really huge amount of land, you can find one, two, three. And what will happen is you have like now you have these little people giving you a little bit of little bit of knowledge and a little bit of information that you were looking for where you're like, "Okay, that person has you know this one bedroom that's one done really well and it's making 80,000.

Everybody else is making 40,000. What is that person doing that's a little bit different and could I do something similar? And then you have to apply some logic here, right? It's like, "Well, if I created something that was as good or better than that one, would somebody traveling from the city come to my place over their place? Or are there more than the amount like how much demand is there for that, right?" Now, because there's only 365 days to be able to sell and most people stay for two nights, right? And most of the time it's not 100% occupied, which means that like okay, maybe we're getting like 100 to 150 people who are staying there. In this city of 2 million people, are there another 150 people that would be willing to spend the exact same amount of money on another one of those things that's within that same 2-hour drive and can it be in a location that is still desirable for people to go to, right?

And then you have to ask yourself like, you know, how many more could you do there? How many how long does it take till I get sort of screwed up there? So, like that's one way where there's no data, you have to go more broad. Now, you can even go even further. So, the broadest that I've ever gone is I was like, "How much do these unique properties make in comparison to regular properties?" And so, what I did was I found unique properties in multiple different areas around the entire country and I went, "Okay, this is the unique property. Let me grab all of the ones around it. How much are those properties around it making?" So, if first one was making 100,000, how much is all the other ones? Well, they all the other ones are making 30 30,000. And then I go to the next place and it's and I do the same the next unique unique property, and I do the same thing. And then I do it again, and I do it again.

And what I ended up finding out, and this was one of the coolest things ever, was that there was a consistent pattern on how much more those properties were making. Which means that the the economy, like the the the what people were willing to spend on even a unique property was based on some sort of metric, which was what does it cost for a normal property, how much more am I willing to spend? And it was on average 300% more. So, if one person was selling it for $100, then you could sell it for $300 if you had created that super unique experience. And that but the coolest thing was the pattern. The pattern showed up in multiple different places around the entire country, and I was not expecting that. I was expecting it to kind of vary, but it showed up as a pattern, which told me I'm like, if I go into an area that's somewhat remote that has similar landscape logic as these different areas, meaning like distance to a city or maybe just completely secluded, not like so far away that people can ever get to it, and I create something unique, I could 300% in comparison to the people around me, right?

No. That's a lot. No, no, that's great. So, the point you're trying to make, which is very clear, is like, hey, there are there's base you can evaluate a property, the more unique the assets are, the more unique the assets within the rental are, the greater the delta is to like the median. Do you feel like amenities and the uniqueness of properties are getting democratized to where in like everyone is sort of doing that, or is it still unique?

Yeah, it depends on the market as of today. It is also so the every every question you ask me I have to go layers deep, and I feel like it's

I love it. The the point of my question is that.

Yes, okay. So, let me let me break it down for you. Um in some markets, when you do it you have that first-mover advantage, right? Now, the thing that that's a the thing that makes that really great is that this is real estate and not, let's say, a software with AI that you can whip up very quickly. Not saying that you can do that, I know software is very difficult. What I am saying is like it's still physical real estate. So, even from the time of like the amount of time it takes for the data to come back to that it's proving that it's actually working, right? So, the example that I give here is in Scottsdale at one point in downtown Scottsdale, somebody did an all pink Airbnb, right?

And great great attraction. Yes.

And they were they were making like $220,000. The the physical property, the bones of the property was not much nicer than the other properties, but it was making like $80,000 more than its competition. And so, guess what happened? People found out about it, they pull open up a whole bunch more, and now that same Airbnb makes like 60, $80,000 less. So, it's back to like normal, which means that the bachelorette demographic for downtown Scottsdale has been not necessarily saturated, but the idea of it has been neutralized, where now it's more of a commodity rather than like a unique experience, right? And so, the what happened there was this person had a first mover advantage. Guess what? With them, they actually went a full year before anyone even saw their data of how much they're making. And then, once people start figuring out, then you get some people with like the cojones to actually go and do the same thing, right?

