ROI Calculator for Short Term Rental in Spain??

Question

Are there any Investors here who have purchased a short term rental property outside the USA?

I am looking for a ROI calculator (EUROS) that will help me as I consider purchasing a property in Costa Del Sol, Spain.

If you have come across one that you have used to help you in the past, I would greatly appreciate it if you could share a link.

I am grateful to this community of Investors for all of the insights that you have shared to help us make smart(er) investment decisions with real estate.

Cheers!

Jude Campbell · Answer

Hi Tony,

My advice when looking into short-term rentals is to distill the DD process to a few key metrics.  Most importantly, what you're going to want to iron out is an estimate on average rental price per night and multiply it by expected number of days per year.  Of course, expenses play a big role but you won't have as much variance in expenses as you will revenue with a short-term rental.

The problem with short-term rentals is that cash flow can be inconsistent and despite Costa Del Sol being a tourist hotspot, can turn quickly, really impacting expected IRR.  It entails taking on more risk than long-term rentals but can be lucrative.

If you want to chat more, send me a private message!  Happy to help.

J

Tony Valle · Answer

Hello Steven, Thank You! I just added that calculator to my Investor tool kit!

I appreciate your suggestion.

Tony

Steven Foster Wilson · Answer

Personally I like using the calc on ohiorem.com/calculator/ because it allows you to run numbers in less than 30 seconds from your phone. It automatically calculates leasing fee, maintenance costs, and cappex costs. There are variables you can add in too to make it more for short term rentals, like the cleaning fees.

Mike Lambert · Answer

Hi @Tony Valle

There's no need for a special calculator. You can use the same as in the US, including the appropriate BiggerPockets calculator. Figures are figures. They can be $ or €. It doesn't matter since the ROI is a percentage.

What @Erwin Groenendijk mentioned is a good guide indeed. I'm not sure if he wanted to be conservative or if it's different where he invests but, where we own in the Costa del Sol, property management is 15% to 20% for short-term rentals and less for long-term rentals. Bear in mind that there's a flat fee on top (typically around €1,000 per year) so the added percentage will depend on your income. Capex will be less at the beginning if you buy a new property obviously.

Erwin focused on the revenue. The denominator of your ROI is the amount you need to invest. Don't forget to include the closing costs (much higher than in the US) and the cost of the furniture and of any work to be done to the property otherwise you could significantly overstate your ROI.

Also, bear in mind that your ROI can vary widely depending on which property you buy and how it's managed. Buying the right property at the right price goes a long way.

Cheers!

Erwin Groenendijk · Answer

Hi @Tony Valle,

We don't have anything like automated calculations but we do everyone via Excel.

Your gross income minus:

- ~25% for a property management company

- utility and internet bills

- 5-10% capex

- insurance

- building community fees

- potentially a mortgage

- profit taxes over the amount that is still left

This should get you on the way

Tony Valle · Answer

Hello Erwin,

Thank you for your helpful response!

Tony