At Rabbu, we’ve built the market-leading Airbnb Calculator to help short-term rental investors evaluate potential properties. The tool uses market data and comparable properties to project revenue for any address in the United States. If you’d like to learn more about the methodology behind the numbers, check out the FAQs section on our site.
We use this tool every day to help investors evaluate opportunities, so we thought it would be helpful to share how we use it to make informed investment decisions.
Analyzing the 75th and 90th Percentile Projections
When we assess potential investments, averages only tell part of the story. After entering in the target address on the Airbnb Calculator, the first thing we do (of course!) is look at the initial result. This represents an annual estimate of the potential revenue this address could generate based on the nearby Airbnb listings included in the initial comparable set. Next, we click on the 75th and 90th percentile toggle buttons. This helps us uncover the difference between average-performing properties and the market’s top-tier performers. This approach highlights the potential for higher revenue, and helps us identify what makes top properties stand out. For example: do all of the best performing properties in this market have a pool? Are all of the kitchens updated? Are the listing photos professional and do they really pop to the potential guest booking on Airbnb? Establishing these patterns can help you quickly form a view on how the target address may compare.
Evaluating the Individual Comparables
We refer to our algorithms initial outputs as "directionally correct." This means that the numbers give you a great indication of how the comparables included in the estimate's set are performing -- but that's just the starting point. The true superpower of the tool lies in the transparency of the information and in its flexibility to be altered by you specifically to your target address.
We always scroll down the page and carefully review the individual comparables included in the dataset, starting with their photos. Properties that are significantly nicer—or less nice—than the target property are excluded. This step ensures that the comparison set reflects a true apples-to-apples match. You'll notice as you Exclude certain comparables, the estimate number will change. How much it changes depends on how drastically the comparables you exclude are impacting the data set. If there are outlier comparables that are significantly outperforming or underperforming the rest of the group, the estimate may change by a wide margin.
Matching Amenities with Precision
Amenities can make or break a property’s revenue potential. After narrowing down the comparable properties based on the photos, we dive into their amenity offerings. Only those with similar features to the target property make the cut. We exclude everything else. This attention to detail ensures that our revenue estimates are as accurate and actionable as possible.
Conclusion: Why We Recommend the 75th Percentile as a Baseline
In our experience, the 75th percentile projection is the best baseline for evaluating STR opportunities. Operating a successful short-term rental requires aiming to be a top Airbnb host, which means surpassing the average and focusing on practices that align with the higher-performing properties in your market.
By using our tool this way, we help investors target their efforts and set realistic yet ambitious expectations. Whether you're new to short-term rentals or a seasoned pro, starting with the 75th percentile can set you up for long-term success.
