NET REVENUE (NOT GROSS) from 1 of my properties

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NET REVENUE (NOT GROSS) from 1 of my properties

Bailey Kramer
Rental Property Investor · Denver, CO · Member since 2019 · 231 posts · 256 votes

Yesterday I shared how much a property I Co-Host GROSSES ($100k-$115k/year) and people wanted the NET number.  Since I'm the Co-Host for that one, I don't know the net and I'm paid off of the GROSS revenue (20%).

So I wanted share how much one of the Airbnbs I own made in 1 full year.  My goal for this post is simply to inspire and also show that it is possible to make money even with high-interest rates!!  If you have any specific questions, throw em below (: 

Let's get into the details:

Purchase Price: $115K (turnkey AND came furnished)

Interest Rate: 8.5% (DSCR Loan. I was 22 when I bought it and banks didn't like me not having a W-2 Job #entreprenur)

Location: Indiana

Strategy: I ran this property as a STR/MTR Hybrid

Total Revenue: $32,609

Expenses: $7,639

PIT: $7,323

Net Profit: $17,647

Important notes:

1. I've been running this property for 10 months now so I extrapolated the data to show the full 12 months.  We have a mid-term guest so I know the exact revenue and expenses for the next 2 months* 

2. Capex isn't included in those #'s, although I've kept all of the money I've made in the account as a reserve at the moment. When I buy another property, i'll use some of the funds to help with the purchase, and leave a healthy reserve in the account!

Have comments or questions?  Feel free to throw em below!

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Bailey Kramer:

A big part of the problem with STR is that people fail to accurately account for expenses and exaggerate their income. I'm not hacking on you, but I'm going to hack on you because I love to dig into this stuff.

A mortgage of $100,000 at 8.5% is $8,760 a year and property tax probably runs around $1,400. That's over $10,000 but you only list $7,323? How are you saving $3,000?

Where's the property insurance that runs an average of $1,600? It seems PITI would be over $11,000 so I'm missing $4,000 or more from your accounting.

Maintenance is typically 10% of the rental income, which would be $3,200. Is that included in your expenses? Average utilities in Indiana are $365. Add internet and you're looking at a minimum of $5,000 and that assumes your Tenants only use an aveage amount of utilities, which is unlikely. Then you've set nothing aside for capex. I would expect your expenses to be closer to $10,000.

Here's the expense missed by 99% of all posters: your time. Let's be conservative and say your time is only worth $20 an hour. If you spend five hours a week on this property, that's $5,200 you could have made stocking shelves at Walmart during that time. You have to account for that in your expenses. 

Bottom line: I'm digging up $10,000 - $12,000 that's not accounted for in your numbers. Am I missing something?

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  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    Well, the 115k purchase price kinda negates the 8.5%.

    I am not sure this is the best example. It is AN example, but most folks seem to be looking in vacation areas where purchase prices are much higher.

    It looks good and it makes money for sure.

    2Reply
  • Brooklyn McCarty
    Investor · Member since 2022 · 1k+ posts · 754 votes
    3y

    Well done!

    0Reply
  • Ryan Thoma
    Member since 2022 · 12 posts · 7 votes
    3y

    What inspired you to pick this location in the first place?

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Bailey Kramer:

    A big part of the problem with STR is that people fail to accurately account for expenses and exaggerate their income. I'm not hacking on you, but I'm going to hack on you because I love to dig into this stuff.

    A mortgage of $100,000 at 8.5% is $8,760 a year and property tax probably runs around $1,400. That's over $10,000 but you only list $7,323? How are you saving $3,000?

    Where's the property insurance that runs an average of $1,600? It seems PITI would be over $11,000 so I'm missing $4,000 or more from your accounting.

    Maintenance is typically 10% of the rental income, which would be $3,200. Is that included in your expenses? Average utilities in Indiana are $365. Add internet and you're looking at a minimum of $5,000 and that assumes your Tenants only use an aveage amount of utilities, which is unlikely. Then you've set nothing aside for capex. I would expect your expenses to be closer to $10,000.

