Branson Market: Vacation rental numbers don't pencil out
Los Angeles, CA · Member since 2019 · 77 posts · 32 votes
Branson Market: Vacation rental numbers don't pencil out
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Realtor · Branson, MO · Member since 2018 · 274 posts · 283 votes
3yHey Paul,
I've worked with about a hundred STR condo transactions as a Realtor in Branson since moving here in 2020. This question comes up a lot and I think there are a few assumptions to look specifically at tweaking. There are definitely people doing well. This question comes up again and again and I still think Branson is hard to beat at the price point for entry level first time buyers.
*Disclaimer - self management, getting a really nice property to work with, using high quality photos, and proper revenue management with quick customer service are going to yield the best results. People who use a local property manager that is unsophisticated or super high priced can kill all the returns. I've heard horror stories so do due diligence. Generally people who I've worked with that have ended up wanting to sell tried to get something very entry level and it didn't rent well. People who have done well bought something that is more future-proof with upgrades, newer furnishings, rehab, etc. But anyways here's what I'm seeing.
So let's run the #'s:
Purchase Price: $200,000
Down Payment: 10% & Interest Rate: 6.5% This might be a challenge to get unless you find a local lender, all condos in Branson that are STR approved are non warrantable. Most will want to provide some type of ARM product and may even ask for 20% down. I have local recommended ones but don't want to cross the line if you're already working with a Realtor. I do know a lender that can do 10% for a 30 yr fixed, which is at a pretty high interest rate, it might be worth looking at an adjustable, anyways.
Principal + Interest = $1448 assuming 30 yr at 9% (explain here shortly)
Taxes: $76.05 ($912.65 per year I pulled that from a Pointe Royale 2/2 listed at $212k)
PMI: $0 (No PMI for non-warrantable condos which is why the interest rate is higher)
Insurance: ~$58 a month. (My policy is $765 a year for my 3BR)
COA Fee: $209/mo
POA Fee: ($1,500/yr) = $125/mo
Golf Fee: ($700/yr) = $58/mo
Utilities: $166(About $2000/yr for water/sewer/electric, there is no gas in Branson because of the lakes)
Cleaning Fee: $333 (Assuming 40 bookings a year at $100/clean for 2br is $4000 )
Internet: $60
Misc: $125 (270 a month is a bit high, I think realistically half that is achievable with about $1500/yr, The majority of the condo maintenance is being taken care of through the COA fees)
Total Expenses: $2658/mo
Total Revenue: Pointe Royale has some of the strongest occupancy in Branson with 55-70% occupancy because of the amenities that are open year-round like the indoor pool, plus outdoor pools, clubhouse, fishing, golf course, etc. Other condo complexes without amenities may see 45-50% as average. Without diving into the cleaning fee and sales tax as a portion of the ADR, we can keep it simple with a "what does it gross gross for the year" and there's a wide range. I've seen 2BR condos at Pointe Royale do $33,000 a year up to almost $50,000.
Revenue Low case: $2,750/mo
Revenue High case: $4,166/mo
Monthly Cash flow: $92/mo to $1,508/mo
Hope this helps!
30 Replies
- 3yLuke CarlPro MemberRental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
My guess is your occupancy is too low @William Beck
- 3yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
Have you looked at houses that rent for more money that don't have all the condo feed?
I know someone that owns 4 or so of these type houses on the same street.
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Hey @Paul Wolfson, cleaning costs are usually a pass through cost.
You are paying fees for think like POA etc which, like @John Underwood said, wouldn't be part of a SFH purchase.
What does the golf fee get you? Free access to a golf course? That could have some value.
What are you basing your nightly rate on? Just AirDNA or have you looked at other units in the same complex to see what their nightly is? Occupancy rate as well.
