Airbnb investor explains how to find markets to buy in, how to succeed – Business Insider

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When the pandemic hit in 2020, Kent He spent his newfound free time learning about real-estate investing.
“The silver lining during Covid was, I read a lot of books and I listened to a lot of podcasts about real estate,” he told Insider. “I dove in.” 
At the time, He was living in San Diego and working for an insurance company on the tech side doing data cleanup.
“I knew that I wanted to leave my W-2 job at some point,” said the 34-year-old. “In order to do that, you need to generate cash flow on a monthly basis.”
Based on his research, he was convinced that the short-term rental route could produce the highest cash flow.
“Even though it’s higher-risk, I felt that with my background in data, I could look for certain opportunities that would allow us to stand apart from the competition,” said He. Short-term rentals are considered riskier since there’s no guarantee that your property will be filled, as opposed to long-term rentals, which are typically filled with a tenant year-round.
He and his wife bought their first investment property in August 2021 in Scottsdale, Arizona and spent three months converting it into a bachelorette-themed Airbnb.
“Within a month of it going live, we had almost $100,000 in bookings,” he said. “It was pretty wild. I had done all my research, but there are no guarantees. It was really, really cool to see these bookings come in and see that people resonated with what we put out.” 
Less than a year later, in February 2022, they purchased a similar property in Scottsdale that they also designed specifically for bachelorette trips. Insider verified He’s property ownership, which also includes an affordable housing rental in Alabama and his primary home, by looking at his closing statements and quit-claim deeds.
By June 2022, the cash flow from He’s two Airbnb units was enough to cover his family’s expenses and he quit his day job to go all-in on real estate. 
“My goal with real estate was never to just retire and lay on a beach and do nothing. My goal was to have the option and freedom to do what I wanted,” said He, who is on a mission to create the largest affordable housing investment community in the United States, and spends his days creating educational content around the affordable housing crisis.
Creating financial independence via Airbnb investing started with selecting a market. 
He, who resides in San Diego, explains how he settled on Scottsdale, Arizona and why he started designing bachelorette-themed spaces.
He started researching various markets in February 2021. It took about six months from the time he started looking at markets to when he closed on his first property. 
The metric he was most concerned with was rental demand, which he was able to look up in various cities using data analytics site AirDNA.
As you can see from the demo market example below, AirDNA scores “rental demand,” which is how often rentals are booked throughout the year. A high score means there is high travel demand.
In this particular example, the rental demand score is 81.
When doing his market research, He was looking for a score of at least 60: “If the rental demand was less than 60, I didn’t even look at the market. I don’t want to fight an uphill battle trying to get people to come to a vacation area where they don’t want a vacation.”
If a city met that threshold, he would study the market closer and consider things like the median property price and the regulations in the area to make sure he could legally operate an Airbnb. 
Scottsdale met all of his criteria, including the rental demand score. In 2021, when he first started looking at markets, “the demand was right around 66 to 68,” he noted.
Another helpful tool He used to then select a specific neighborhood within Scottsdale was PriceLabs.
“PriceLabs’ market dashboard functionality allows you to export a data set of the top performers in any market,” he explained. 
As you can see in this sample report from PriceLabs, you can look at all of the available listings in your market and filter by number of bedrooms, star rating, and reviews.
He looked at the top 200 listings in Scottsdale and did a keyword search in the reviews section of each listing. Specifically, he was looking for how many times the word “location” popped up in the reviews. 
“It’s generally a positive connotation associated with that word,” he explained, so he was looking for properties with a lot of mentions of “location” in the reviews. “Now, you know which neighborhoods people are raving about.”
In addition to using the dataset from PriceLabs to find hot neighborhoods, He used it to understand what types of guests were visiting the area.
Again, he went to the reviews of the top listings and searched for keywords like “family” and “bachelorette.” 
“About 40% of the reviews for the top 200 listings mentioned the words ‘bachelorette’ or ‘girls trip,'” he said. “That’s how we found an outsized opportunity in the market.” 
From there, He designed a bachelorette-themed space. It’s outfitted with a “beauty bar” with individual vanity mirrors:
There’s also a Peloton bike and an outdoor space with a pool, fire pit, and games like cornhole:
He also provides his guests with recommendations to restaurants that take reservations for large groups and referrals to excursions or activities in the area.
“If you can help them plan their trip out a little bit better, it takes a lot of stress off the coordinator — and usually that coordinator is the person that’s going to be leaving your review,” said He. “So any way that you can understand the stresses in their life and reduce that stress, I think it comes out as a win.” 
He credits much of his success on Airbnb to understanding his guests and their needs. This is something that any host can do to stand out from their competition, he said. You just have to be willing to analyze data and reviews of existing rentals to figure out what type of person is typically visiting your market and then design a product that caters to that guest.
If the majority of people visiting your area are families, “think about how you can solve their problems and what you can include to make the life of a parent that’s traveling a little bit easier,” he said. Maybe you include a stroller, crib, or pack-and-play in your rental.  
“I think anyone can do this as long as they do the research and identify the opportunities that other people might not be looking at,” said He of Airbnb investing. “You just have to look at data a little bit differently and that’s how you find those outsized opportunities.”
Axel Springer, Insider Inc.’s parent company, is an investor in Airbnb.
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