STR in the Smokys - Expenses

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STR in the Smokys - Expenses

Vincent M.
Investor · Westchester Co., NY · Member since 2016 · 68 posts · 11 votes

Hi again, Trying to pick up some of my research in the STR market in the Smoky Mountain area. I am putting together a spreadsheet with some costs to help understand a the end game a little more - i.e. cash at the end of the year. Was hoping some of you all who have cabins can weigh in a little with some real life costs ....

Avg Nightly rent for a 2 Bed - estimating from VRBO / AirBnB ~ $140 over the course of the year. Does this sound like a good average or am I shooting Low/High?

Vacancy - I am guessing about 15%? for this area? Again whats been your experience. Is this high or low?

I am estimating the following for expenses. Some I have guessed, Some @Avery Carl (Thank you) has guided me on &  Some I really don't know what they are in that area:

Garbarge - $50/Month

Water/Sewer - ? 

Cable/web/Phone - $150/month

Cleaning - $500/ Month. 

Electricity - $150/Month

HOA - Variable

Security - ?

Pest Control - ?

Gas - $50/Month

Insurance - $75/Month

Landscaping/External Maintenance - $75/Month

Capex - Going to use 5% of Gross receipts

Rental costs associated with VRBO/AirBNB and general Marketing costs - ?

Would welcome some feedback on these numbers any any that I am missing. I would be glad to share my spreadsheet once I have it put together

Thanks - Vincent

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Luke CarlPro Member
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
8y

@Nancy Bachety don’t turn guests away. Call or text me. You already have access to everyone you need :) 

Also don’t worry about trash worry about the next purchase!!!! Massive action!! 

Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
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  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    8y
    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    0Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    8y

    Totally up to you I don't worry about it. 

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
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  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    8y
    @Vincent M. I apologize for the bad formatting it’s tough with the BP quotes. Short answer is if you self manage a 250k property with 20% down conventional you should pocket $800-1000 at the end of each month if you do zero repairs. I like to spend the first years income fixing up the joint. Avery has all of these answers as well. It’s fantastic to get second opinions though!
    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
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  • Vincent M.
    OP
    Investor · Westchester Co., NY · Member since 2016 · 68 posts · 11 votes
    8y

    Thanks @Luke Carl  for the validations of numbers. I like to have everything in a spreadsheet to start so I know what I am looking at. I know its can all change as you start with your rental. Your confirmations are very helpful. 

    An are I am not familiar with is the marketing side of the property. What are these  costs like If I self manage ?

    thanks

    0Reply
  • Rhonda Blue
    Real Estate Broker · East TN Loudon/Lenoir City/Tellico Village · Member since 2014 · 363 posts · 222 votes
    8y

    Hello Vincent

    These are not estimates but exact numbers of my 2/2

    Garbage - 0

    Water/Sewer - 120/quarter

    Cable/117.26/mth

    Web - $72.91/month

    Cleaning - $425/ Month.

    Electricity - $325/Month

    HOA - 1100/year

    Security - 0

    Pest Control - 25/mth

    Gas - 200/year

    Insurance - in mortgage

    Landscaping/External Maintenance - $40/month only in summer months

    Capex - Going to use 5% of Gross receipts

    Rental costs associated with VRBO/AirBNB and general Marketing costs - 0

    I manage my own AIRBNB and also help host for other investors. so this cost could as rental cost I'd estimate at 15% 

    @Avery Carl found me some great deals. 

    1Reply
  • Vincent M.
    OP
    Investor · Westchester Co., NY · Member since 2016 · 68 posts · 11 votes
    8y

    @Rhonda Blue. Thank you for your feedback. Certainly helps in my planing. 

    I guess the one area that I need to learn more about is the whole AirBNB, or VRBO/HomeAway. 

    Am I understanding you correctly that If I self manage my property with these systems, they will take about 15% of my gross receipts? That certainly takes a big chunk out of the pie... 

    Thank you

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  • Tim Schroeder
    Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
    8y

    AirBNB and VRBO each take 3% of gross, plus VRBO costs an additional $500 flat rate per year (and it's worth it)

    Watch the electric, it's higher than you think. Add $25-50/month for pest control. Add $20/mo for Avalara automated tax remittance. I use 5% for capex AND 5% for maintenance. Maintenance is higher than I expected.

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  • Vincent M.
    OP
    Investor · Westchester Co., NY · Member since 2016 · 68 posts · 11 votes
    8y

    @Tim Schroeder 

    Thank you Tim. Will add those in also.  I will adjust electric up $350/Month to be covered. 

    Glad the rental platforms are only 3%. I must have misunderstood the last post. 