- Realtor · Branson, MO · Member since 2018 · 274 posts · 283 votes3y
Hey Paul,
I've worked with about a hundred STR condo transactions as a Realtor in Branson since moving here in 2020. This question comes up a lot and I think there are a few assumptions to look specifically at tweaking. There are definitely people doing well. This question comes up again and again and I still think Branson is hard to beat at the price point for entry level first time buyers.*Disclaimer - self management, getting a really nice property to work with, using high quality photos, and proper revenue management with quick customer service are going to yield the best results. People who use a local property manager that is unsophisticated or super high priced can kill all the returns. I've heard horror stories so do due diligence. Generally people who I've worked with that have ended up wanting to sell tried to get something very entry level and it didn't rent well. People who have done well bought something that is more future-proof with upgrades, newer furnishings, rehab, etc. But anyways here's what I'm seeing.
So let's run the #'s:
Purchase Price: $200,000Down Payment: 10% & Interest Rate: 6.5% This might be a challenge to get unless you find a local lender, all condos in Branson that are STR approved are non warrantable. Most will want to provide some type of ARM product and may even ask for 20% down. I have local recommended ones but don't want to cross the line if you're already working with a Realtor. I do know a lender that can do 10% for a 30 yr fixed, which is at a pretty high interest rate, it might be worth looking at an adjustable, anyways.
Principal + Interest = $1448 assuming 30 yr at 9% (explain here shortly)
Taxes: $76.05 ($912.65 per year I pulled that from a Pointe Royale 2/2 listed at $212k)
PMI: $0 (No PMI for non-warrantable condos which is why the interest rate is higher)
Insurance: ~$58 a month. (My policy is $765 a year for my 3BR)
COA Fee: $209/mo
POA Fee: ($1,500/yr) = $125/mo
Golf Fee: ($700/yr) = $58/mo
Utilities: $166(About $2000/yr for water/sewer/electric, there is no gas in Branson because of the lakes)
Cleaning Fee: $333 (Assuming 40 bookings a year at $100/clean for 2br is $4000 )
Internet: $60
Misc: $125 (270 a month is a bit high, I think realistically half that is achievable with about $1500/yr, The majority of the condo maintenance is being taken care of through the COA fees)
Total Expenses: $2658/mo
Total Revenue: Pointe Royale has some of the strongest occupancy in Branson with 55-70% occupancy because of the amenities that are open year-round like the indoor pool, plus outdoor pools, clubhouse, fishing, golf course, etc. Other condo complexes without amenities may see 45-50% as average. Without diving into the cleaning fee and sales tax as a portion of the ADR, we can keep it simple with a "what does it gross gross for the year" and there's a wide range. I've seen 2BR condos at Pointe Royale do $33,000 a year up to almost $50,000.
Revenue Low case: $2,750/mo
Revenue High case: $4,166/mo
Monthly Cash flow: $92/mo to $1,508/moHope this helps!
- Los Angeles, CA · Member since 2019 · 77 posts · 32 votes3y
@Michael Baum I got the daily rate from AirDNA using the ENEMY method that was mentioned by @Luke Carl
I looked only at listings that had 300+ days available on AirDNA and made sure they had at least 20+ reviews. I took their average rate which came to about $158. Which is actually higher than the current rates I'm seeing directly on AirBnb website.
The Occupancy rate was confirmed to be about accurate. This forum has a few posts with people saying their units were rented out 160-175 days in the last year. AirDNA says 52% is the average occupancy.
@John Underwood I've only looked at condos because it seems 90% of all listings on AirBNB are these condos in Branson. I usually avoid condos but it seems to be this market's most popular listing type. Perhaps I'm wrong?
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Really great info there @William Beck.
- 3yRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Generally its going to be hard to get STRs to pencil anywhere at today's rates with only 10% down. Shift that up to 25-30 and a lot more markets will make sense
Harpoon Capital515 Reviews - Los Angeles, CA · Member since 2019 · 77 posts · 32 votes3y
@William Beck thank you for your concise response, that’s great info. Do you know if there is much demand for 4-bedroom cabins there? As I see that 90% of the market is 2/2 condos.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
@Paul Wolfson The breakdown from William is nice, but I see some things missing.
1. Cost of furnishings. If you spend $30,000 to furnish a place, that should be broken down into an annual/monthly cost, spread over five years (or whatever you think the life-span of furnishings would be). $30,000 in five years comes to a monthly cost of $500.
