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have you thought about adding an amenity
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to your short-term rental wondering
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should I add a pool how will it affect
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my expenses and overall will this be a
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good return on investment today let's
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walk through the analysis if we haven't
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met yet hi my name is Lydia and I
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operate a beach house Airbnb down in
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Florida and this very question whether
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or not to add a pool has been on my mind
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for the past few months at first glance
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the disparity between pool versus no
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pool in a five-bedroom house in my
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market appears to be $30,000 of Revenue
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per year but before we drop $100,000
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into this fresh new amenity let's do a
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deeper dive on all the data your Market
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might be different than mine and your
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amenity of choice might be different
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than mine but the process should very
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much be the same Step One is deciding
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which amenity to even look into for me
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personally how I decided to look into a
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pool is because pools in my area is
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actually quite common it's obviously fun
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in the warmer months to dip into a pool
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and cool off but in the cooler months
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like right now as I'm filming it it's
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like snowing in Minnesota we get a lot
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of outof State snowbirds and they would
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love to come to a place that has still
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warmish outdoors and a heated pool when
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I look at my market overall and kind of
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sort all the listings by highest
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performing by Revenue the top ones are
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often properties with a pool so as I was
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going through my monthly review of the
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market data in my area NPS everyone
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should be doing this periodically to
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stay up to date on their Market I was
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just kind of clicking around on the
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amenity filters on air DNA and that's
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how I stumbled upon this difference in
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revenue and it's been on my to-do list
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to look into further ever since a huge
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shout out to airdna for partnering with
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us on this video I've been relying on
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their Market data for my decision-making
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process and you can give them a try for
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free using the link in the description
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box below they also have a paid
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subscription option for more granular
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details on the amenity filters and
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whatnot step two after you've decided
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what amenity you'd like to look into you
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need to determine your comparator groups
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for example if you were me you could
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compare like five bedroom listings with
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a pool versus five-bedroom listings
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without a pool however in my area just
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looking at the five bedroom houses would
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be too small of a sample size not to be
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a giant nerd but you need sufficient
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sample sizes to make sure the outliers
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don't have an outsized effect and if you
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think about it my five-bedroom house
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could at maximum house 12 guests but not
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everyone who's booking my house is
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exactly 12 people people some of them
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might be eight people nine people and
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they could be looking at a whole host of
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other listings that could fit their
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needs so kind of working backwards
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knowing my target audience what are the
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other properties that might also show up
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in their search I decided in this case
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the most applicable comparator groups
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would be four to six bedroom listings
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with a pool versus four to six bedroom
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listings without a pool and compare how
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they've been doing in terms of Revenue
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occupancy all of their data this brings
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us to step three a general compar side
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by side of the two groups you want to
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review the overall Trends in Supply in
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demand and occupancy so what you're
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doing here is pulling up in your area
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filtering by the number of bedrooms and
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I also filter by number of guests and
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bathrooms to pull up the most relevant
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comparison groups all right so pulling
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them up side by side on the left hand
