Looking for Cash flow - wondering the expenses on STR
Member since 2022 · 3 posts · 0 votes
My wife and I are close to retirement. We have some money that we're looking to put into RE (about $450-500k) that we can use and rent out the rest of the time. One to be near one of our kids (in Acworth) in the Red Top mountain area, and second one in Norris Lake area for like an annual gathering with the whole family. I've found some possible places and like the numbers I'm seeing but not sure of breakdown. I used the airdna calculator but don't see a detailed number breakdown. I assume that would be in pro membership. I have listened to a variety of BP podcasts and watch the youtube channel with relevant info and that has been great. I believe a while back I heard that there was a calculator or estimator for all the numbers to consider. Where could I find that?
I'm going to be honest here - if you're looking for a calculator to tell you what your expenses are then you likely don't know enough about what you're doing...
You need to come up with a list of all your STR expenses (this includes the cleaning fee since you are the one paying the cleaners!)
Then use pricelabs, airDNA, realtors/owners in the area (look up short term shop - they are experts in that field) to estimate your revenue
Now you can calc your profit since you have your revenue & expenses
There's tons of different calculators out there...please don't be one of the ones that depends on a random calculator that can be put together in 10 mins to tell you whether or not to make YOUR investment (relying on someone else's calculator would be a BAD idea!). Make a spreadsheet and do your own due diligence based on YOUR SPECIFIC property
Not sure about the specific tool you are talking about, but talking to a well recommended property manager that specializes in Short Term Rentals in that area will prove invaluable. It sounds like you want this to be a passive investment which means that the day to day running of the business and the cost that comes along with it will be in the hands of a third party.
If you can handle the analysis on the fixed costs: mortgage, taxes, insurance all you have to do is plug in the last cost which is the total cost of running a STR. Whether that is in the form of an all-encompassing property management fee or piecemealed together will be up to you but a good PM will be able to provide you with more a accurate snapshot and potentially shed some light on the viability of the purchase. They are going to have a more specialized and local focused view of what your costs will actually be.
Hope that helps and good luck on your journey!
My wife and I are close to retirement. We have some money that we're looking to put into RE (about $450-500k) that we can use and rent out the rest of the time. One to be near one of our kids (in Acworth) in the Red Top mountain area, and second one in Norris Lake area for like an annual gathering with the whole family. I've found some possible places and like the numbers I'm seeing but not sure of breakdown. I used the airdna calculator but don't see a detailed number breakdown. I assume that would be in pro membership. I have listened to a variety of BP podcasts and watch the youtube channel with relevant info and that has been great. I believe a while back I heard that there was a calculator or estimator for all the numbers to consider. Where could I find that?
I don't know Norris Lake, but I know Douglas Lake...I own a cabin there. It performs a little under your typical Sevierville cabin...it's about 25 minutes from Dollywood. Happy to share details.
In general above and beyond mortgage and typical utilities…
Pest
Lawn care
Hot tub (if applicable)
Airbnb fees (3%)
Software to manage or price
Furnishing if not already furnished
I'm going to be honest here - if you're looking for a calculator to tell you what your expenses are then you likely don't know enough about what you're doing...
You need to come up with a list of all your STR expenses (this includes the cleaning fee since you are the one paying the cleaners!)
Then use pricelabs, airDNA, realtors/owners in the area (look up short term shop - they are experts in that field) to estimate your revenue
Now you can calc your profit since you have your revenue & expenses
There's tons of different calculators out there...please don't be one of the ones that depends on a random calculator that can be put together in 10 mins to tell you whether or not to make YOUR investment (relying on someone else's calculator would be a BAD idea!). Make a spreadsheet and do your own due diligence based on YOUR SPECIFIC property
I'm going to be honest here - if you're looking for a calculator to tell you what your expenses are then you likely don't know enough about what you're doing...
You need to come up with a list of all your STR expenses (this includes the cleaning fee since you are the one paying the cleaners!)
Then use pricelabs, airDNA, realtors/owners in the area (look up short term shop - they are experts in that field) to estimate your revenue
Now you can calc your profit since you have your revenue & expenses
There's tons of different calculators out there...please don't be one of the ones that depends on a random calculator that can be put together in 10 mins to tell you whether or not to make YOUR investment (relying on someone else's calculator would be a BAD idea!). Make a spreadsheet and do your own due diligence based on YOUR SPECIFIC property
I'm going to be honest here - if you're looking for a calculator to tell you what your expenses are then you likely don't know enough about what you're doing...
You need to come up with a list of all your STR expenses (this includes the cleaning fee since you are the one paying the cleaners!)
