First real estate purchase - would LOVE advice!
Hi all,
First post on the forums...and we're getting ready to pull the trigger on a property to use for short-term rentals! Looking at a house near the Shenandoah River in the Front Royal region. Here's the airdna page for that region:https://www.airdna.co/vacation...
The property would be 355k, and I *think* we could do $230/night, looking at other places in that area. It has 4 bedrooms and 2 baths, and very easily could sleep 8-10 people. We're thinking of starting with 8 max since there's only 2 bathrooms.
I'm estimating 60% occupancy, which airdna says is low for the area...this would bring in about $4k per month after the airbnb and/or VRBO fees. Maybe a little higher, but let's be conservative :)
Expenses estimated at $3,162 including the mortgage. Here's the breakdown (cleaning is assuming we charge a little less in cleaning fees than what we pay the cleaners):
| expense | cost |
| Mortgage | $ 1,345.30 |
| property taxes | $ 178.33 |
| Insurance | $ 175.00 |
| electricity | $ 250.00 |
| gas | $ 0 |
| water/sewer | $ 130.00 |
| hoa fees | $ - |
| cleaning | $ 150.00 |
| consumbale | $ 138.00 |
| internet/cable | $ 100.00 |
| maintanence | $ 295.83 |
| CapEx | $ 207.20 |
| mortgage_ins | $ 93.19 |
| gardening | $ 100.00 |
So after expenses, monthly cash flow would be about $850.
Estimating the furnishing + small-ish renovations would be $50k. Along with the down payment and closing, estimating we'd put down $98k upfront total. So with $10,200 in annual positive cashflow, we're looking at a 10.5% return in the first year.
Does this seem right to people? Anything I'm forgetting or should be calculating differently? Thank you!
Most Popular Reply
Have you got quotes on the insurance for house or estimating the cost? If in the flood plain down by the river could be considerably higher than estimate. Gardening may be a little low too. Do you have enough cash reserves to carry you through renovation time? Front Royal is without a doubt an area that attracts lots of weekend people from the city. If property is close to town and close to the river, or on the river, you should do well. Good luck with it. Oh, just personal choice but make sure you have enough cash to carry property for 6 months with zero income just to be safe.