And that takes time, too. That's the sort They have like a 2-year head start on everybody, and if they're making $80,000 more than the next person who's also profitable, that means that they're capturing like $100,000 plus in profit for a 2-year period. Guess what? You could sell the property at that point, right? If you really wanted to. So, the the the reality is first mover advantage when it comes to amenities. And we even So, without giving away the markets, we are finding places that we are doing this exact same thing, and we are our clients are reaping the rewards right now. Like, they're they're very without explaining what we're doing, what strategy we're doing, what experience we're creating, and what market we're in, we are doing this logically, and it is outsized returns for these people in this moment. So, there's that, right? But, then When get to the point where it's like, well, does it become more saturated?

And naturally, right? If if if there was one option for like an unbelievably you know, resort-style property, sure. But if you have like 50, then it's like not as exciting. But the reality is that the people with the amenities have properly selected the properties that allow them to do things that others cannot. So, there will be a group of people who have a gigantic advantage over their competition at all times due to the physical bones and landscape of that property. The easiest example I can always give is um if I had a acre in my backyard and I turned it into a resort, and then my neighbor has literally just enough room for a pool, I will always dominate my neighbor every single Even if I did nothing in my backyard, right? And so, the there are the amenity It's like It's really It's the natural progression of Airbnbs. Every single thing naturally gets better, right? And so, you you you have to then realize that that was naturally going to happen for Airbnbs.

And the question that became, well, what is the thing that you could do to an Airbnb to make it better? Well, okay, well, amenities, right? Okay, well, then how do I do it even How do I create the amenities? What experience am I creating? How do I set them up? Like, where do I put them? How do I And so, well, what what's what What is naturally going to happen is that the properties will just naturally get it will naturally add more value through amenities as everybody continues to do this. I remember there's another piece I wanted to say about this. I'm going to leave it later cuz I you did ask me to give a hot take, and I want to leave that towards the end, okay?

Yeah, let's So, let me ask So, one of the things you've mentioned, and you and I speak about my product a a lot. You give us a lot of feedback in terms of how we can improve. Uh we love getting that. So, like, one of the things you've mentioned is, "Hey, don't fully like our rentalize a property. You come in, you enter an address, you get a revenue estimate. Don't fully trust the number." And your your feedback was like you should allow people to like customize comps. I mean like great. We did that. We opened up the floodgates and we were like you can pick the comps, filter by whatever criteria you have to like override the estimates so you can sort of be part of the equation.

Can you give an example of typically when you have to override an estimate? Not for our product, but in general when you're doing research for anybody, what are the things that you're seeing that the algorithm isn't picking up? Like what's the human judgment of like whether it's comp selection, amenities, seasonality, some nuance around like demand travel patterns? What is it that the algo can't pick up that you're picking up?

Yep. Easy. The what the end product will look like. And how much money I have to be able to put that together. So what the algorithm is picking up, it's grabbing the tangible data. It's grabbing the four bedrooms, it's grabbing the two bathrooms, it's grabbing the location, it's grabbing these sort of things that I can match up with my property. The reality is like even within the I said this at the beginning of the call, even within the own own portfolio that I helped create, we have two properties that are like so close to each other, but one makes $100,000 more. So so you the data like you know AirDNA is just going to grab that they're both four bedrooms within the same area, but what it can't do is be like well, how were the photos taken? Why was it priced? What what photo comes before the other one?

But let's let's say for the sake of argument we we could do that now. Let's say we could now look at the photos, we could look at the quality of the amenities, we could look at just beyond just the photo bad to bad. We could dig into each aspect and custom select comps. What what else would the human judgment have to do beyond that?

So if I am if I'm putting together my property, right? I two things, budget and marketing, okay? I'm saying them right now so I can make sure I can get through both points. So the first one is budget. The amount of money that I have to be able to put towards that property is going to vastly change the outcome of what that property looks like, right? It's going to change the amenities I add, the way that I can put them together, the furniture that I put inside. Like all of these different things are going to be based off of how much money I have to spend. If you have $100,000 to spend, I got $300,000 to spend, it's going to be drastically different, right? So, that aspect right there is it doesn't matter, you know, how I need that input. I need that input for me to be able to know what the annual revenue is going to be, right? If I don't have that input, then I'm like, well, what are we doing here, right?

What is he cuz makes sense, right?

100%. Basically, what you're saying is you have a blank sheet and you can compare the blank sheet to what it can be, but you need to know what the blank sheet can be yourself. That's where the creative and construction elements of like all aspects of what can the art piece be is what human judgment does that make an algorithm not.