Then use pricelabs, airDNA, realtors/owners in the area (look up short term shop - they are experts in that field) to estimate your revenue
Now you can calc your profit since you have your revenue & expenses
There's tons of different calculators out there...please don't be one of the ones that depends on a random calculator that can be put together in 10 mins to tell you whether or not to make YOUR investment (relying on someone else's calculator would be a BAD idea!). Make a spreadsheet and do your own due diligence based on YOUR SPECIFIC property
Let's see a list of the expenses you have come up with?
And I'll tell you what I would add/subtract
A good realtor who does a lot of STR business in the area where you want to buy can look over your spreadsheet and let you know what's missing, too high, or too low. In my market for example, people routinely underestimate insurance, and they sometimes use the "last taxes", which will NOT be your tax rate.
I'm going to be honest here - if you're looking for a calculator to tell you what your expenses are then you likely don't know enough about what you're doing...
You need to come up with a list of all your STR expenses (this includes the cleaning fee since you are the one paying the cleaners!)
Then use pricelabs, airDNA, realtors/owners in the area (look up short term shop - they are experts in that field) to estimate your revenue
Now you can calc your profit since you have your revenue & expenses
There's tons of different calculators out there...please don't be one of the ones that depends on a random calculator that can be put together in 10 mins to tell you whether or not to make YOUR investment (relying on someone else's calculator would be a BAD idea!). Make a spreadsheet and do your own due diligence based on YOUR SPECIFIC property
one thing i didnt estimate enough was the taxes i would be paying. Im paying $1000-1200 a month in taxes (st, fed, county). also make sure you have emergency funds. i had a plumbing issue less than 2 months into renting.
@David Hare, as noted your best bet would be to talk to a manager in those areas. They will charge their fee, plus actual expenses incurred. I would try to talk to several, as different managers will handle properties differently.
While I don't own an Airbnb currently, I have several close friends that do/used to, one that is a manager of her own and for others, and used to own one. Additionally, I am in a somewhat similar position to you: looking for a place for my family to use, and STR in between.
Regarding expenses:
- Electric
- Gas
- Water
- Internet
- Netflix/Cable/etc
- Paper product
- Cleaning supplies
- Coffee for guest
- Fairly regular replacement of linens (sheets/towels/wash clothes)
- Insurance
- Taxes
- Airbnb Fees
- Local fees/taxes
- Cleaning costs (yes reimbursable, but there is a fine balance between covering costs and not pissing off potential guests)
- Mortgage costs
- Maintenance costs
- Landscaping
There are lots of nuances to running an airbnb. If you cram a bunch of beds and heads into a Norris lake house, you are more likely to get guests that are just there to party. Personally, when I consider a property for myself, I want others like me: they will pay a premium for creature comforts and good design. Don't be pennywise, dollar dumb. Provide enough toilet paper and then some, buy nice linens, ideally have a full bath for every bedroom, etc.
Hi David. We manage quite a few homes in the Norris Lake area. I'd love to talk to you and see how we might be able to help make it a passive investment for you. Shoot me a message.
I'm sure everyone has given you great answers, so I only have one thing. The expenses are always more than you think. I currently have 8 units, soon to be 10, and the expenses have always been more than in the pro-forma.
@David Hare, as noted your best bet would be to talk to a manager in those areas. They will charge their fee, plus actual expenses incurred. I would try to talk to several, as different managers will handle properties differently.
While I don't own an Airbnb currently, I have several close friends that do/used to, one that is a manager of her own and for others, and used to own one. Additionally, I am in a somewhat similar position to you: looking for a place for my family to use, and STR in between.
Regarding expenses:
- Electric
- Gas
- Water
- Internet
- Netflix/Cable/etc
- Paper product
- Cleaning supplies
- Coffee for guest
- Fairly regular replacement of linens (sheets/towels/wash clothes)
- Insurance
- Taxes
- Airbnb Fees
- Local fees/taxes
- Cleaning costs (yes reimbursable, but there is a fine balance between covering costs and not pissing off potential guests)
- Mortgage costs
- Maintenance costs
- Landscaping
There are lots of nuances to running an airbnb. If you cram a bunch of beds and heads into a Norris lake house, you are more likely to get guests that are just there to party. Personally, when I consider a property for myself, I want others like me: they will pay a premium for creature comforts and good design. Don't be pennywise, dollar dumb. Provide enough toilet paper and then some, buy nice linens, ideally have a full bath for every bedroom, etc.
The info and calculator from the BP podcast/YouTube could be the one that Tony Robinson put together. He has a wonderful tool that was meticulous put together so you can be sure it'll come out pretty close. Here is a link for you to find a YouTube video explaining how to run numbers for a STR and how to use the calculator.....STR Deal Analyzer How-To
So many great resources here on BP that you can use. Also consult your realtor, make sure you aren't missing a line item. Avery Carl has a calculator that I like to use.