Room for rent short term : How to make a market study for your private room in your house?

If you are considering renting out a room in your house as a private room for travelers, but you don’t know how to estimate the income you could get from it, here are some techniques that will allow you to analyze the supply and demand in your city. Many tools and data are available for free online. I will give you all my advice, tips and tricks to make this analysis as reliable as possible. If you are ready to invest a little money, you can have access to more precise data to feed your analysis and I’ll give you these tools. But to spoil it all, I can already give you the link to (what I think is) the most reliable simulator available online now.

You should keep in mind that this work is not simple, Airbnb helps you with that and provides through this link a simulator to estimate the potential revenue for your private room. It is a very efficient tool! Fill in your address, the number of travelers you can accommodate at the same time, then click on “Private room” and that’s it. The estimated rent appears below. On the small button with a question mark in a circle, you will find the assumptions made by Airbnb to calculate that income.

If you want to do the work by yourself and understand the offer that is offered, I list below 2 investigation methods.

You should keep in mind that this work is not simple, Airbnb helps you with that and provides through this link a simulator to estimate the potential revenue for your private room. It is a very efficient tool! Fill in your address, the number of travelers you can accommodate at the same time, then click on “Private room” and that’s it. The estimated rent appears below. On the small button with a question mark in a circle, you will find the assumptions made by Airbnb to calculate that income.

If you want to do the work by yourself and understand the offer that is offered, I list below 2 investigation methods.

Market study for the rental of a room from free data:

Method 1: Check if there is demand by creating a fake ad online.

The goal is to find out if people are looking for accommodation in your city or region. This method is more appropriate for medium-long term stays. To do this, you just have to set up a free ad on one or more ad sites like Craigslist or Gumtree. Describe exactly what you offer. Indicate in the description of the ad some specific elements such as:

  • The surface of the room,
  • Private or shared bathroom,
  • If you give access to the living room
  • If guests can use all the amenities in the kitchen
  • If you grant access to a parking lot or to other bonus such as a private terrace, a swimming pool, etc.

You can show photos of the room and shared areas, or use photos found on the internet that look a lot like the private room that you would rent out. The goal here is not to rent for real but to verify if there is a demand for your type of accommodation.

Choose sites that allow you to create an ad very quickly and for free. Each country has its local site for that. For example Craigslist in the USA.

Once you have posted the ad, wait for people to contact you. You will be able to see in a few days if your private room is interesting travelers. If you are quickly contacted by email or phone for more information, this is a clear indication that there is a demand. If this is not the case, then all is not lost. Some explanations are necessary to understand that these results are not representative of all the demand…

The limits of this technique:

• This type of site will usually be used by people who are looking for a room for a few months. It can usually be the case for a student, or for interns in a company for example. You might not have the real visibility on the demand coming from tourists.

• The site you use might cover a limited geographic zone, when you want to cover the whole world. Craigslist is very famous in the US, but it might not be used abroad. Most of the users of short term rental platforms such as Airbnb come from all over the world. So, you will not be contacted by tourists wanting to visit your city. Only some Americans will contact you.

• You cannot learn a lot of information about the offer in your city through this kind of site. You will be able to see if there are few or many ads, but you will not realize if these are often consulted.

• You will have no statistics on the seasonality of the demand or an average occupancy rate in your neighborhood for your type of accommodation.

Method 2: Observe the market in real time, and analyze the data gathered through time

An easy way to check supply and demand is to go on the exact same platforms you will be using in the future to put your ad online. There, consult and analyze the other ads that already exist. By going to the Airbnb or Homeaway websites, you can do a search as if you were a traveler looking for accommodation. Enter in the filters the same criteria as what you could offer yourself with your private room and look at the results that show up.

The number of listings is an important information:

If a lot of profiles show up, it means that there is a lot of supply, and vice versa.

Do not hesitate to vary some criteria such as the number of travelers you can accommodate in the room. This will allow you to see if rooms with similar amenities as yours exist. In general, the more guests you can accommodate in your room, the better:

  • if you only have the space to host one person or a couple, you will be in direct competition with the hotels and with most of the studios in short term rental.
  • If you can install 2 single beds to accommodate 2 people who are not in a relationship (a mother and her daughter for example, or two work colleagues on a business trip) then this will be a plus.
  • If you have a private room for 3 people, you will be more interesting than traditional hotels. Beyond 3 travelers then your room should be quite spacious, or you should offer two rooms or even an entire floor of your house.

Check if these listings have a lot of reviews

The number of reviews is an indicator of whether this accommodation is rented regularly or not. So whether the demand is strong or not.

• If there are only few reviews, it means that few tourists have left a feed back. So either they did not really like their stay (and the rating will be low), or the listing is not attractive enough to get reservations (ugly photos or poorly written description). Another explanation can be that the listing is very recent and has not yet hosted many guests.