    Here's the expense missed by 99% of all posters: your time. Let's be conservative and say your time is only worth $20 an hour. If you spend five hours a week on this property, that's $5,200 you could have made stocking shelves at Walmart during that time. You have to account for that in your expenses. 

    Bottom line: I'm digging up $10,000 - $12,000 that's not accounted for in your numbers. Am I missing something?

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    8Reply
  • Emily Shen
    Los Angeles, CA · Member since 2022 · 4 posts · 3 votes
    3y

    @Nathan Gesner appreciate you digging into this! 😉 As a new investor, I don't always know the "missing" costs when someone does an evaluation but I know those #s can sneak up on you. Will be curious to see what OP responds with.

    2Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    3y

    I have questions.... Which DSCR lender did you use for this? I'd be curious to know because none of the ones I've worked with would loan on this property. They all have a minimum loan amount of $100k, a minimum property value threshold of $150k, and they vet the buyer for experience (would not loan to a 22 year old in most cases) and credit score (680 minimum) plus require actual rent rolls/rental history at 1.25% DSCR minimum. Your monthly PITI on this would be around $860 with 20% down at 8.5% interest (closer to $11k/yr than your $7k number as Nathan pointed out), so actual rent roll and rental comps would need to be $1,075/mo minimum in which case why would anyone sell it turnkey and furnished for $115k in this market? You'd have to rent this every single night of the year for $88/night to hit your projected numbers. That doesn't seem possible in any location where properties can be purchased for $115k. If you're really getting $2,700/month with 0% vacancy on a property purchased recently for $115k, I'd love to know where that is exactly! It doesn't seem like a realistic scenario in my humble experience, sorry to say. Also why wouldn't you include capex and a reasonable vacancy rate in your numbers (these are #1 and #2 profit killers)? Also what is an "entreprenur" ;)? Thanks for sharing, it just doesn't seem believable, I'm with Nathan on this one. What are we missing here?

    0Reply
  • Bailey Kramer
    OP
    Rental Property Investor · Denver, CO · Member since 2019 · 231 posts · 256 votes
    3y
    Quote from @Nathan Gesner:
    Quote from @Bailey Kramer:

    A big part of the problem with STR is that people fail to accurately account for expenses and exaggerate their income. I'm not hacking on you, but I'm going to hack on you because I love to dig into this stuff.

    A mortgage of $100,000 at 8.5% is $8,760 a year and property tax probably runs around $1,400. That's over $10,000 but you only list $7,323? How are you saving $3,000?

    Where's the property insurance that runs an average of $1,600? It seems PITI would be over $11,000 so I'm missing $4,000 or more from your accounting.

    Maintenance is typically 10% of the rental income, which would be $3,200. Is that included in your expenses? Average utilities in Indiana are $365. Add internet and you're looking at a minimum of $5,000 and that assumes your Tenants only use an aveage amount of utilities, which is unlikely. Then you've set nothing aside for capex. I would expect your expenses to be closer to $10,000.

    Here's the expense missed by 99% of all posters: your time. Let's be conservative and say your time is only worth $20 an hour. If you spend five hours a week on this property, that's $5,200 you could have made stocking shelves at Walmart during that time. You have to account for that in your expenses. 

    Bottom line: I'm digging up $10,000 - $12,000 that's not accounted for in your numbers. Am I missing something?


     Hey Nathan, I appreciate your response!

    - As far as the mortgage goes, the loan amount was $80K (Yes I put down 30%!)

    - My utilities are DIRT CHEAP and I honestly don't even understand how to be honest.  My electric, gas, and water total about $100/month, and internet is $60/month.

    As far as capex and maintenance go, I did mention that capex isn't counted in the #'s because right now i'm saving all of it and will re-invest the cash into another property (while leaving a healthy # of reserves in the account that is currentyly collecting 4.5% interest)

    Maintenance has averaged less than $100/month, but ofcourse months in the future could vary!

    Just a side note - I took all of these #'s straight from my P&L

    1Reply
  • Bailey Kramer
    OP
    Rental Property Investor · Denver, CO · Member since 2019 · 231 posts · 256 votes
    3y
    Quote from @Emily Shen:

    @Nathan Gesner appreciate you digging into this! 😉 As a new investor, I don't always know the "missing" costs when someone does an evaluation but I know those #s can sneak up on you. Will be curious to see what OP responds with.


