Frequently Asked Questions

Rabbu's revenue estimates are annual projections of revenue Airbnb property investors can expect to earn from nightly rental rates. The estimates calculate current market performance based on the comparables in the included set, then seasonalize that data using normal pre-pandemic demand curves, to arrive at an annual projection of potential future performance. The estimates are not representations of historical performance.

Gross Yield is annual income (numerator) divided by the purchase price (denominator) of the property. The target percentage for this number varies by the intended use for the property – for example, whether the property will be rented full-time or only part of the year – but for most full-time properties, most Airbnb investors target 25% or more.

In short, it's the net income (numerator) divided by the total cash put up by the investor at the initial time of purchase (usually, the down payment if a loan is used to finance the purchase, plus upfront costs such as furnishing and more).

Cash-on-cash is a popular metric with short-term rental investors and commercial real estate investors more broadly because it shows the return profile of the investment when long-term mortgage financing is used to fund the purchase. For example, in short-term rentals, this often means when a DSCR, or “Debt Service Coverage Ratio” loan is used.

To illustrate, let’s use an example. The total purchase price is $500,000. The investor pays $100,000 cash as a down payment and borrows $400,000 from a DSCR lender. At closing, the investor pays an additional $10,000 in closing fees, insurance premiums, and also an additional $25,000 in furnishing costs – which the investor also funds out of pocket.

The total initial investment of the investor’s cash is therefore $135,000 ($100,000 down payment + $10,000 closing costs + $25,000 furnishing costs).

To calculate cash-on-cash return for a year, we now need net operating income, which is determined by annual revenue and annual expenses. In this example, let’s assume annual revenue is $100,000, and annual expenses (including debt service) of $75,000.

This means our net operating income (rent less expenses) is $25,000.

To arrive at cash-on-cash return, divide the Net Operating Income by the initial investment. So, in this case:

$25,000 / $135,000 = 18.5%.

We know many short-term rental investors pay close attention to cash-on-cash return, but we also heard from many of our investor users that they found it more confusing than helpful. To arrive at cash-on-cash return, the software has to make many educated assumptions about performance, including mortgage financing and annual expenses.

We found that most of our users prefer to focus on the revenue (income) as a percentage of the purchase price, which is “Gross Yield.”

You can still filter by cash-on-cash returns in our platform, but we plan to highlight Gross Yield more prominently going forward.

Use the annual revenue estimate as a directionally-correct starting point to evaluate the potential of Airbnb property investments, to be followed by more detailed separate underwriting, by you and/or a local agent. To be connected with Rabbu's expert partner agents, click here

We highly encourage you to select comparables, use the filters, and compare the target address' estimate to broader performance more generally in that market in order to arrive at the most reliable estimate. To search by market, click here

Comparables in real estate investing are other properties similar to the target address. Generally, to determine default comparables, our platform includes Airbnb listings with the same bedroom count within one mile of the target address. There are exceptions to this, however – for example, if a target address does not have enough comparables within one mile, the search will expand to a greater radius so the data set is meaningful enough to generate a directionally-correct estimate.

In addition, our algorithm does programmatically exclude certain 'outlier' comparables that appear to show current revenue disproportionate to property prices in that area. The reason the platform does this is because often the data in those listings is inaccurate due to reasons outside of Rabbu's control (for example, purposefully inflated prices by owner, maintenance issues, etc).

As mentioned above, the best way to arrive at a more reliable estimate is to review the comparables included in the default set, and to include or exclude comparables based on the attributes of the target property (for example, amenities), and/or based on the results you expect to achieve operating the property (for example, review scores).

They are used throughout our platform, including on our Airbnb Calculator, in Market Data, and in Properties For Sale.

While this post primarily explains our annual nightly rate revenue projections, to arrive at return metrics such as cash-on-cash in Properties for Sale, our platform does include some basic expense assumptions. These can always be adjusted using the calculators on individual address and property pages.

The definition of these short-term rental metrics are below. Our estimates are driven by REVPAN, or Revenue Per Available Night, because multiplying the seasonalized REVPAN by 365 is the best way to project annual nightly rate revenue, given that REVPAN is the product of ADR (booked nightly rate) and Occupancy.

• ADR, or Average Daily Rate, is the average of booked nightly rates.
• Occupancy is a percentage, calculated by dividing the number of booked nights in a given period by the number of total nights in a given period.
• REVPAN, or Revenue Per Available Night, is the amount of revenue you can expect to earn every night the property is not blocked or down for maintenance. This is calculated by multiplying the ADR by the Occupancy.

Our estimates are forecasts of expected future performance based on current market conditions; our estimates do not indicate past performance. However, if our estimate varies significantly from your listing's current performance, try the following:

• Select comparables. You know your property's comps better than anyone. Exclude comparables that don't match your target property.
• Use the 75th percentile or 90th percentile toggles. Have one of the top performing properties in the area? Use the Quick Select toggle button to quickly include only the best comparables in the estimate's set.
• Use the Filters. Does your property have amenities others don't have? Do you only want to see properties with more than 10 Reviews? Use the filters to quickly pare down the comparable set.
• Expand the Radius. If your property is in an area where there aren't many Airbnbs with a similar bedroom count, you may need to expand the radius of your search so our tool can identify more comparables.

No. Our estimates only include income from nightly rates ("rent"). The estimates do not include cleaning fees or other incidental fees such as pet fees, early check-in fees, or check-out fees. While you should include these income opportunities in your detailed underwriting, in our experience it's best to look at initial revenue projections primarily with the nightly rates in mind.

All annual estimates for the target address are seasonalized. To seasonalize the data in order to smooth for high demand and low demand periods, we use current market conditions and apply county-level, pre-COVID demand data by month to arrive at the annual, seasonalized estimate.

Rabbu is a market leader in this data, but we're not the only company offering estimates. It is impossible to know how each competitor arrives at their estimates, from how they source the data, to whether fees like cleaning revenue are included in the estimates. Many companies do not disclose how they arrive at their estimates publicly or transparently. Many also do not indicate which properties they used as comparables to get to their estimates.

To review estimates on an apples-to-apples basis, we recommend doing research to determine what is included in competitor's projections.

Our estimates project what properties can expect to earn based on current market conditions, based on the comparables included in the set. Actual performance will be based on the operation of the property.

The Host or operator matters in the short-term rental industry – identical properties next door to each other could vary wildly in performance based on the Host's hospitality, the cleanliness of the property, the reviews, and more.

Accuracy is largely down to execution and changing market conditions, both of which are impossible to predict. Some hosts outperform estimates, and some hosts underperform estimates.

Use our estimates as a directionally-correct starting point for more detailed underwriting. We always recommend connecting to our partner agents, who are local to your target market, because these agents can help you understand the dynamics on the ground, and they can help you understand the true investment opportunities. To be connected with a Rabbu Agent, click here

As the estimates are based on current market conditions, they are consistently updated. Generally this occurs on a weekly basis.

Some top lenders in the short-term rental industry do use our estimates to assist with underwriting Debt Service Coverage Ratio (“DSCR”) loans. To learn more about evaluating if a DSCR loan for an Airbnb investment is right for you, click here.