[Calc Review] Help me analyze this deal

36 Replies | Las Vegas, Nevada

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I am seeking an investor or investors who are looking to place their money in a deal that has been calculated using conservative numbers with great earning potential. Please contact me for further discussion. Thx for any feedback as well. 

Account Closed

Yes sir I will be marketing it on Airbnb and potentially other similar platforms. I used 20% vacancy, just to be sure not to over estimate my profits being generated and also a fair to low daily rate, which will only fluctuate up in better then poor market conditions. 

Hi @Isaac Chun - how did you arrive at the monthly income and how did you arrive at the purchase price? 

Have you made an offer on this house for $200k? If so, was it accepted?

The whole calc is based on that monthly income so I'm very interested how you came up with that number.

@Marty True

Hey thx for checking out my post. I have made an offer and it was accepted. I did my research on comps in my area that are doing Airbnb and discounted my calculations to lean more on the conservative side. I’m also starting out this deal using a lease option to minimize my upfront costs and give myself time to bring up my credit score to qualify for more favorable loan offerings at purchase. Hope that helps give you a clearer picture of how I came up with these numbers for my deal. 

Thanks for the info. With regards to the actual number in the monthly income calc, can you be specific about the math there? Also, have you made any preliminary inquiries with the city about short-term licensing?

@Marty True

From what I gathered, since the property resides in the north Las Vegas district, there aren't any requirements to do STR. Though there's no telling if or when that may change (hoping it won't be for a while though).

I simplified the math by estimating a daily rate of $250 for 30 days and factored in 20% vacancy

I would call the city of NLV to confirm. It seems they may have finally banned it according to this article: https://thenevadaindependent.com/article/short-ter... (last paragraph).

Also, I think your daily rate is extremely high. Take a look here: https://www.airbnb.com/s/North-Las-Vegas--NV-89032--United-States/homes?refinement_paths%5B%5D=%2Fhomes&place_id=ChIJxz3IVQnCyIARMH3_8Ju0c5E&query=North%20Las%20Vegas%2C%20NV%2089032%2C%20United%20States&allow_override%5B%5D=&s_tag=6AEvsNYM

@Marty True

I’ve searched and cannot find any documentation showing it being banned or illegal, besides it being mentioned in that article you’ve mentioned. I’m not sure how to use that Airbnb info that you posted. It doesn’t show up as a link I can click on

Yeah, sorry that is a long link from Airbnb. If you just copy/paste the whole thing in your browser, it works...

https://www.airbnb.com/s/North-Las-Vegas--NV-89032--United-States/homes?refinement_paths%5B%5D=%2Fhomes&place_id=ChIJxz3IVQnCyIARMH3_8Ju0c5E&query=North%20Las%20Vegas%2C%20NV%2089032%2C%20United%20States&allow_override%5B%5D=&s_tag=6AEvsNYM

@Marty True

Did you search with parameters that take into account the number of beds/ bedrooms/ bathrooms and people staying? Makes a huge difference, then just doing a general search in the zip code of the home. This home can accommodate 12+ guests. Let me know if these things better explain how I came up with my assumed numbers for daily rates

@Isaac Chun

That really is a crazy ROI! If you truly can get 100%+ COC return on something like this, it's a wonder anyone would do anything else!

How are you going to manage it? Yourself? Or with a PM? Even if it is yourself, your time is definitely worth something. Not only that, but with a constant rate of turnovers, it will certainly take up more of your week than a standard single family rental would.

What about housecleaning? Similar to a hotel, you're going to have to clean after someone leaves to get it ready for the next guest(s). If you're talking 12+ guests, yes that could be a lot of income, but wow could that be a lot of picking up! Do you have a housekeeper lined up? I don't see a regular cleaning expense on your analysis.

If you're planning on managing and cleaning yourself, this could very well be a full time job, literally!

@Jonathan Streufert

I will be managing the property myself, until I add more properties into my portfolio. I have already sourced out some initial house cleaning staff. I didn’t add a cleaning expense, because it is typical practice to pass those expenses on to the guest. So, I’m figuring it to be a wash between what the guest is charged and what I pay my cleaning staff. I do expect to invest enough hours to consider this a part time job, but with full time cash flow. I do plan to set systems in place to almost fully automate my Airbnb rentals to allow me to keep scaling my business portfolio. So am on the look out for good investors to grow along with me. 

