Sarasota STR Deal or NO Deal

[Luis Sosa]

I have a great realtor who started his own boutique STR business with 4 luxury properties looking to grow to 10. He presented a deal coming up for 600k 3bed/2bath within city limits (5day rentals) no pool. He wrote out below strategy for the next 24months with a planned pool 50k install after 7 months. How needs light preparation for STR mainly paint and furnishings probably revenue neutral first year.

Challenge: I am looking to finance the deal potentially 10yr arm 20% down. I assume between down, closing, and furnishings I will be in for 150K year one. I am looking for creative ways to get the pool financed in mortgage or financed. Don't know if equity will be in property in 10months and if refi will be an option in 10months. Potential is to wait on the pool till year 2 but revenue will be much less. Realtor business owner will manage the property as a master tenent for 25% and 75% myself (hands off). He is doing this with three other investors and confident on his numbers. This is a great area near downtown and top school with 10k sqft land within city limits.

So deal or no deal ? and how could I strategize this any better to keep only 150k initial investment as my max out of pocket with pool?

Taxes: $550/mth

Insurance: $300/mth

Mortgage P and I (assuming 80/20 loan with a 10 year arm at 7% interest with a 30 yr amortization schedule): $3166

Utilities (including lawn, FPL, Water/sewer, Pest, Internet and streaming): $500

Miscellaneous: $200/mth

Total Monthly Cost: $4716

Revenue projections from January 1 through August 1 (at which time you will take it off the market for 4 months to build a pool):

January: 95% occupancy at $350/nt = $10,307

Feb: 95% occupancy at $350/nt = $9,310

March: 100% occupancy at $350/nt = $10,850

April: 95% occupancy at $325/nt = $9975

May: 60% occupancy at $200/nt = $3720

June: 75% occupancy at $250/nt =$5625

July: 75% occupancy at $250/nt=$5812

Total Revenue: $55,600

Mgmt Fee (25%) = $13,900

Total 7 month expense: $33,012

Net Profit: $8688

And here is the Annual Revenue projection with pool beginning December 2023- December 2024:

December: 75% occupancy at $350/nt = $8137

January: 95% occupancy at $450/nt = $13,250

Feb: 95% occupancy at $450/nt = $11,970

March: 100% occupancy at $450/nt = $13,950

April: 95% occupancy at $425/nt = $12,112

May: 65% occupancy at $280/nt = $5642

June: 80% occupancy at $350/nt =$8400

July 80% occupancy at $350/nt =$8680

August: 65% occupancy at $300/nt = $6045

September: 50% occupancy at $250/nt =$3750

October: 55% occupancy at $250/nt =$4262

November: 55% occupancy at $260/nt =$4290

Gross revenue: $100,488

Gross Expenses: $81,714

Net Profit: $18,774

Annual Mortgage Principal paydown in first 10 years: $7K/yr

Total average annual gain beginning with year 2: $25,774