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side we have the four to six bedroom
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listings without a pool and on the right
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hand side we have the same size same
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number of guests same bathroom listings
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but with the pool right away we see that
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the annual revenue on average without a
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pool is 93,000 versus with a pool is
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$122,000 per year the occupancy is also
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different by about 10% the average daily
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rate um is slightly higher for the pool
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group um same for the revar that's also
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higher I think this is a sufficient
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sample size having 35 versus 36 listings
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in each group The amenities I mean
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everyone should have air conditioning so
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we can skip over that whole part looking
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a little bit more under occupancy I
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really like this graph and I like to
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change it to the last 3 years to kind of
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see in detail if there were any
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anomalies between one year versus the
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next I think on the pool side it kind of
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ranges I don't know the Top Line Is It
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ranges 50ish to 80% versus on the nopool
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side it's like 40ish to Upper 60s so I
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think consistently across all the months
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having a pool does offer higher
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occupancy rates and this trend seems to
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be fairly consistent at least in the
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past few years I think sometimes
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occupancy is interesting to think about
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in a weekend heavy Market it really just
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means some places are booked for four
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nights versus three nights versus two
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nights on a weekend but anyway as far as
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how long are the guests staying again
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switching it to look at the past 3 years
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I'd say they're very similar they're
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both kind of 3 to 4 day weekends which
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is also what I try to aim for this next
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graph shows how many bedrooms the
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listings have and it kind of just shows
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the spread between four five versus six
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bedrooms interestingly in the pool
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category not as many are six-bedroom
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houses but I think I did filter out
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places with a ton of bathrooms that
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might be the reason further down we have
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a supply demand graph and it shows how
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many listing days were booked and the
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number of booked listings it does look
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like the pool demand has gone up but the
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supply has also gone up for all we can
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tell supply and demand has kind of
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matched so it's interesting but nothing
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to conclude yet now this one I think is
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really important to look at when are the
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future reservations being booked and
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ideally I would like to see a clear
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indication that having a pool means you
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get booked out sooner by more guests and
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it's not that obvious to me remember
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it's 33 35 listings versus 36 listings
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so the numbers the nominal numbers are
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very similar and looking at for example
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christmas-ish week about 20 listings of
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each have been booked and it's a very
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similar percentage same for kind of
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looking towards Spring break it is not
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clear and convincing that having a pool
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gives you earlier bookings or gives you
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a higher guaranteed occupancy booked
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farther out if that makes any sense
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moving on to kind of the revenue
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generated by the listings on average per
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month I'd say the nopool listings range
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from like a low end of 5,000 in the
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month to upwards of 10 11,000 per month
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that is fairly consistent with my
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experience versus it is definitely
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higher for the pool side having higher
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revenues per month kind of throughout
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the whole year this next graph is
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splitting it up by different bedrooms
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how much revenue did each listing earn
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by bedroom as you can see the four to
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five bedroom lines the orange and
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purplish ones they've kind of merged
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into the same thing this is definitely
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different than when I first started out
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looking through this just helps me
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understand if the averages were pulled