• It is a good sign if there are many reviews. It means that there is a high demand for this type of accommodation in the area. In addition, you can read these reviews and get an idea of ​​the profile of the guests (locals or foreigners, families or solo, etc.). You can anticipate that the same type of tenants will rent your private room.

Look at the price charged by the similar listings in your neighborhood

Pay attention only to the ones that have many reviews, and that provide exactly the same amenities as you.

Consider that this is the price you will have to set up for your own listing. By clicking on the “Price” button, Airbnb displays an average price charged on the current listings and gives a graphical view of the price distribution. Note that these prices include the service fee and taxes. So, you should deduct about 15% of that price. Play with the sliders in this graph and you will see which prices are the most practiced, and therefore the fairest in relation to this market.

From there you can estimate an average monthly income for your private room by multiplying this night rate by the number of days rented. This figure is not easy to get or estimate. It would be too simple to multiply it by the number of days of the month. You shouldn’t because you will never rent 100% of the time. We must weight this price by the average occupancy rate in your city.

Some statistics concerning the hotel occupancy rate are available online. Even if it is not entirely correct, you can use this figure because it should be close to the real occupancy rate for private rooms.

Airbnb revenue simulator

To make up for this lack of information, and to attract you as a customer, Airbnb provides a simulator so you can estimate your monthly rental income based on their own historical data. They take a certain number of assumptions such as the geographical area, the price of identical listings, occupancy rate, seasonality of the demand. These are conservative assumptions because Airbnb will only consider 15 days of rental per month in their simulation.

Check similar data with AirDNA

Other statistical information can be found on the AirDNA website. In its free version you can enter your address and observe the number of listings that are online in your city. You will be able to see the number of reviews, the price per night and the number of nights the room is available during the year.

You will have to uncheck the ads for entire home (in purple) to see only the private rooms (in blue on the map). At the top of the page there are interesting data on the average price per night, the occupancy rate and the average monthly income, but in the free version this mixes data of entire house and private rooms. We can however use the data of the occupancy rate in our own calculations.

When you scroll down on their page, you will have access to additional information, relating to amenities, minimum number of nights, but these are average data on all types of housing. Therefore, it is not very consistent in our case study. By subscribing to this site (for a fee), you will have much more information (as explained at the end of the article).

The limits of this technique:

On Airbnb, you will need to select a date range to access to the price of the ads. Therefore:

  • You will not have an overview of all the profiles available in the area. Only listings that are not rented on these dates will be visible.
  • You will not be able to have an overview of the evolution of prices over the year.

On Airbnb and Booking.com you will never know the occupancy rate.

You have no way of analysing the renting seasonality through short-term rental platforms.

In addition AirBnb does not display the total number of ads if it exceeds 300. Though this figure is already a sign that there is a lot of offer, then we can guess that the demand is quite steady. If you zoom in a smaller area the number will be smaller and the whole supply will be more readable.

On Airbnb, Homeaway or Booking.com, you could think of seeing the seasonality and the evolution of prices the hard way by searching on various dates spread over several months, but it is not viable because many owners only unlock their calendar 2 or 3 months in advance. So, you will not have a reliable view of the supply beyond this period.

On Booking.com, room listings are mixed with hotel listings. It is possible to select “Homestays” in the “Type of establishment” field in the filters on the left of the screen. If no equivalent profile exists in your city, this field will not even display. This research will allow you to clearly see what the supply is as a whole, and what are the prices charged by the hotels in your neighborhood.

Market study for the rental of a room using paid data:

AirDNA and historical statistics from several short-term-rental platforms

On this site, AirDNA provides to the public a set of data from different seasonal rental platforms. They historicize data and allow precise analyzes with a more global point of view.

The primary purpose of AirDNA is to display in detail the market for the supply of accommodation available on Airbnb and Homeaway. Each listing is represented on a map of the city that you have selected. This perspective will let you assess at glance whether the supply is low or large.

Click on an icon on the map to access to the price per night. By scanning the different profiles, you can estimate the price range practiced in your neighborhood. You can put your daily rate in this range.

In the paid version, filters will allow you to precisely target data relating to listings that have the same characteristics as yours. You will also be able to get figures on the prices charged, get projections of demand over the coming months, and understand the seasonality of demand. All this data will allow you to make a very precise analysis of your market, based on real data provided by market players.

A limit is that this tool is rather intended for companies managing many listings, property managers or hotels. It will certainly be of little interest in the long term to subscribe to such a service unless you decide to put a fleet of apartments for short term rental.

Conclusion

All the tools available for free online will already allow you to get a good idea of ​​the relevance of the demand in your area, and the potential income you could get from your private bedroom. Through the videos below, I show you in details what can be the income from a room rented in some French cities. I encourage you to tell me in a comment if this information was useful to you and what problems are blocking you.

Etude de marché pour une chambre chez l’habitant à Strasbourg
Etude de marché pour une chambre chez l’habitant à Rennes
Etude de marché pour une chambre chez l’habitant à Orléans

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