I'm a new (potential) investor who has been actively working my contact networks to find my first property. I recently received an off-market lead to a seller who has 2 vacation rental cabins that are for sale on a single lot in a very popular part of Sevier County. The asking price seems compelling and I've been able to secure financing. Similarly, I have 3-years worth of rental history and other rental history comps to give me a great idea on revenue. I also have histories for utilities, taxes, and insurance. However, the part that I'm struggling with on analyzing this deal would be how to project long-term expenses like CapEx, Maintenence, and Repairs. What would be a conservative percentage of revenue to set aside for CapEx, Maintenence, and Repairs (on average) to help with final analysis on this deal?
Congrats on securing a deal and being conservative in your underwriting. Here are some of the numbers I use for a 4/4.5 built in 2005.
RM - 250/month
Capex - 2500/annual
Deep cleaning - 1000/annual
Historical utilities are a good guide but be mindful your occupancy rate may differ from the former owner so these expenses are highly correlated to usage. (Don’t forget covid knocked out 6-8 weeks in 2020 so annual 2020 number might be understated).
DM if you want to talk more numbers and best of luck on your purchase.
I hope this helps!