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up by the six-bedroom houses or pulled
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down by the four-bedroom houses but this
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doesn't seem to be that much of a case
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in this next graph we're looking at the
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distribution of listing Revenue so
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comparing the top 10% versus the bottom
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10% and everything in between looking at
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the nopool side my experience has been
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very similar to the pink line kind of in
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the top 75th percentile it really ranges
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from the bottom to the top how much you
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can make a month average daily rate
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seems to be consistent throughout the
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years and matches with how the revenue
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fluctuates by month so nothing too
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exciting what was the average daily rate
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by bedroom again I think it's promising
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to see a clear increase if I were to go
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from a five-bedroom no pool to a five
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bedroom with a pool comparing these two
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graphs the next one I like to look at is
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what are guests willing to pay for
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future stays cuz so far the data kind of
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looks backwards whereas this one kind of
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looks forwards and it is actually very
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interesting cuz I'm looking at the
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spring breakish time in March on the
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pool side guests are willing to pay like
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$11,000 or so versus actually not really
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they're both kind of around the
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$800 range with a couple higher spikes
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on the pool side I guess that's really
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hard to tell if that's an anomaly for
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one special super awesome listing versus
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is this the average because if you can
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look at the purple bar it's quite low
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it's not representative of that many
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listings and it's also interesting to
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see the purple bars are actually lower
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on the pool side meaning that there
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aren't as many booked listings for
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spring break week versus the no pool
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side I don't really know what to think
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of this it's not clear and convincing
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here that the pool is help helping
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future revenue and I worry this ties
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into the increase in Supply but more to
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look into I think revpar is the revenue
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per available night which is another
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metric you can look at I have found the
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pattern to be pretty consistent with
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just the revenue throughout each month
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now the next thing I want to look at is
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this calendar at the end it's kind of
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like a heat map the darker the blue the
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more popular and booked and more Revenue
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generating those weeks are and comparing
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the two graphs there is a little bit of
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variability July seems to be a hot
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season as does kind of the winter
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holidays the pool listings might be
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doing better during October but March or
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spring break wise they're about the same
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the summer looks about the same overall
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this tells me the pattern is similar all
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right and then how far in advance are
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guest booking just comparing the two
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graphs there are still a lot of last
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minute bookings which I don't love for
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my sanity but that's okay at the end of
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the side by- side comparison to me it
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looks like listings with a pool does in
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fact generate more Revenue have higher
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occupancy higher average daily rates the
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pattern of seasonality might not be all
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that different it might not mean people
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are booking more in advance but overall
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it does seem to be making more money
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because the amenity in question does
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seem to correlate with a higher revenue
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generated it makes sense to move on to
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the next step which is a deep dive into
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each individual listing the objective
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here is to go through each listing look
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at all the pictures all the information
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how they are pacing for future bookings
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what rates they are charging the quality
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of their meni quality of their pictures
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the reviews that they have basically
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evaluate all the listings and find out
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which ones are most comparable to yours
