Vacation Cabin. Lease Option. Actual Numbers.1st Deal. Deal?
Like everyone else I have been looking, connecting, negotiating and I think I may have found one that will work. The fact that this property is a Class A property located in the most visited National Park is just icing on the cake. I would appreciate your thoughts on this possible deal.
Facts on the seller - Has owned two cabins for over 10 years - he built them, wants to move his family back home to California. The cabins are in the most ideal locations.
Facts on the Lease - After 9 weeks of negotiating (and walking away from it completely on my part, more than once) the seller has agreed to a 1 YR Lease Option for a Upfront $2,500 Fee - which includes the 1st months fee. The monthly Lease Fee will be $1250 - which will cover his Loan Payment, Taxes & Insurance. At the end I can purchase or walk away if I don't think the cabin will perform.
Facts on the Purchase - If I purchase he will carry the full amount of $170,000 in a 20 YR seller carry note at 6%. I have confirmed with a local bank who VERBALLY said they could do a 4%.
Facts on the Value Add - He only uses VBRO to bring in vacationers, I could list on AIRBNB, HomeAway, Craiglist, Ads or Flyers...etc to bring in more. The upstairs loft has a pool table, I could toss that out and put another bed up there, turns this sleeps 4 cabin in to a sleep 6. (Increase the nightly fee and open up to more potential vacationers)
Facts on the Revenue - Documented GSI over last 4 years from the cabin.
YR1 - $24,000. YR2 - $23,700 YR3 - $25,000 YR4 - $26,300
For this breakdown I assumed $23,000 in GSI, or $1,916.67 per month.
HOA - $18.33
Direct TV - $42.75
Shared Well - $20.00
Utilities - $160.17
VBRO - $33.34
Lease Fee - $1250
Turn Around is paid separately from this income - so I didn't included it.
NOI BEFORE TAXES - $392.08 (Assuming $23,000 in GSI)
NOI BEFORE TAXES - $558.74 (Assuming $25,000 in GSI)
Facts on the Variable - 2-3 Winter months don't book up to cover cost, but that cost is more than made up in spring, summer and fall. I also would be managing it, which isn't the long term goal, but I have more time than money.
Facts on the Awesomeness - This will only cost me $2500 out of my own pocket, for a Class A $190,000 property producing $23000-$25,000 a year, over 27.5 years isn't this a deal?
Thanks!
Jonathan