It's the It's the first input that is needed, right? So, like as an example, if you um if I was if I had a property that was four-bedroom downtown Scottsdale, okay? And I go, this is the property that I need to figure out how much What is the annual revenue going to be on this property? If I had the money in the backyard had enough space to be able to add a pickleball court, and let's just say a fire pit and a hot tub. If I knew that those things are possible, the annual revenue on that property is going to be vastly different than if I didn't add those three things. And so, then therefore, I need that input. I need to know that I need to know exactly what it's going to look like before I can I can forecast what the revenue is going to be, naturally. So, that's the first piece. The second piece is the marketing, okay? And this is something that I have been like honing in on more and more and more.

I actually found one of the greatest comps No, the greatest comp that I've ever come across in like the eight to nine years that I've been studying Airbnb data. And it's a property that is marketed so well that it's a non-luxury home that is keeping up with mansions in Fort Lauderdale. It is blowing my mind. I'm studying it, my My is studying it. I'm We're going to be testing out things. We're going to like we're changing the way that we're going to be marketing all of these different things because we found a comp that is blowing our minds. As an example, this property does not show one interior photo until the 64th photo.

Get out of here. You serious?

Backyards drive revenue more than anything. However, how well can you market that backyard? I'm telling you like this thing is it's it's like it's going to reshape how we market. So so

So like every Airbnb for example, when I do my listing, they have an order of how they do photos.

Worst thing you could do. I hate that thing beyond anything. Kills your marketing. I'll explain in a second. Absolutely destroys your marketing. But sorry, I didn't mean to cut you off.

No, no, keep going. Yeah, keep going. When I was going with my question is when you go with that order, it orders your photos in a certain way. It's To your point, it kills your marketing and kills all of the journey you want to take the customer on.

Yeah, imagine, okay? Imagine on the Airbnb website, you're like you know like the first thing you guys have at the very top that's like the the thing that gets people to want to sign up. Imagine if you took that and put it at the very bottom of your website. And instead, you took all of your legal information and you made that like the first thing people see when they show up on the website. How many people are going to be excited about Airbnb when they see it?

They wouldn't.

What happens when you go into the photo tour? You show off your living room and then when do you get to show off the things that make you better, more interesting in experience in comparison to everybody else? At the very end. That's when you're able to show the backyard or maybe even like the game room. So the reality is that everybody is selling a bedroom, bathroom, living room, dining room, and kitchen. I don't want to compete on that stuff ever. I've been making posts recently that just keep saying stop selling bedrooms, start selling experiences. Because bedroom are commodity, experiences are hard to price, right? And so the reality is that the the natural process that a guest is going through and you're software guy, so you understand. It's like okay, we land on this page, then we land on this page, then we land on this page. And you you know that you're kind of walking people through a certain process when they when they're using the software.

Well, on Airbnb right now, you look up a market, and you see one photo, and that one photo gives you like an idea of the property. You get excited about that one photo just like a YouTube thumbnail, and you click into it. Then what happens? You see five photos, and the idea is show off five things that make you different than everybody else. To once again, get somebody excited enough to click all the rest of the photos. They then click, and you're in the photo tour, and what do they see? Your living room. Right? You You were just seeing five of like the most amazing things about your property, and they want to go learn like and want to see these things. They click it, and now they see the living room. All of that excitement from click one to click two to click three, gone. It's like, okay, now I've got now I'm like now I'm systematically, mathematically you like going through this. You don't want someone to go into that mode.

You want them to be in this like excited mode of like, oh my god, look at that. Look at these tile and photos. Oh my god, I'm going to head marketing, right? Like if you go to hotels page,

they're not showing you the suite or the room. They're showing you all of the beauty of the estate, the property, and you're like mesmerized. You're picturing yourself there, and the hotel room is the last thing you do in That's that. That's great.

They're showing you the the the the lobby, their restaurant. They're showing people having drinks. They're doing all these different They're marketing. People don't realize it's it's marketing 101, right? And I feel like this is the the the fine like I don't know. It's taken me years to get to this point to be like, you know what? That marketing piece is a really big deal on this thing that I'm selling online, right? Like people don't think about renting out their Airbnb as selling something. But you're selling something for a couple of nights, and you have a lot of other people selling this similar thing. So, how do I outsell them? It's not just by having more. That's a huge component to it, but now I've got to get them to fall in love with it. Think like I actually just thought of this analogy this morning. The next time you're shopping on Amazon, and you're looking at different products, I recently realized that I wanted to see certain photos that would make me feel good about the product.