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one way to quickly do that is to use the
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export tool if you go back to the main
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US market page there is a little icon up
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here where you can click and get the
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listing in a table format and you can
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use the export function to generate a
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spreadsheet that you can download I like
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to use this as a starting point and then
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create my own spreadsheet and I
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recommend having the link so you can
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have a future reference information on
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the Bed Bath and number of guests the
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revenue occupancy and average daily rate
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kind of data and then I also put my
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observations in pluses and minuses
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compared to my property so pluses could
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be if they are a better location if they
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can house more people if they have an
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extra bathroom if they are five stars on
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300 reviews then that's yeah obviously
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better than what I have or they can be
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minuses like they are even farther away
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from the beach or they are smaller or
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the Interiors look dated or the pictures
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are bad you get the gist as I go through
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listing by listing I also try to clean
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up the data a little bit so occasionally
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there would be listings that are no
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longer listed like this one you click on
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the link on Airbnb it directs you just
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to the Airbnb main page that might be
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because they have closed up the listing
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they sold the place or or they are I
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don't know shutting it down and
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relisting it I've seen people do that
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sometimes if I click on the vbo link and
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the same thing happens I'm pretty
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confident that this listing is no longer
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and I'm just going to ignore it I also
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take out any duplicates it's not common
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but sometimes the arbnb and vbo ones are
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not listed together as one thing on
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airdna dashboard so if I identify that I
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just combine the information as I go
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through the listing I click into the
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actual Airbnb listing I look at their
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pictures their interior design what kind
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of amenities they offer so this one has
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a pool it's actually a pretty small pool
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it's a tiny little rectangle but they
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also have a botchy ball situation going
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on which looks really fun they are
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listed as a guest favorite for having
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121 reviews and 4.93 stars they are
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managed by a professional property
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management company and it looks like
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their future dates are booked like a
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healthy amount of bookings for future
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dates location wise they're a little
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farther away from from the beach than
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where we are but they're also close to a
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nice park so I think we'll call the
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location kind of a wash all of these
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observations I would categorize as what
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bonus points they have and what minus
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points they have on my listing and as I
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go along I will group together all the
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ones that are closest to mine in in a
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comps kind of group and then everything
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else I will still keep the data but kind
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of disregard them for most of my
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analyses the other thing you might have
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to clean up a little bit as you're going
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through the data is sometimes a
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amenities like pools or Games Rooms or
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whatever amenity you're looking at if
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the listing itself didn't check them
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properly on the listing website so like
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on Airbnb they did not check the pool
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button then obviously the data might
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transfer incorrectly into air DNA and so
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they might be miscategorized as a pool
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house but they don't actually have a
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pool it happened to a couple listings so
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I kind of reverse them and put them into
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the right places there's a little bit of
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data cleanup that is required in this
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step studying your competitor's future
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calendar ERS and future bookings is
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really important because it shows you if
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like I know which weekends I'm booked
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and which weekends I'm not and so if a
