AirBnB Cabin investment

[Will Cruz]

Is there anyone here that is willing to have a conversation regarding a potential Airbnb cabin in Maine. I would like to run the numbers by someone that has experience.

[Travis Timmons]

This is my best back of the envelope, spitball estimate. If you can book 255 nights per year, or a 70% occupancy at $250 per night, you're looking at gross rental income of $63,875 before expenses. Based on a 20% down payment at a 5-6% interest rate (making some guesses here), your monthly payment would be in the $2500-2800 range on a 30 year note depending on exact taxes, HOA, and insurance costs. If you account 5% for maintenance costs, 3% for platform booking fees, 2000-3000 per year in utilities (will be more if on a heating oil furnace), I calculate an operating profit of $15-20k before taxes. Standard depreciation (465,000/27.5) is $16,909, so that would likely be tax free income.

There are a lot of assumptions in this calculation. If occupancy goes down to 50%, you're looking at approximately $7,000-8,000 in operating profit based on my assumptions and calculations. What if your actual 12 month average nightly rate is $200? Again, these can go either way...it could be $300/night - I don't know the area or the property. You have to be confident in your ability to add value as an operator or have upside in the land. If you could add an airstream, yurt, or other structure to generate revenue, that can change the income potential as well. Every property is different, but at $465,000, I'd want more than 2 bedrooms. You are on the water though and that counts for something. My goal in purchasing short term rentals is to maximize the number of bedrooms for my budget and 2 bedrooms is light for $465k.

Those are my thoughts, which may be worth what you paid for them. Please send me a direct message if you feel that I could helpful. I'd be happy to email you the spreadsheet that I use when analyzing purchases. We own a short term rental in Ellsworth, so I know that little corner of Maine well but not much about Newport. What I can tell you is that the startup expenses to get a property ready are usually a bit more than you estimate. Make sure that you account for that in your calculations. My initial take, since you asked for it (kind of), is that it better be a great property on an awesome lake and you better be confident in your ability to self manage for you to get a solid return on a $465k, 2 bedroom house that needs updating.