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  • Will G.
    Rental Property Investor · Maryville, TN · Member since 2009 · 529 posts · 414 votes
    8y

    Check air dna for analytics, for sevierville, says 66% occupancy, which is 240 nights/year. 240 x 140 = $33,600 gross, minus expenses. Best you can count on for long term rentals is 35% for expenses, also the # banks use and a good estimate when considering all of the components actually consumed in a single family home.

    Now since it is str add, management, water, elec, cable, internet,cleaning, etc.

    I would think 50% of gross is totally fair and possibly a little low.....Lucas please chime in?

    So $16,800 in net before debt service in your example 2/2 that rents for $140 night?

    I also would consider that the rental rate would differ throughout the year.

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  • Vincent M.
    OP
    Investor · Westchester Co., NY · Member since 2016 · 68 posts · 11 votes
    8y

    Thank you @Will G.  Interesting view on AirDNA. Changes the whole equation. Going from 15% vacancy to 33% certainly changes the whole bottom line.  How accurate is this data and is it a true reflection of the area?

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  • Tim Schroeder
    Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
    8y

    My cabins are larger and thus have higher vacancy rates. But I know from talking to people that you will definitely achieve higher than 66%. More like 98% in peak seasons and probably 80% overall annual. But people with 2BR's will probably chime in and give you better detail for smaller units. But I promise you that if you self-manage you will get way over 66% !!

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  • Vincent M.
    OP
    Investor · Westchester Co., NY · Member since 2016 · 68 posts · 11 votes
    8y

    Thank you @Tim Schroeder. That's a good clarification.  I do plan on self managing - will need to learn those ropes!  

    0Reply
  • Will G.
    Rental Property Investor · Maryville, TN · Member since 2009 · 529 posts · 414 votes
    8y

    i would like to know how accurate as well and hopefully lucas can shed some light on that. I imagine those folks make their money on being close!

    I can tell you after many years owning ,managing long term sfr's one should count on at least 35% of gross rents for expenses, as newbies often neglect to factor in consumption of roofs,mechanicals, flooring, cabinets etc. And i have heard all the arguments of sell before the major stuff needs replaced(and i have done that) but for a real, long term view, all these expenses need considered.

    Short term then, in theory, MUST be higher expenses, so how much more is obviously slightly different on every rental but we need a ratio to go by(with a little margin) to assess deals.

    Another concern of mine is, when is market saturation achieved?

    Air dna says rental growth at 93% year over year and way up since 15.

    And what happens to the millions of str's when the economy enters the next recession?

    Anecdotally, i went to book an str in north florida and there were soooo many, i picked a perfectly fine 3/2

    5 blocks from the beach for $45/nite! So how does that owner make any money? A quick check of the air bnb forums had many hosts complaining of saturation and super competative pricing. Might be that area only?

    0Reply
  • Tim Schroeder
    Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
    8y

    One thing to bear in mind in the Smokys is that VRBO is King and AirBNB is the newcomer. So where you see huge growth in AirBNB that doesn't necessarily mean the market is increasing, it just means AirBNB is taking some business from VRBO. Having said that a bunch o cabins burned down a year or so ago and that may have bumped up rates. As people rebuild them, I worry a bit about what that increase in inventory will do to rental prices....

    1Reply
  • Will G.
    Rental Property Investor · Maryville, TN · Member since 2009 · 529 posts · 414 votes
    8y

    Tim, i am referring to air dna data which i believe uses rental data from all major sites. Have you looked at their data to see if close?

    0Reply
  • Tim Schroeder
    Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
    8y

    I have looked at it, yes. I find it a very helpful comparison of cities or regions, but not to be relied upon TOO much. It's ONLY AirBNB data. And since AirBNB is the underdog, the majority of rental data for the Smoky's isn't covered at all. Which is why I take it with a big grain of salt.

    1Reply
  • Will G.
    Rental Property Investor · Maryville, TN · Member since 2009 · 529 posts · 414 votes
    8y

    Thanks for the clarification.

    Does anyone track vrbo data?

    0Reply
  • Mike V.
    Rental Property Investor · Campbell, CA · Member since 2017 · 419 posts · 499 votes
    8y

    No.  VRBO won't share anything with anyone... Except the fees.  They're more than happy to share those with everyone!

    1Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    8y

    @Will G. don’t bother with airddna they should just change their name to analysis paralysis. My cabins are always booked solid.

    @Vincent M. Just get me on the phone for an hour I’ll teach you how to self manage.

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    1Reply
  • Vincent M.
    OP
    Investor · Westchester Co., NY · Member since 2016 · 68 posts · 11 votes
    8y

    @Luke Carl . Thank you. I am grateful for your help, and to everyone who responded. I will connect with you privately once I have a few more pieces in place. I am working with Avery also. She just hooked me up with a Mortgage person who I am hopefully speaking with before the week is out. 