     Yes absolutely!!!

    0Reply
  • Bailey Kramer
    OP
    Rental Property Investor · Denver, CO · Member since 2019 · 231 posts · 256 votes
    3y
    Quote from @Steve K.:

    I have questions.... Which DSCR lender did you use for this? I'd be curious to know because none of the ones I've worked with would loan on this property. They all have a minimum loan amount of $100k, a minimum property value threshold of $150k, and they vet the buyer for experience (would not loan to a 22 year old in most cases) and credit score (680 minimum) plus require actual rent rolls/rental history at 1.25% DSCR minimum. Your monthly PITI on this would be around $860 with 20% down at 8.5% interest (closer to $11k/yr than your $7k number as Nathan pointed out), so actual rent roll and rental comps would need to be $1,075/mo minimum in which case why would anyone sell it turnkey and furnished for $115k in this market? You'd have to rent this every single night of the year for $88/night to hit your projected numbers. That doesn't seem possible in any location where properties can be purchased for $115k. If you're really getting $2,700/month with 0% vacancy on a property purchased recently for $115k, I'd love to know where that is exactly! It doesn't seem like a realistic scenario in my humble experience, sorry to say. Also why wouldn't you include capex and a reasonable vacancy rate in your numbers (these are #1 and #2 profit killers)? Also what is an "entreprenur" ;)? Thanks for sharing, it just doesn't seem believable, I'm with Nathan on this one. What are we missing here?


     Hey Steve, thanks for your response!  The biggest thing I left out by mistake was that I put down 30%!  So the mortgage balance was $80K.

    As far as DSCR Lenders I used offermarket.us/loans. I'm under contract on a triplex right now and I'm using them again (:

    2Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    Whew that Offermarket site likes to gather your data. 

    0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    3y
    Quote from @Bailey Kramer:

    Yesterday I shared how much a property I Co-Host GROSSES ($100k-$115k/year) and people wanted the NET number.  Since I'm the Co-Host for that one, I don't know the net and I'm paid off of the GROSS revenue (20%).

    So I wanted share how much one of the Airbnbs I own made in 1 full year.  My goal for this post is simply to inspire and also show that it is possible to make money even with high-interest rates!!  If you have any specific questions, throw em below (: 

    Let's get into the details:

    Purchase Price: $115K (turnkey AND came furnished)

    Interest Rate: 8.5% (DSCR Loan. I was 22 when I bought it and banks didn't like me not having a W-2 Job #entreprenur)

    Location: Indiana

    Strategy: I ran this property as a STR/MTR Hybrid

    Total Revenue: $32,609

    Expenses: $7,639

    PIT: $7,323

    Net Profit: $17,647

    Important notes:

    1. I've been running this property for 10 months now so I extrapolated the data to show the full 12 months.  We have a mid-term guest so I know the exact revenue and expenses for the next 2 months* 

    2. Capex isn't included in those #'s, although I've kept all of the money I've made in the account as a reserve at the moment. When I buy another property, i'll use some of the funds to help with the purchase, and leave a healthy reserve in the account!

    Have comments or questions?  Feel free to throw em below!

    Well done, ESPECIALLY at such a young age.  You found an inexpensive property, in a rather inexpensive area, with very low expenses, and were able to ,ale it work well.  As you accumulate wealth you will probably move to large, more expensive properties that provide a greater return on your time.  But, you rightly chose a property where you could show a profit even if you had to go to  LTR.  Limiting your downside is always a good strategy.  
    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    1Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    3y
    Quote from @Bailey Kramer:
    Quote from @Steve K.:

    I have questions.... Which DSCR lender did you use for this? I'd be curious to know because none of the ones I've worked with would loan on this property. They all have a minimum loan amount of $100k, a minimum property value threshold of $150k, and they vet the buyer for experience (would not loan to a 22 year old in most cases) and credit score (680 minimum) plus require actual rent rolls/rental history at 1.25% DSCR minimum. Your monthly PITI on this would be around $860 with 20% down at 8.5% interest (closer to $11k/yr than your $7k number as Nathan pointed out), so actual rent roll and rental comps would need to be $1,075/mo minimum in which case why would anyone sell it turnkey and furnished for $115k in this market? You'd have to rent this every single night of the year for $88/night to hit your projected numbers. That doesn't seem possible in any location where properties can be purchased for $115k. If you're really getting $2,700/month with 0% vacancy on a property purchased recently for $115k, I'd love to know where that is exactly! It doesn't seem like a realistic scenario in my humble experience, sorry to say. Also why wouldn't you include capex and a reasonable vacancy rate in your numbers (these are #1 and #2 profit killers)? Also what is an "entreprenur" ;)? Thanks for sharing, it just doesn't seem believable, I'm with Nathan on this one. What are we missing here?


     Hey Steve, thanks for your response!  The biggest thing I left out by mistake was that I put down 30%!  So the mortgage balance was $80K.

    As far as DSCR Lenders I used offermarket.us/loans. I'm under contract on a triplex right now and I'm using them again (:


    Looks like Offermarket will do DSCR loans for as little as $50k, on properties valued as low as $67k. That's much lower than any other DSCR lenders I know of. Did you pay any points/ origination fees? Also curious where this is, it seems odd that a property valued at $115k would be in a good enough location to rent for $2,700/month. Maybe you just got a great deal!?

    0Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    3y
    Quote from @Bailey Kramer:
    Quote from @Nathan Gesner:
    Quote from @Bailey Kramer:

    A big part of the problem with STR is that people fail to accurately account for expenses and exaggerate their income. I'm not hacking on you, but I'm going to hack on you because I love to dig into this stuff.

    A mortgage of $100,000 at 8.5% is $8,760 a year and property tax probably runs around $1,400. That's over $10,000 but you only list $7,323? How are you saving $3,000?

    Where's the property insurance that runs an average of $1,600? It seems PITI would be over $11,000 so I'm missing $4,000 or more from your accounting.

    Maintenance is typically 10% of the rental income, which would be $3,200. Is that included in your expenses? Average utilities in Indiana are $365. Add internet and you're looking at a minimum of $5,000 and that assumes your Tenants only use an aveage amount of utilities, which is unlikely. Then you've set nothing aside for capex. I would expect your expenses to be closer to $10,000.

    Here's the expense missed by 99% of all posters: your time. Let's be conservative and say your time is only worth $20 an hour. If you spend five hours a week on this property, that's $5,200 you could have made stocking shelves at Walmart during that time. You have to account for that in your expenses. 

    Bottom line: I'm digging up $10,000 - $12,000 that's not accounted for in your numbers. Am I missing something?


     Hey Nathan, I appreciate your response!

    - As far as the mortgage goes, the loan amount was $80K (Yes I put down 30%!)

    - My utilities are DIRT CHEAP and I honestly don't even understand how to be honest.  My electric, gas, and water total about $100/month, and internet is $60/month.

    As far as capex and maintenance go, I did mention that capex isn't counted in the #'s because right now i'm saving all of it and will re-invest the cash into another property (while leaving a healthy # of reserves in the account that is currentyly collecting 4.5% interest)

    Maintenance has averaged less than $100/month, but ofcourse months in the future could vary!

    Just a side note - I took all of these #'s straight from my P&L


    Bailey even with 30% down your PITI must be closer to $10k/yr. not $7,323. Did you leave out taxes and insurance?

    0Reply
  • Alex ScattareggiaPro Member
    Investor · Cabo San Lucas, Mexico · Member since 2023 · 150 posts · 139 votes
    3y
    Quote from @Steve K.:

    In fairness to OP, he only quoted PIT not PITI lol.

    I am going to go out on a limb and guess OP isn´t paying insurance being as he has ignored the question three times.



    1Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    3y
    Quote from @Alex Scattareggia:
    Quote from @Steve K.:

    In fairness to OP, he only quoted PIT not PITI lol.

    I am going to go out on a limb and guess OP isn´t paying insurance being as he has ignored the question three times.




     Or property taxes lol...

    0Reply
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