And I was trying to buy like an eye mask like for sleeping and there were certain ones that I looked at that gave me all these photos where I was like, okay, I have all the information I need and I feel really good about this. And then another one I looked at it was like, I feel like I need to see a little bit more. Like why aren't they showing these certain images? And I had no confidence to buy the product to buy that one, right?

And Ron, this might be a secret sauce of yours and you might not share it, but have you AB tested life like the humans in the photos versus static like just like photos and whatever you found. Okay, I'm going to data

Yeah, haven't actually like 100% AB tested it because it's it's really difficult to to do. For like if Airbnb gave you an AB test option, I would be in heaven, right? Like give me the ability to AB test my first photo. Like why do I not have that, right? Let me create two different listings with two different titles. Like let me do that. Why don't they Anyways, so the the thing that we have seen is that people in the photos of lifestyle photos didn't make a difference on a larger property. So we had multiple properties on the same area. One had lifestyle photos, the other ones did not and it did not make a marginal difference. I'm a I am a strong believer that it does make a difference for properties like mine, the A-frame. And the reason being is because I'm not

you got to picture yourself. Yeah.

Exactly. You got to You got to picture the person sitting by their fireplace eating s'mores or laying out by the daybed with the water like you know, sparkling in the back. Like you got to be able to see those things. Otherwise it just feels like there's something a really small you know, it's 450 squit square foot A-frame. Like it's tiny. I got to sell the experience rather than anything else.

That's right, man. You never show an empty home. You always show a staged home. You have to like it's easier Yeah, you need to fill it out. Uh let's let's go into one of the question I had on on the data. Regulation is something you guys look at and you mentioned that early on. Can you model regulatory risk in markets or is it permanently human call? Like do you have a hot take here?

Uh it's I think it's a human call. We have not figured out a way to be able to do that as of right now. Um maybe there's somebody else out there who will, which would be great, but the way that we see it is like the way that I've been thinking about this a lot more is the fact that in some markets they rely on Airbnbs for the economy of that market. The more that they rely on it, the happier I am about it. When they have like no need for it or that it's just an absolute nuisance or they just don't have enough travel demand, that's where you start to get into these sticky situations because like the economy of that city or that market can get rid of every single Airbnb tomorrow and nothing will change for them. Their headaches will go away, right? Now it Whereas like if you go to Miami, they they're huge like there's so much tourism within that area and they have so much demand and like people the hotels can't keep up that they need it, right?

Um so the way that we like to think about it is like how badly does the economy need it and what do they have in place already? Because the other side of that is um in California, in Palm Beach, not Palm Beach, it's not Joshua Tree, it's not LA, but it's in the middle of that. What's that one market in the middle? Palm Springs.

Palm Springs. That's right.

They have travel demand. They got a ton. But they got a ton of motels. And they have been consistently try making it harder and harder and harder and harder to Airbnb, right? What you can do, what you can't do, all these different things. So then therefore when I look into that market, I'm going they've proven over and over and over again that they're only going to make this harder for us. So why would I start now and go for another 10 years into this, right? And what do you 10 years I'm probably not going to be allowed to do anything there. And so then there goes my investment. So that's why like that's how I look into those sort of things.

That's that's awesome because I I I think about regulation a lot having bought a house in the Hamptons. There is demand, there's travel demand, there is willingness to pay, but there's also a lot of fickle homeowners who would rather not have short-term rental folks. They would rather have seasonal renters, long-term renters coming in and like So, in the Hamptons, people come in, they rent from Memorial Day to Labor Day. 3 months, one renter, boom, done. And then the rest of the time, you can rent it out. But it's it's It's an interesting regulatory market, and it's just so hard to underwrite regulatory risk, and things just It's It is a human call. So, you sort of alluded to this. If a market relies on a lot of short-term rental listings, yes, they tend to typically be resilient to regulation and other things. What are attributes in your mind that make a market really resilient in today's day and age?

Like given everything you know about the interest rates, given everything you know about the supply growth rates, the demand, like what makes And you don't have to mention specific markets, but what are characteristics or data filters a person should use at whether in AirDNA or outside. How you filter for resiliency in a market?

