Short Term Rental Deal Analysis
I'm hoping to get a second set of eyes on this deal. It's a condo (The hoa is STR friendly) in Sedona, Arizona. It's currently being used as an Airbnb and it's annual pre-covid numbers are as follows:
- $116 ADR at a 64% occupancy
There area few comps in the same complex that are used as an airbnb. Those numbers are as follows:
- $130 ADR, 73% Occupancy (high comp)
- $92 with 70% occupancy (low comp)
Average among all comps: $102 with 68% occupancy .
With my financing that I have in place I'd be looking at a mortgage of $950 (HOA fee included) . Based on the average comp we are anticipating a revenue of $2108/month. Our anticipated net would be around $831/month once cleaning, utilities, capex, etc is accounted for. We would be putting around $25k into the deal so my anticipated CoC would be around 36%.
I had a few questions I was hoping to get some answers to:
1) Am I missing something in my numbers? Help me poke holes in my data
2) Is it too risky to buy a STR in our current climate? (we currently have one that has made do, but I'm a little nervous to expand to another)
3) How much in reserves would you put aside for a property like this?
Thanks in advance!