Salem, IN · Member since 2018 · 11 posts · 3 votes
Hi, I am trying to put togetger a performa for an STR. What are your monthly costs outside Mortgage, would love to see numbers. I want to make sure I am not forgetting anything. This STR will be in Sevier County TN so similar locations would work as well.
Investor · FL · Member since 2016 · 332 posts · 388 votes
6y
@Michael Baum @Thomas Bass I have built and am building in the market for buy and hold for $130-$150 a square foot. Finding a lot with a view is key. The difference in price is more due to customization, well depth and driveway length. If you want instant cash flow buy an existing and if you want to control your product then build. As for price per night rarely does my 2 bedroom go below $219 a night and as high as $529. My 5 bedroom goes at $475 a night mid season and as high as $875 a night. My others are in between. Just like there are different quality and prices in hotels there are different qualities in cabins. We charge higher, give a higher quality product, attract higher quality guests and get a higher return. With the cost of a lot it is close to the same in building vs buying existing. Decide your strategy and either buy a cabin or buy a lot, but either way get to it!
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
6y
These numbers are going to vary greatly depending many variables particularly the size of the property. I don’t think anyone is going to open up their tax returns on the internet, but.....
Average numbers I would say
Cable/Internet: $175
Electric: $200
Water: $0 it’s well water (which has pumps and filters that can break any time)
Propane: $300 per year
Maintenance: good luck guesstimating this one
Need more details to get you close to what you seek but @Avery Carl has all of your answers.
Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
6y
@Thomas Bass What size of property are you looking at? Is there an HOA? Utilities costs tend to be electric, cable, internet, and possibly propane/gas, water, and sewer but depends on the property. Power bills vary wildly. Estimate high, guests are not considerate power users. All your utilities will vary depending on the size of the property.
You also need to account for insurance, which is roughly 2x as expensive as a typical homeowner's policy. Set aside some for future capex and maintenance expenses. Don't forget a 3% fee for bookings through AirBNB or VRBO. I pay $20/mo per property to Avalara to handle my occupancy taxes, which is beyond worth the expense.
Other expenses that typically get passed on to guests are local occupancy taxes and cleaning fees, so if you're just using rental rates for your income then you can ignore these, as they're a wash.
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
6y
@Thomas Bass I’ve been self managing in the market you’re interested in longer than just about anybody and I have no idea what I spend on toilet paper. I just don’t care. I send the numbers to my CPA and let him deal with it.
For the things you mentioned I’d say anywhere from 500-5000 per year depending on the size of the property.
Don’t sweat the small stuff. Find a 3 bedroom for 300-350k and let it rip!
Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
6y
@Luke Carl is right, don't overthink it. Buy smart and you'll be good. He's got five cabins in that market, I have three. If you've got to worry about how much your electric bill might fluctuate, it's a bad deal. Pencil in some guesstimates if it makes you feel better, but it should be a nice fat margin where you can afford to spend a couple hundred more in one month or another without feeling a pinch.
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
6y
@Thomas Bass building is a good way to never make money. It’ll take you two years to get a cabin built and it’ll cost significantly more than buying an existing property. Buying new construction that’s already finished is fine.
Again, the price of a view depends on how many bedrooms and sq ft, but you can generally expect to pay 40-100k more for a property with a view VS the exact property with no view.
Contractors are so backed up and so expensive you’re going to lose a lot of toilet paper.
I am looking in the same area and had similar ideas. It just isn’t cost effective in that area. building is not an easy thing. Best to buy a place and start there. My 2 cents.
Rental Property Investor · Wrentham, MA · Member since 2019 · 137 posts · 104 votes
6y
I'm in the same place (looking to get into STR in the Seabrook Island SC area). The one thing I haven't seen mentioned is the vacancy. I'm finding this to be the hardest thing to build into my analysis. Do the listing websites help with this? Should I just post a comment on BP? Good luck! Great comments from everyone...very helpful!
Salem, IN · Member since 2018 · 11 posts · 3 votes
6y
@Luke Carl do you think that is because of your price point? I noticed all of your cabins are 99 per night. Do you know what would happen to your occuppancy rate if you raised your prices to $150 a night? Did you test your pricing?
Real Estate Agent · Texas Tennessee · Member since 2019 · 93 posts · 83 votes
6y
@Thomas Bass I believe the $99 you see on Airbnb for @Lucas Carl cabins is the lowest price per night he currently has it listed. This will fluctuate due to demand during a particular season or day of the week. As an example, if you search for my house with no date range selected, it will too show up as $99 per night. But depending on the date, my prices go up to exceed $300 per night. I’m pretty sure after managing STRs in the smokys for half a decade he has done his research on what price point he should be at to maximize profit.
