Vacation Rental Opportunity

[Jordan Rajchel]

Curious to hear some thoughts on an opportunity that has presented itself. 

I am working on a partnership with some friends where we could go in with cash on a 53 Acre property with a 4 bed 3 Bath log cabin and 3 smaller identical cabins that sleep 6 a piece. Currently, the owner lives in the larger one and rents out the three smaller ones. 

Without getting any actual documentation, I have been told by the selling realtor that the current owner brings in about 30k per year in revenue and nets 25k. The listing essentially says "Motivated seller, 499k or best offer". My thought was to go in with 400k cash and see if it takes it. However, I'm not completely confident in the numbers even at this price.

Assuming her 25k net is right and we intend to rent the larger cabin as well, I am thinking we could easily raise that net to 40k, which would be a 10% cap rate. 

Current rental rates are 98 per night or 575 per week per cabin. By my math, on weekly rentals, max occupancy on just the three smaller cabins is about 90k.

What do you all think?