2BR 700k vs 3BR 800k short term rental
I’m thinking of investing in either a) 700k 2 bedroom or b) 800k 3 bedroom vacation rental in a ski and lake town. I have gotten some rental numbers from a couple properties but not the particular ones I want to put an offer on. I’m trying to see if I am missing anything in my cash flow analysis. I’m using the average rental income from another 2 bedroom which includes vacancy so I put vacancy as 0.
@Rachel Turnerif you set your vacancy rate at 0 that means your occupancy rate is 100%. Use 60% as a conservative occupancy rate.
Why are your maintenance costs so high?
@Rachel Turner where is your cost for furnishing to add into down payment to calculate Cash flow ROI?
Agree that repairs/maintenance looks super high and that occupancy should not be zero. (Occupancy rate in my area is about 62-65%, not sure what yours should be.). What is the slow season there? Here, if you get any bookings in Nov or Dec, you're lucky. These are our dead months on the Emerald Coast.
Be sure your rental numbers are at least from the neighborhood you are considering buying in. Location matters a lot for income potential. Also amenities. Is there a hot tub, for example?
You should include a small amount monthly for consumable supplies (TP, paper towels, soap, dish detergent, etc.).
So the only things I would point out is that your airbnb/tot number is incorrect (ToT/TBID) are 14% of your gross income alone. Secondly, if you are not using a property management company, you'll need to take into account the cost of consumables for your guests- toilet paper, paper towels, dish soap, shampoo, hand soap, etc etc, unless you have included these numbers in your "repairs and maintenance" allotment. Best of luck!
@Shelby Pracht thanks for the feedback! I made the updates to my analysis and it's not looking great. Does this look realistic for expenses and for monthly income?
@Rachel Turner I would check in with whoever you received your income data from to make sure that the airbnb fees were included in their gross income. Airbnb takes out their fees before any payouts are sent and isn't included in the gross income that THEY provide, so when I run my calculations I don't add it back in. Double check if they do, because that will free up a little space in your calculations.
Also, I would probably go back to your original estimate for your cleaning expense, 1246 monthly is probably closer to what I see on average for my two bedrooms than 966.
All that being said, my two bedrooms tend to gross significantly more than either of the income numbers you are using, so take that with a grain of salt.