This is how I would define resiliency. I think that's the probably the right place to start, right? If I If I have an Airbnb, and it's within a market, first, does is regulation going to change? That's the first piece. The second piece is, will I be able to continue to offset my expenses? Will I be able to turn a profit? At a minimum, offset my expenses on an ongoing basis, profit would be the ideal scenario. How long do I believe that I'll be able to continue to do that? And then like that's that's really for me the core of it, right? Maybe in some markets there's going to be What are the insurance risks? What are the flood risks? Like We're not really in those type of areas, but you know, I mean, like those are There's other sort of like economic like is this market all dependent on one proper or one business? Like that's another, you know, type of risk. But like generally, what I the way that I think about this is like if I got a property today, and I, you know, know it's going to be able to make you $20,000 in profit this year, how many years am I going to be able to make that profit before either competition comes in, travel demand drops, or something along something else happens?

And so, to me, the resilience is the ability to be able to get a property within a market that has ongoing cashflow.

So, the 20% filter in a different way. The markets that pass that filter generally what tick the box.

Some, but not all. So, there's markets where the amount of supply continues to increase faster than the amount of demand. So, in other words, the ability to continue to build homes is never-ending, right? Those places scare me probably the most.

Even with the earning potential, like it it would still be scary because of the because of the supply growth.

Exactly, right? And the majority of the time when they build new properties, they're building them better than the ones prior. And if it's a very STR focused market, they're continuing to try and build it in a way that is even better, amenity optimized, in comparison to the ones earlier. And so, if I buy a property that is like great as of today, well, what are they going to continue to build over the next 5 years that makes my property almost obsolete or a really stupid option for somebody because why would they spend $100 on mine when they have this other one that's $100? So, like those are the markets that scare me the most by far, right? So, I I like markets where they aren't building aggressively or they literally cannot. So, some markets in Florida, the land is gone. It's done. They've already built it, right? Especially within the 20-minute driving range to the beach. So, then that means I don't have like Okay, this is this was my hot take.

Can I can I jump into it?

Let's go into your contrarian hot take. Let's do it.

Sure. My belief is that we are in the golden age of Airbnb for two reasons. The first one is the tax loophole because I don't believe that's going to last forever. And the second one is that markets will eventually shut off or not make sense to purchase in anymore. And Florida is one of my favorite examples to explain this in, okay? There's no more land, right? The homes are all built. The size of the backyard has been determined. The size of the property, maybe you can add an addition, but then you're cutting into your backyard, right? So, the the properties are done. They they they they have them all. So, now we have a finalized selection of all these different properties. And the reality is like, well, we know what drives revenue, so we're just going to grab the property that has the most revenue drivers on it and then optimize it to max out its revenue drivers, right? But, we can only do that as long as the purchase price isn't too high.

So, take a prop- a price like Miami, the the purchase price in those areas are are insane for some of these homes, right? It's it's insane. Like, to to to buy close to uh Miami Beach is is next to impossible, right? And so, what that tells you is that as the properties continue to appreciate, they will eventually get to a point where they crush cash flow's ability unless rental demand continue to keeps up, but we have seen that that has not been the case. Now, the rental demand, so how much I make on an annual basis, will naturally increase as inflation increases. But, if appreciation outpaces that quite aggressively, especially in markets where there is quite literally no more places to build, right? Then, that will there will become a point where the amount of profit will be squeezed, okay? But, in this moment, we have And by the way, this is already true for the vast majority of markets in all of America.

Again, I've studied 600-plus like main markets, and almost all of them don't work. We're we're in like I'm not going to give the exact number, but it's less than 100, okay? So, so majority of markets, this has already happened. Purchase prices compared to revenue does not work. But, right now we're in markets where it does work, and we can grab the properties at the right purchase price and put them together in the most optimal way so that we are still driving a profit. I strongly believe that those purchase prices will continue to rise, and the number of properties that will be able to grab the revenue that you want to be able to grab will completely sort of disappear. Because you have to remember like, you think to yourself, okay, well, uh if I just get like a bigger home and a property with a bigger backyard, then I'll be able to outperform you. So, you go, yeah, but to a certain point because eventually they're going to get that but the money that costs to be able to get that property will not allow you to be able to make any money, right?