I think your being way too optimistic here 

How many times have you done this before ? as far as buying an expensive property of several hundred grand with no down payment and renting all 47 bedrooms out to strangers online and self managing this all yourself ? 

@Dennis M.

Well thanks for stopping by, but you haven’t shared anything to substantiate your very brief statement lol

Where did you come up with 47 bedrooms?? Also, if you were an actual interested investor who wanted to work with me I'd be sharing every small nuance of my deal with you. Also, how can you strereo type me and my ability to construct a deal simply because it's my first REI deal. Sure you're entitled to your opinion, but you seem to come across as a rude person.

@Isaac Chun

So according to your calculations, guests will pay on average $250/night, plus any cleaning expenses? I'm not at all familiar with the Las Vegas market, but I'm just trying to get a grasp of where your income/expenses are coming from.

I get that at least according to your numbers, it appears you will be making a killing in COC return. However, I just want to caution you against getting into the habit of hand-waving whenever someone brings up an expense you don't have in your calculations, saying "eh, don't worry about it; I have enough cash flow to cover it." That can become a slippery slope and once enough of those pop up, suddenly it's actually not that great of a deal anymore!

Regardless, I wish you luck in your work with this property and continued success in your future investments!

@Jonathan Streufert

Not quite sure what you mean by hand waving. I have taken those expenses in consideration. I just didn’t include them into my calculations, as they are not shown in the searches and will always cover my expense of having the property cleaned between each reservation. Thanks for the well wishes!

Isaac, I currently rent two properties on AirBnB and VRBO, one in Atlanta and one on a lake near Clemson.   Did you get a chance to see what other bookings are in that area as far as actual rental rates?  In my experience, my ATL house rents every weekend but not much during the week so I am looking at around a 70% vacancy rate.  My Lake house does better, but is seasonal (late spring to early fall) and Clemson home games and I am around 60% vacancy rate.  I know that LV is jumping, but I am not sure that your vacancy rate is accurate, especially as you are starting out.

@Patrick Shea

Thank you for the valuable personal experience data that you shared! When I was researching comp properties from Airbnb in my market, it appeared that they were nearly booked up during the summer months and not less then 60% 60-90 days out. So, I could be overestimating my average vacancy by 10%-15%. Only time will tell and my ability to market to my target/niche customers. 

@Mike Benitez

Most of the flooring needs to be redone, interior painting and other cosmetic things like fixtures. A little landscaping will help it as well. That’s things off the top of my head. The property belongs to a long time friend that is relocating out of state. 

Can you link to AIRBNB comparables and how you calculated your vacancy percentage and estimated income? What is the minimum expected occupancy?  What is the current use of the property? The $30,000 repair costs would include what and do you have contractor estimates?  What would an investor in your deal get in return? Did your friend ever AIRBNB the house? 

In addition to what @Peter Lim asked, coming back to the question of "have you confirmed that it is legal to short-term rent the property?" - I think that without being able to answer "YES" to that question, it would be too risky for external investors to jump in the deal.

The "deal" is all about the huge numbers you're projecting and that can only be achieved (assuming your projections are accurate) in the short-term rental model. If you're inviting external investors to consider your deal, I would make sure I could answer the question of "is it legal to operate in the model that I am pitching?"

Originally posted by @Isaac Chun :

@Marty True

Did you search with parameters that take into account the number of beds/ bedrooms/ bathrooms and people staying? Makes a huge difference, then just doing a general search in the zip code of the home. This home can accommodate 12+ guests. Let me know if these things better explain how I came up with my assumed numbers for daily rates

The point about accommodating 12+ guests is something to mention also... So one of the primary reasons that short-term rentals are not permitted in many parts of Vegas is because well, it's Vegas and people come here to party. These "party houses" that were renting illegally on AirBnB drew lots of attention from the neighbors and have caused loads of problems.

The fact that you mention this house can accommodate 12+ people implies that you are looking to fill that "12 person, higher nightly rate" space. If that is the intention, then the deal again, seems a bit risky by the fact that it could become that "sour apple in the neighborhood".