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competitor has booked weekends on my
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open weekends it really means at some
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point someone searched for staying there
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in this market in that weekend and they
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chose this listing over mine and overall
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I think it helps me gauge where I stand
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in terms of like the percentile within
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the market and I think it's really
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important to have some sense of within
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the pool group where I would be and this
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is important because you've seen how far
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the spread can be top 10% versus the
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bottom 10% make a huge difference in
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Revenue overall I found this data on
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airdna to be pretty reliable it skews I
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think just 3 to 5% underestimated just
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based on my own listing comparing to
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what it guesses I make but I think
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that's a reasonable margin of error I
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know this step is super tedious you can
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probably hire an assistant to help you
00:14:57
with this step as long as you know how
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to give clear instructions or you can
00:15:00
send them this video there you go moving
00:15:02
on to step five I think we're ready to
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project the revenue with versus without
00:15:06
the pool at this point I have two
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spreadsheets one for with pool one for
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without with the data cleaned up and
00:15:12
trimmed down to just the comparables I
00:15:14
pull together the mean revenue and also
00:15:17
the median Revenue occupancy average
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daily rate as well as the high and low
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end of the ranges for not having a pool
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AKA as is the most comparable listings
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are actually making 80 to 85k for
00:15:30
Revenue last year we've been occupying
00:15:32
kind of the upper end of this nopol
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category making around 100,000 in
00:15:37
revenue and kind of just quick glance at
00:15:39
these numbers only seven listings in
00:15:41
this area with no pool made more and
00:15:44
that's consistent with my rough estimate
00:15:46
of kind of being in that top quarter of
00:15:48
that market with the pool we could have
00:15:51
been making maybe $140,000 in Revenue I
00:15:54
think in this table the revenue is
00:15:57
slightly lower than it should be because
00:15:59
the limitation is some of these listings
00:16:01
are new so they don't have a full Year's
00:16:03
worth of data and that's kind of pulling
00:16:05
the averages down if I look mainly at
00:16:07
the average daily rate multiply it by
00:16:09
the occupancy I get closer to maybe
00:16:12
140,000 and the best case scenario if we
00:16:15
extrapolate how we are currently above
00:16:18
average in the no pool situation if we
00:16:20
add a pool we would still be above
00:16:22
average then maybe we could get closer
00:16:25
to
00:16:26
180,000 I don't really think that's fair
00:16:28
generally the pool houses seem all very
00:16:31
professionally managed and
00:16:32
wellmaintained so I think in comparison
00:16:34
we might just be kind of in the middle
00:16:36
the worst case scenario for some of
00:16:38
these places I don't know why I think
00:16:40
they look just fine but it could be
00:16:42
they're on the algorithm's bad side or
00:16:45
they have some pricing errors getting
00:16:46
too many like one or two night weekends
00:16:49
based on those worse off listings for
00:16:51
some reason the revenue I'm projecting
00:16:53
could be as low as $100,000 and that
00:16:56
would be no change than what we already
00:16:58
make another confounding factor is that
00:17:00
a lot of these pool properties have an
00:17:02
additional amenity like mini golf or
00:17:04
botch ball so it's kind of hard and
00:17:07
unfair to say that this difference in
00:17:09
revenue is all due to the pool I'll
00:17:11
never know exactly how much each thing
00:17:13
contributes just based on intuition the
00:17:15
pool is more important but I suppose
00:17:16
it's also a limitation that I don't have
00:17:18
a perfect comparative group with just a
00:17:20
pool added no mini golf no nothing else
00:17:23
overall all that to say if the current
00:17:25
Revenue Trends continue which is a big
00:17:28
if and we'll talk more about that I can
00:17:29
expect to make an additional $40,000 per
00:17:32
year in Revenue by having a pool which
00:17:35
is pretty good so that leads me to the
00:17:37
next step step number six gathering
00:17:39
information on the cost both the initial
00:17:42
cost for starting up and the maintenance
00:17:44
cost for ongoing pool maintenance in our
00:17:47
most recent visit to the beach house we
00:17:48
met with a pool contractor to get some
00:17:50
more information and just get some
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questions answered I still have the
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actual piece of paper it says
00:17:56
$551,000 obviously this was their
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special pricing but either way 60,000
00:18:00
that was less than what I thought a pool
00:18:02
would cost I'm going to guess it's
00:18:04
likely a bit more just the nature with
00:18:06
how these projects go let's say it's
00:18:09
$80,000 pool construction can be paid
00:18:12
for outright by cash or they can be
00:18:14
financed just for easy math I'm going to
00:18:16
assume we're paying cash up front when
00:18:18
we're closer to that decision point we
00:18:20
can play with different numbers on how
00:18:21
to finance it and this and that but I
00:18:23
need this to be a good decision either
00:18:25
way even if we just use cash up front
00:18:28
for maintenance potential repairs pool
00:18:30
heat and an increase of Home Insurance
00:18:33
I'm estimating $6,000 for the year from
00:18:36
what I can tell it could be less it
00:18:37
could be more I was hoping to use a more
00:18:39
conservative estimate just in case there
00:18:42
are more surprises which I I mean I know
00:18:44
there will be more surprises because
00:18:45
this is a new thing that we're doing if
00:18:47
you have a pool in Florida or anywhere
00:18:49
in the southeast of us please let me
00:18:51
know your experience I'd love to hear
00:18:53
what you liked and didn't like any
00:18:55
surprises you had that would really help
00:18:57
me out and then for downtime I'm not
00:18:59
sure we really need to completely close
00:19:01
it and stop hosting for a couple months
00:19:03
versus could we advertise that yeah
00:19:06
there's construction going on here's a
00:19:07
super reduced rate I'm kind of leaning
00:19:09
towards the former because who wants to
00:19:11
stay at a house with construction going
00:19:12
on assuming 12 weeks of no revenue and
00:19:16
I'm picking the slowest months roughly
00:19:18
I'm going to be missing out on $220,000
00:19:21
of Revenue altogether $220,000 of loss
00:19:24
Revenue plus 80,000 of the pool
00:19:26
construction itself that's $100,000 in
00:19:29
upfront investment with all this
00:19:31
information you are now ready for step
00:19:32
