Short-Term Rentals in Philadelphia

8 Replies

Hi All:

I have a group of like-minded investors in NY that have has a great deal of success  with short-term rentals (AirBnB). They are expanding to PHI and have approached me about partnering with them on a deal.

Below is the info I have so far, looking for advise on what I am missing from a data standpoint, and what I should know about the market in general.

Property type: Townhouse

Listing price: $550K

Layout: 2bd/2ba

Property taxes: $13K

Income expectation: $200-$300 per night

Leverage: approx. 85% LTC

What is a good estimate for the following:

Financing fees

Closing costs

Vacancy rate: (I was told 80% is a conservative estimate for the area)

Repairs & Maintenance

Cap Ex

Thank you all in advance for the advice!

I don't have information about closing costs but I'm telling you right now you could have 2 or even 3 properties 3/4 bedrooms for the $550,000 price. Have you settled on a neighborhood that you would like to own in?

@Andrew Reyes , have your potential partners explained to you or have you researched yourself the short-term Airbnb regulations in Philadelphia?  If not do you homework and include in your figures, the tax and fee assessments.  Also, there are certain residential neighborhoods where short-term rentals are not allowed.  Is the property you are considering one of them?

I will say this again, do your homework.  It is great to ask the advice of folks here but nothing substitutes for getting the information yourself.  Especially, if you are doing business in a city you don't live in or is not familiar with.

@Andrew Reyes I currently do rentals in PHI. I’m not sure where your property is located but without having all of the specifics here’s what I can tell you. There’s about 4000 active listings in the market with a city average rate of about 165, please keep in mind that this fluctuations depending on location, size, seasonality, and quality of your listing. The laws towards short term rentals are favorable but might require permits depending on your setup. Do yourself a favor and run a report on AirDNA to get some location specific information, you can narrow it down to the zip code of the property so you know about what to expect. Feel free to reach out if you have any other questions.

I do a good amount of Airbnb work and I would definitely tell you to include furniture costs as well. If you're going to be renting out your spot for $200-$300/night I'm guessing you're going all high end furniture. $200 - $300/night for a 2bd/2bath seems kind of high throughout the entire year but I'm no Philly market expert. I would also tell your investors to send you their Airbnb business profile page so you can be sure they are truly doing a great job of Airbnb. 

I'm following this thread...looking at possibly doing some STRs in Philly.  

@Andrew Reyes did you follow up on this deal?

@Michael Melendez Do you manage STR in Philly for others?

@Paulette Midgette @Michael Melendez @Maxwell Lee Updated deal info. I appreciate any thoughts:

Purchase Price: $465,000

Upfront costs: $71,070

10% LTC financing: $46,500 Down

Closing costs: $13,950

Legal costs: $500 (seems low)

Profetional Photography: $120

Furnishing: $10,000

Airbnb Revenue
Average daily price $170
Days in month 30
Monthly price multiple
Jan 56%
Feb 58%
Mar 75%
Apr 94%
May 98%
Jun 100%
Jul 93%
Aug 89%
Sep 83%
Oct 98%
Nov 94%
Dec 79%
Annual RevPar $51,875
Monthly RevPar $4,323
Annual Airbnb Rent Escalator 3%
Monthly Rent From Parking $0
Total Gross Rent $51,875
Expenses
Property Taxes Annual 709
Insurance Annual 2,232
HOA Annual 0
Waste Removal Annual 300
Adminstrative Annual 200
Advertising Annual 0
Maintenance/Repairs Monthly 150
Other Expenses Annual 0
Airbnb  
PM Fee   15.0%
Insurance Premium Monthly 70
Restocking / Cleaning Monthly 150
Utilities Monthly 200
Internet Monthly 100

Hey @Andrew Reyes - Was reading through this thread and was curious to know if you ever moved forward with an Airbnb rental in Philadelphia.  If so, how is it going?  If not, what were the hesitations/hurdles you ran into?  

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here