Short Term Rental Question

[Jim Rusco]

I am looking at purchasing a condo in Myrtle Beach, SC. Purchase price is around $110,000; rental income is $26,000/year. When I plug my numbers into my calculator, I am coming up with a cash flow of roughly $800/month. This seems too good to be true. This property is considered a “condotel” with lots of amenities. I feel that I am missing something.

For expenses I have:

Mortgage pmt

Repairs

Cap Exp

Taxes

HOA

Insurance

For income I have an estimate based on previous years rental income.

What am I missing? Any help would be greatly appreciated.

Thanks.

[Julie McCoy]

You're missing the management fee! Unless you plan to self-manage, but most condo-tels require you use the in-house manager. You also need to account for any utilities not covered by the HOA, and set aside some small-ish amount each month to replace things that get damaged like linens or pots & pans.

Also, find out if that gross amount includes cleaning fees or not, and adjust your calculations if necessary.