How to value a Finger Lake Vacation Rental

3 Replies

I'm a  new investor with two commercial buildings with 10 units. An opportunity at a vacation rental has presented itself and I am looking for advice on evaluating the value of the deal since that's a completely new strategy for me. 

My thought process so far:

-Total cost of the home: $400k translates to $2500/mo with $80,000 down
-price of the home seems in line with comparables in the area
-similar homes on AirBnB and go for $400-600/night
-assuming a rate of $420/night it would take 72 nights to cover the mortgage
-a quick availability check on AirBnB makes that seem easily doable. I looked at similar homes and counted up the blocked out dates between now and the end of August and that alone is coming in around 60-70 nights, though I'm not sure if that's a smart way to do it. 
-worst case, I can afford the monthly payments. not that I want to eat them, and yes it would hurt, but it wouldn't kill me.
-the rental is in an area I really like and have vacationed at several times, so I would absolutely use it myself.
-the home is rentable as is, but there are opportunities for value adds (updating kitchen, etc).

I haven't actually seen the place other than online yet and the financing numbers are just from a basic web calculator. Before I really start moving on this, I just want to know if my head is in the right place. 

I know there are costs beyond the mortgage like upkeep/wear-n-tear, property management, marketing, house-keeping. Any good tips on estimating those? 

What are all the obvious things am I missing? 


@J Dono I would be happy to share a spreadsheet I created to estimate costs. Send me a private message if you would like this. Also check out airdna, mashvisor or eliotandme to estimate revenue. Happy to talk through what to expect. I have 5 short term rental units in Steamboat springs, co and manage a few more.

Thanks @Jake Cohen. I will definitely check out those sights and as for the spreadsheet, I'd definitely appreciate it! I'll send a PM as soon as I figure out how!