Salem, IN · Member since 2018 · 11 posts · 3 votes
6y
@Reagen Natho I totally understand, My thinking is that if all of @Luke Carl cabins have the same lowest price of $99 that I wonder if some of them should have a lowest price of $150. Looks like he has some 1 bed and some 2 bed and some with no view and some with a good view so just curious why they all would have the same lowest price. Just curious on his pricing stratagies.
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
6y
@Reagen Natho haha thanks for making me
Sound like a rockstar! And of course, you are correct about the lowest pricing.
@Thomas Bass while I must admit I am flattered that my properties warrant such scrutiny, the $99 you are seeing is simply Airbnb click bait. It really has nothing to do with pricing or management technique. If you’d like to get an idea for actual prices, you’ll have to select hypothetical dates to see what the actual pricing is for those dates. If it’s a Wednesday in January, it’s probably going to be $99. If it’s a weekend in December, it’s going to be much higher.
Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
6y
@Luke Carl and @Reagen Natho are correct - that $99 you see is just the lowest possible price. You'll make yourself crazy trying to figure out the best price point all the time, because it can/does literally change day to day. If it's that important to you, use a pricing algorithm like Wheelhouse or BeyondPricing etc.
Perhaps a better use of this energy would be to do the calculation on what happens if you have nearly 100% occupancy at that lowest rate. Do you still make money? If so, great! You're set. Is this the BEST way to get the highest revenue out of your cabin? Nope, not at all, but it will give you a security blanket if that's what you're after.
If my cabins rented at the lowest price point year-round I'd still be getting great cash flow. My cabins hardly ever rent at a rate that low, so it's fantastic.
Real Estate Agent · Gatlinburg, TN · Member since 2015 · 67 posts · 70 votes
6y
I couldn't disagree more with @Luke Carl about "building being a good way to never make money". It doesn't cost significantly more than existing resale cabins. And I don't see how you could say it is fine to buy a new spec cabin, but building from scratch is a terrible idea and won't make money. The builder is most likely making more on a spec cabin than a custom new construction built for an owner from the beginning. Also, in the scenario of building from scratch there typically aren't Realtor commissions involved, while a spec cabin would most often involve a Realtor. That alone is a significant amount (5% to 6%). It does take quite a while for the new construction to be completed in our market though. 9 months to a year is fairly common (depending on the size of the cabin and project).
Salem, IN · Member since 2018 · 11 posts · 3 votes
6y
@Reagen Natho@Julie McCoy I am not Scrutinizing anything. I am asking you questions because you guys know what you are doing. Lucas Carl told me in a previous reply to find a 3 bedroom for 300-350k and let it rip but you dont own a single 3 bedroom. Is there a reason you dont have anything bigger than a 2 bedroom? Again I am not scrutinizing anything just curious. I am sure you have a reason for everything you do and I am just trying to learn what those reasons are.
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
6y
@Jay Fradd in my market, I've been buying houses with CH/A for between $6-$8 a square foot. They all needed an additional $1000 worth of work that a professional can do in 2 business days.
Real Estate Agent · Gatlinburg, TN · Member since 2015 · 67 posts · 70 votes
6y
@Paul Sandhu That is amazing! I always enjoy (and usually laugh) reading your posts. That is an incredibly lucrative situation you have going there with the workers! In our market it seems as though $200/sf is the new norm for short term rental cabins.
@Reagen Natho@Julie McCoy I am not Scrutinizing anything. I am asking you questions because you guys know what you are doing. Lucas Carl told me in a previous reply to find a 3 bedroom for 300-350k and let it rip but you dont own a single 3 bedroom. Is there a reason you dont have anything bigger than a 2 bedroom? Again I am not scrutinizing anything just curious. I am sure you have a reason for everything you do and I am just trying to learn what those reasons are.
Thanks for everyones help!
But you don't believe us when we answer your questions, and that's exhausting. I've got better things to do with my Saturday afternoon.
I have smaller cabins because that's the demographic I chose to target when I got started. I, and Lucas, and Avery, know/have worked with many people with larger ones. Lots of them with multiple cabins. We've studied the market and have a good sense of how various sizes of cabins perform. You say you already know this.
If you aren't content with that, by all means, do your own research. I'm gonna go watch some football.