    0Reply
  • Nancy Bachety
    Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes
    8y

    @Vincent M. Timely question. We’re about to close on a 2/2 in Sevierville, thanks to @Avery Carl’s tenacity when dealing with a seller who is behaving irrationally. And @Luke Carl too. We were just quoted for an insurance policy with Proper, ranging $1500-1800, depending on $1000-$10,000 deductible. It’s not a landlord policy, it’s a commercial policy. They are different.

    And thanks to @Rhonda Blue too for your help and input. Why is garbage $0? Is it covered by an HOA?

    I started our STR's with Airbnb and got used to its platform but I also use VRBO and generally don't like its platform. I think the fees are higher. I'm rethinking them now after reading @Tim Schroeder’s post. Is the fee much lower once you pay the $500? I assume it is if many bookings come from them in this area.

    We also self-manage and began doing that in N Florida, St Augustine, another top tourist destination. We enjoy a good occupancy rate there and get most bookings from Airbnb. @Will G. not sure what area you were referring to but we haven’t noticed it in 18 months.

    We buy in places that have good return and that we like to spend time in. My goal is to bounce and we’re setting the stage. So far, it’s working. Between the return, the ability to visit, the tax benefits, and the cash flow, we’re happy. We’re also smart enough to realize the requesting guest comes first, generally, at this point.

    One last comment, two nights ago before I shut my eyes, I listed the cabin we didn’t close on yet. While I slept, we got a request for 8 days, and we’ve had three requests since then, all for October, filling more than half the month, potentially. Granted my prices were low, $105 and $155. I replied back explaining we don’t yet own it and they can wait and take the risk of not closing, or go elsewhere. 

    Great thread here. I appreciate the feedback and input from all of you.

    1Reply
  • Rhonda Blue
    Real Estate Broker · East TN Loudon/Lenoir City/Tellico Village · Member since 2014 · 363 posts · 222 votes
    8y

    OMG... Nancy you called me and I've been trying to get your number to call you back my voice mail cut your message short.... CALL ME! 

    Garbage is $0 because cleaners take it out and deliver it to the dump! 

    Also Nancy... Bookings for OCT are not surprise because Oct, NOV, DEC are hot months down here. Your ahead of the game getting booking so you can get those reviews. Prices can always keep going up. 

    1Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    8y

    @Nancy Bachety don’t turn guests away. Call or text me. You already have access to everyone you need :) 

    Also don’t worry about trash worry about the next purchase!!!! Massive action!! 

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    2Reply
  • Tim Schroeder
    Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
    8y
    Originally posted by @Nancy Bachety:

    @Vincent M. Timely question. We’re about to close on a 2/2 in Sevierville, thanks to @Avery Carl’s tenacity when dealing with a seller who is behaving irrationally. And @Luke Carl too. We were just quoted for an insurance policy with Proper, ranging $1500-1800, depending on $1000-$10,000 deductible. It’s not a landlord policy, it’s a commercial policy. They are different.

    And thanks to @Rhonda Blue too for your help and input. Why is garbage $0? Is it covered by an HOA?

    I started our STR's with Airbnb and got used to its platform but I also use VRBO and generally don't like its platform. I think the fees are higher. I'm rethinking them now after reading @Tim Schroeder’s post. Is the fee much lower once you pay the $500? I assume it is if many bookings come from them in this area.

    We also self-manage and began doing that in N Florida, St Augustine, another top tourist destination. We enjoy a good occupancy rate there and get most bookings from Airbnb. @Will G. not sure what area you were referring to but we haven’t noticed it in 18 months.

    We buy in places that have good return and that we like to spend time in. My goal is to bounce and we’re setting the stage. So far, it’s working. Between the return, the ability to visit, the tax benefits, and the cash flow, we’re happy. We’re also smart enough to realize the requesting guest comes first, generally, at this point.

    One last comment, two nights ago before I shut my eyes, I listed the cabin we didn’t close on yet. While I slept, we got a request for 8 days, and we’ve had three requests since then, all for October, filling more than half the month, potentially. Granted my prices were low, $105 and $155. I replied back explaining we don’t yet own it and they can wait and take the risk of not closing, or go elsewhere. 

    Great thread here. I appreciate the feedback and input from all of you.

    AirBNB and VRBO both charge 3% although VRBO calls is a credit card fee and AirBNB calls it a host fee. On top of that VRBO charges $500 a year (or a percentage but that costs you more). I don't understand all the complaints about VRBO. I get better guests who pay more and stay longer and they are more host-oriented than guest-oriented like AirBNB. And it costs me $41.66 per month. Big deal.

    1Reply
  • Vincent M.
    OP
    Investor · Westchester Co., NY · Member since 2016 · 68 posts · 11 votes
    8y

    Thanks all for the additional feedback. 

    @Nancy Bachety Good Luck in  your new cabin. I hope to be following in your footsteps very soon

    Vincent

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