Here is what I use to calculate the return on a VRBO property, everything in blue should be updated for the property your looking at - my numbers for nights/rate came from the property management I am using on this one, and is based on similar units they rent out in the same area.
Here is what I use to calculate the return on a VRBO property, everything in blue should be updated for the property your looking at - my numbers for nights/rate came from the property management I am using on this one, and is based on similar units they rent out in the same area.
I have this is as a Google spreadsheet so I can access it anytime/anywhere - PM me and I will figure out a way to get you a clean copy you can play with.
The vacancy rate is completely variable based the market you are looking in. You can get that data from property managers in the area, or doing research using vrbo.net or other sites to see how similar properties you are looking at are booking up.
Also - don't forget to use the @name tag so people know your asking questions, I just happened to see this one because I have a "vacation rental" keyword setup...
@Nayt Grochowski and everyone else, I am looking at vacation rentals in my area but most of them are only for shares of the property/ I would only be able to rent it out for part of the year instead of 365. I was wondering if you knew of an equation to find cap rates by plugging in the number of days I would own? Thanks!
@Taylor Call - Problem is it all depends on the time of year - the numbers in my sheet are based on an average over the entire year. Prices should fluctuate all year round based on peak vs slow seasons etc.
If you are only able to rent out the property for part of the year you need to research what the average vacancy is for that time and then bump it up 10% to be safe.... it is completely doable, but is just going to require much more research and narrowing down the values in the spreadsheet.
@Nayt Grochowski Hi- I just found this thread and was wondering if I could get a copy of the spreadsheet if it's not too much to ask. The screen shot of it looks like it would be very helpful. Thanks!
@Nayt Grochowski thank you for sharing the excel sheet! Is this something that the property manager supplied with before you bought the property? If so, would you say it was an accurate reflection of the actual return? For a totally hands-off operation this seems like a sweet deal. Where in the US is that?
I built the spreadsheet based on other rentals I have done, but the figures for nightly rental rate, vacancy, etc came from the property management company based on similar rentals in that area they manage. This property ended up falling through (short sale that did not get approved) - but I had talked with other investors in the area and the numbers are accurate - this was in Branson MO.
@Nayt Grochowski can you send me the spreadsheet you are using. I am purchasing my first vacation rental in the next few months and this would be very helpful comparing properties. Thank you!
@Nayt Grochowski Thank you so much for this post, I found it very helpful! On the VRBO Calculations Spreadsheet, can you please explain what the 80 for "Monthly Income- High/Low Nights" means? It doesn't make sense that it's nightly rental income, unless I am thinking of it incorrectly?
@Account Closed its for you to estimate how many nights a year you will rent out at the High rate vs the Low rate. It all depends on your location and how often you can get your unit rented out for the different rates.