It's like some people will be able to have some of those, but they're inventory for luxury properties is far fewer in comparison to the inventory for the normal properties. And so, I truly believe that we're in a golden era right now in some of these markets where you can get properties where there's I mean, I told you earlier, one lady is making $70,000 profit from her property, right? That's like one or two. We have I have a lot more examples than that, even higher numbers than that, right? And so, the reality is that while they're like capturing this, but a property can only be optimized to a certain point. Once I've added an entire resort into my backyard and added a game room onto the interior, I can't do anything else. I can't even like I mean, physically, there's nothing else to be done. So, then therefore, nobody else can come into that market and create an even bigger, better listing without paying a premium for it, which is going to make it hard for them to cash flow.

So, there's this like perfect balance that is happening right now between the purchase price and the amount of revenue that can be made and how much you can maximize a property and the people who are capturing those properties and and executing properly are truly grabbing what I think is like the greatest cash flow they will be able to receive for an ongoing basis and then their property will continue to appreciate and they will they get really, really, really like this is the key piece, extraordinarily difficult for competition to come in, which means that they hold the inventory. They have the the ones who grabbed the inventory now will hold the inventory for the foreseeable future and then they'll just be trading it and when that time comes, the people who buy the future properties will have significantly less cash flow in comparison to the ones that are buying it now, right? But then also so so that huge gigantic piece, which I think is so cool when you think about it over like a 10-year period, but also the fact that, you know, they were trying to get rid of the STR tax loophole or or bonus depreciation.

They were trying to get rid of it already. The likelihood of it going away is not zero, right? So, we know in this moment we have markets at work, properties at work, cash flow can happen, and a ridiculous amount of tax savings. Tell me like what could be better when it comes to specifically Airbnbs?

So, as you're on the contrary intake, let me ask you this other question. If you had a client come in and they have the capital to invest, would you advise them to buy an existing home or build on a lot? What is better for tax savings? What is better for creative cash outflow in one of these 100 markets that you short-listed? Like, what is the What is What is your typical Do you have like a go-to strategy if they have the capital?

There's one thing that I've learned is that everybody has their their their No one client is the same. So, like when you say, "Hey, this is how to advise this person." The reality is like I need to know that person's preference, what they care about, how much are they willing to be able to actually build, why do they want to build in comparison to buy? Like, I have to Just like I have to understand their perspective. Yeah, and in general, I'm I'll give like a general sort of ways of thinking about this. So, if you could build, right? And you were willing to do it, you could build the property in the most optimal way possible to have the most revenue drivers for your property, right? That means that you could maybe cut out the master bedroom, that square footage, make the other bedrooms just large enough to be able to get like the right set of beds in there. So, now you can sleep the right amount of people in there.

And instead of just having two living rooms, you have three living rooms because one's going to be turned into a a movie theater. You didn't add a garage in there, you added something completely different, and you made sure that it was at like a very awesome plot spot of the property so that you maximized your backyard. And then even the way you added in like the pool and all the backyard, man, it you you 1,000% optimized it to be the thing that drives most amount of revenue for that specific market. As an example, within Gatlinburg, Tennessee, like almost exclusively the built properties with an indoor pool because that's what helps drive revenue nowadays, right? So, like that's an example of purposely building for short-term rentals. And so you know if you could do that then yeah you're like you're boiling those you could build it to have a rooftop patio where every single last other person in that property has no in that market it doesn't have a rooftop patio now you just dominated right?

So like you can do things that other people can't do you just got to be willing to do it.

One last question. What is one thing you would tell a first-time buyer to do before they have open a spreadsheet or Airbnb or anything else? Like what's the

Oh even before? Usually my recommendation is like get in get into this get into the data. The reality is like if I mean there's there's a couple ways to think about this. You can go more holistically and say hey you should mentally prepare yourself to be able to understand this. You should understand real estate fundamentals and not just buy an Airbnb for cash flow and tax savings right? Or or you should figure out a way to be able to make good decisions. You should be able to figure out a way to like handle stress and be able to get through certain things. You should learn how to be hospitable. Like you can do all of those things but the reality is that if you want the end results of the property being profitable you need to buy the right property and make sure you have enough capital to compete against your competition and set it up the right way. And the only way to be able to know how to do that is you have to understand the data and the only way to understand the data in the best way possible is to go through my training.

You don't It's not the only way.

That's a good segue John. How do people find you?

Uh strsearch.com That is our website.

John thank you for being on the STR Data Labs.

Thanks for having me I appreciate it.