Number Crunching/Underwriting with Cleaning Fees

[Lauren Heinen]

Hi! We have moved our market to New Mexico mountain ranges for STR purchasing. These houses are a lot cheaper, and therefore bring in less income.

I am looking at some seller financed deals at <5% interest rate, but the numbers still aren't in the green because the cleaning fees are such a massive part of the expenses. Am I doing something wrong, or are these cheaper properties just a lot more difficult to cash flow? (Essentially the opposite of LTRs). Any help would be great, and below is an example! Thanks

$230k Purchase Price

$30k gross income/year (AirDNA/Rabbu)

Yearly:

$12000 Monthly payments

$8000 utilities/capex/mx

$7000 cleaning (70 stays/$100 per clean)

Add in all the other costs and the cash flow is negative, even though it's such good loan terms. I feel like I'm doing something wrong with these cheaper properties. Thanks!

-Joe and Lauren

[Nathan Grabau]

@John Underwood and @Nathan Gesner one of AirDNA's "darker" secrets is that it includes cleaning fees in its revenue estimate, so they need to be backed out if you are using their estimator. That is why I recommend people use pricelabs, which does not include cleaning fees.