Help to analyze STR purchase

[Dom Radcliffe]

Hello everyone,

I purchased a 5BR/5BA townhome with private pool in Davenport resort community for STR use and occasional personal vacation use. I am looking to self manage with a local team for ops/cleaning and some automation. I am assuming 75% occupancy at Average nightly rate of $275. I am getting a close to $1200 cash flow with 22% COC after accounting for fees and expenses. On a slightly conservative side, 70% occupancy at rate of $250 would produce a close to $450 cash flow per month with 8% COC. Using Pricelabs Comps and enemy method for 30 properties around, I have noticed similar rentals averaging $280-$300 per night (median, rather than mean) with 70-80% occupancy.

If it helps, my goal is to generate enough income so that property pays for itself. I am not looking to make a profit utilizing cashflow. I am buying and holding. 

I have two questions, and please feel free to ask any further questions regarding this situation. I can be specific with more details too.

1. Is this a reasonable strategy and do the numbers look okay?

2. Tax question: Assuming that annual gross revenue generated is $70,000. Annual expenses including mortgage/interest/op expenses is $60,000. When its time to file federal taxes, I am assuming I need to pay Uncle Sam around 20-30% of annual gross revenue, right? That is about $20,000 in taxes. So, effectively, I am actually -$10,000 in deficit when its all said and done! Or is there something else to this equation that I am missing?

This is my first experience with any RE investing. Thank you for reading and I look forward to your expert guidance and suggestions.

[Ryan Moyer]

I don't think I could say with confidence right now that an unthemed 5br townhome in Davenport would do 70-80% occupancy at $275/night.

People are giving those places away to guests right now.  And granted, it is very much the slow season in Disney, but it's not like last year where "slow season" was actually just "slightly-slower-than-high-season season".

On question #2, you can write off pretty much everything other than the principal paydown as an expense that limits your taxable income, so you wouldn't owe anywhere near $20,000 in taxes on that amount.  Assuming $70k in income, $20k in principle paydown, and $40k in other expenses your taxable income would only be $30,000 (multiplied by whatever tax bracket you fall into to estimate what you would owe).