number seven which is calculating the RO
00:19:35
or return on investment in the best case
00:19:37
scenario with the $80,000 extra in
00:19:40
Revenue per year taking out maintenance
00:19:42
expenses this is an additional $73,000
00:19:45
of profit per year as a result of
00:19:48
$100,000 of investment so a 73% return
00:19:52
in the worst case scenario zero increase
00:19:54
in Revenue but additional expenses of
00:19:57
6,000 per year this one would be a loss
00:20:00
the more likely case of maybe 140,000 of
00:20:04
Revenue total per year minus expenses
00:20:06
this would give us an additional
00:20:08
$33,000 of profit per year on 100K
00:20:11
investment this is still 34% of return
00:20:14
which is pretty good it would take
00:20:16
altogether about 3 years to fully
00:20:18
recover the cost not included in this
00:20:20
Roi is the change in home equity
00:20:23
theoretically the home value should go
00:20:25
up after we add a pool the numbers I see
00:20:27
are kind of all over the place I'm sure
00:20:29
it depends on the market I've seen
00:20:30
anything from 5 to 8% of the home value
00:20:34
itself to like 50% of the pool cost also
00:20:37
not included are any tax implications
00:20:39
which I think are generally positive
00:20:41
both are going to be very helpful in
00:20:43
recovering that initial sunk cost but
00:20:45
I'd like the pool decision to be a
00:20:47
standalone good decision even without
00:20:49
additional home equity which obviously
00:20:51
can fluctuate based on how the market is
00:20:53
doing in terms of housing prices and
00:20:55
taxes because that's like the last thing
00:20:57
to consider with all of this information
00:20:59
and discussion step eight what is the
00:21:02
final decision this is a really tough
00:21:04
one I think on paper just looking at
00:21:06
this 30ish to 50ish per return that's
00:21:10
excellent and I feel pretty confident in
00:21:12
how I looked at the listings my
00:21:13
comparables My overall methodology on
00:21:16
how I arrived on that number there's
00:21:17
even additional upside that I haven't
00:21:19
included like the home equity and taxes
00:21:21
considering what I could be doing with
00:21:23
my money to invest in all the other
00:21:25
possibilities including buying another
00:21:27
short-term rental
00:21:29
it's hard to beat 30 to 50% returns
00:21:31
Playing devil's advocate though there
00:21:33
are a few reasons not to add the pool
00:21:35
the first one is a math one yeah 30 to
00:21:38
50% return sounds amazing but you can
00:21:40
also phrase it as you need at least 2
00:21:43
years to recover your initial cost what
00:21:46
if I happen to want to sell within those
00:21:48
2 or three years will my partners
00:21:50
because this was a partnership will they
00:21:52
or I need the liquidity for some reason
00:21:55
do I accept the risk of being locked in
00:21:57
I guess technically I could sell anytime
00:21:59
it's not really locked in I guess the
00:22:01
right way to say it is do I accept
00:22:03
potentially just accepting a loss if I
00:22:06
were to sell sooner the second thing to
00:22:08
think about here is the learning curve
00:22:10
of adding a new amenity and all the
00:22:12
maintenance that goes with it and all
00:22:14
the potential surprises which I know
00:22:16
there will be a bunch I feel like I'm
00:22:18
finally at a steady state for learning
00:22:20
the operations of this particular house
00:22:22
and adding an amenity kind of restarts
00:22:24
that whole process it's not a good
00:22:26
enough reason to say no just something
00:22:28
to kind of mentally prepare for and
00:22:30
think about if that's a commitment I
00:22:32
want to make and then lastly this is a
00:22:33
very important one what I projected is
00:22:36
based on past performance and you know
00:22:39
what every investment disclaimer says
00:22:41
past performance does not guarantee
00:22:43
future results forget the pool for a
00:22:45
second take broadly the four to five
00:22:48
bedroom houses when I first started and
00:22:50
was studying the market the five bedroom
00:22:53
houses made significantly more in
00:22:54
Revenue while kind of costing the same
00:22:56
to purchase on the market over time this
00:22:58
difference in Revenue has kind of
00:23:00
diminished and those lines have merged
00:23:02
to the point where four or five bedroom
00:23:04
houses make roughly the same it could be
00:23:07
because the supply has gone up for five
00:23:10
bedroom houses or maybe more people have
00:23:12
noticed the same thing that I've noticed
00:23:14
Revenue declines as the supply goes up
00:23:16
who's to say this can't happen to pool
00:23:17
houses if it does then the duration it
00:23:20
will take to recover that sun cost will
00:23:22
be even longer I see some potential
00:23:25
signs of this the DraStic increase in
00:23:27
Supply in pool house houses over the
00:23:29
past few months past year and also in
00:23:31
the graphs that looked ahead to Future
00:23:33
bookings for the future 180 days the
00:23:36
homes with pools didn't necessarily
00:23:38
command that much more in terms of
00:23:40
occupancy yes the rates are a little bit
00:23:42
higher but the occupancy seems about the
00:23:45
same it would seem to me that there are
00:23:47
people that would be happy to pay for a
00:23:49
kind of expensive still very luxurious
00:23:52
house without the pool when it meant
00:23:55
they didn't pay a premium just for pool
00:23:57
access when they're already so close to
00:23:59
the beach this makes sense to me as a
00:24:02
traveler but I don't know how big a
00:24:04
group this is and whether this is enough
00:24:07
in the future I think all this kind of
00:24:09
goes into predicting the future which
00:24:11
obviously is impossible to do so far
00:24:13
though just based on my observations the
00:24:15
higher end of travel like several
00:24:17
thousand dollar worth of bookings for a
00:24:19
weekend at a beach house kind of travel
00:24:21
that has been somewhat immune to
00:24:23
economic changes in recent times and so
00:24:27
whether this continues to the Future
00:24:29
it's hard to say but at least it looks
00:24:32
promising my plan is to move forward
00:24:34
with getting a survey this would be a
00:24:36
small inexpensive first step to take
00:24:38
because in my city there are limits to
00:24:41
what size pool you can have based on the
00:24:43
lot size that you have for your house in
00:24:45
the meantime I'll also a talk to my
00:24:47
partners to see what they think of this
00:24:49
plan I'll show them all the data and see
00:24:51
what feedback they have see if this
00:24:53
commitment to adding a pool would be
00:24:55
consistent with their goals and then B I
00:24:57
want to talk to people in the area who
00:24:59
have pools I've never had a pool in my
00:25:01
house I just don't really know what to
00:25:02
expect and there's only so much you can
00:25:04
read online I made the mistake of going
00:25:06
to a Reddit Forum to see what people
00:25:08
have complained about for pools and I
00:25:10
saw some horror stories of like dead
00:25:12
animals that fall into the pool and they
00:25:14
get trapped and that is just horrifying
00:25:17
and then C because the most optimal time
00:25:19
to install the pool would be like August
00:25:22
is anyway I have time so the last thing
00:25:25
that I want to do in the meantime is to
00:25:27
continue obs observing this Market
00:25:29
dashboard probably check in like say
00:25:31
around February March to see if this
00:25:34
data has changed over time I already
00:25:36
have my list of comps it would be really
00:25:38
easy and quick to just go through the
00:25:40
same process again but abbreviated and
00:25:43
see if my worries about the increase in
00:25:46
Supply and the decrease in Revenue
00:25:48
whether that is actually happening with
00:25:51
pool properties and also by then we'll
00:25:53
have a clearer outlook on the general
00:25:55
economy anything that's changing with
00:25:57
taxes and rules all the things this was
00:25:59
such a long and nerdy video thank you so
00:26:02
much for kind of talking it out with me
00:26:04
and thank you to airdna for sponsoring
00:26:05
this video I hope you found this useful
00:26:07
or at least entertaining and I will see
00:26:10
you again next time bye
