Need Help Calculating Short Term vs Long Term Rental Return
Hello,
I currently own a vacation home in Phoenix that I use mostly use for personal enjoyment, but I also do to short term rentals (STR) through AirBnB and VRBO to offset some of the costs.
Since I use my home mostly for enjoyment and sometimes do STR, I am trying to determine the return calculation comparison between a LTR (long term rental) and STR. Here are the current numbers:
- Purchase price of 340k in December 2016
- Not sure if this is relevant, but I put 10% down and have a 30 year fixed at 3.5%
- Utilities (electricity, gas, water, internet) have averaged $3627 / year for the last 2 years
- Pool cleaning $ 1000 / year
- Lawn care $ 1200 / year
- Property Tax $1450 / year (2018)
- Mortgage interest $6900 (2018)
- PMI $638 (2018)
I guess I am trying to decide how much I would need to earn per year doing STR vs LTR 'and' which is a better investment based upon the above numbers. (I believe that following the 1% rule, in order for it to be a good investment, I would need to generate $3400 / month). If it is determined that an unfurnished, LTR is a good (or better) investment than a STR, I could do a LTR on my existing home and then purchase a new vacation home if the numbers made sense. The utilities, and possibly the pool cleaning and lawn care could be removed from the list of annual expenses if doing a long term rental. Hopefully all of this makes sense?
Thanks in advance!