2. Nothing set aside for capex? While the HOA takes care of the exterior, you still need funds to replace flooring, furnace, and other large expenses.
3. You traditionally want 10% set aside for ordinary maintenance (broken doorknob, repair the washing machine, etc.) which is closer to $200 a month but he only accounts for $125.
4. Your time is not accounted for, which is a common mistake with DIY short-term rental owners. If you spend three hours a week managing the rental and your time is worth $40 an hour, that's $160 in expenses.
It's 4:30AM and maybe I missed/misunderstood something.
The reason others may be "making it" is because many of them paid cash for their properties, many bought their properties more than four years ago when prices and mortgage rates made more sense, and many of them do not realize they are getting a 4% return when they think they are making 15%.
The DIY Landlord Book4.7247 Reviews - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Robin Simon:
Generally its going to be hard to get STRs to pencil anywhere at today's rates with only 10% down. Shift that up to 25-30 and a lot more markets will make sense
This is always the bottom line.
Most STR anywhere is 3%-4% cap rate only, the poster may not realize that he's buying 4% cap.
For 4% cap we have to buy lot more down to even maybe 35%. - Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes3y
Quote from @Robin Simon:
Generally its going to be hard to get STRs to pencil anywhere at today's rates with only 10% down. Shift that up to 25-30 and a lot more markets will make sense
Echoing this point. Your debt service is more than half of your total revenue (56.84%). With condo related fees in the mix as well, it's going to be difficult for you not to go negative in terms of a month to month cash-flow basis.
- Property Manager · Branson Missouri · Member since 2022 · 73 posts · 51 votes3y
@Paul Wolfson in regards to your question about the 4 bedroom cabin demand I can shed some light. We are a property manager in the Branson area for vacation rentals since 2005. We mainly focus on stand alone properties of which many are 4 bedroom cabins. We are not in Pointe Royale as we offer our guests a unique experience. We currently manage over 225 properties ranging from 1 bedroom to 12 bedroom vacation rentals. Our 4 bedroom, depending upon amenities and location in 2022 for only nightly revenue (does not includes cleanings/sales tax/insurance) over $50,000 to $75,000. We are on target to duplicate this success for 2023 as well.
You may want to also consider looking at a few new developments. (We are not real estate agents, fyi) A new development that we are very excited to offer to our guests is call Rocky Shores. This Table Rock lakefront/lakes access development is in a high demand location. Last I checked, there were still some 2 bedroom and 4 bedroom lodges available priced at $429K and $599K.
Another guest high demand location of another brand new development is Briarwood on Lake Taney Como which offers 2 bedrooms lakefront at $395,000.
With the fact you mentioned of the numerous condos in our marketplace our owners have enjoyed much success with the unicorn properties or those that offer something unique to our guests.
In addition, with all of the growth of new attractions being offered to our Branson/Ozark area our demand has increased. This past week our website experienced a 32% increase activity over a year ago for the same week.
Good luck to you in your searching.
- 3yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
@Paul Wolfson
I've had a 2-2 cabin in Branson since 2015 in Stonebridge and it doesn't do well after all my expenses including my COA and POA. I cash flow around $300/month when you factor in the whole year which has some dead months like Feb with zero bookings every year. Utilities are closer to $400/month and I pay 30% for a PM which takes most of my profits. I have 18 rentals and this one is by far my least profitable. Lol
- 3yRyan MoyerBusiness MemberProperty Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 996 posts · 1k+ votesI don't really see how this changes anything in regards to his broader point. Just doing a quick browse it looks like a 4br place somewhat near the lake is typically priced around $600k - $1M (those rocky shores ones you mentioned are $600k and they seem to go up from there).
Quote from @Valerie Budd:
@Paul Wolfson in regards to your question about the 4 bedroom cabin demand I can shed some light. We are a property manager in the Branson area for vacation rentals since 2005. We mainly focus on stand alone properties of which many are 4 bedroom cabins. We are not in Pointe Royale as we offer our guests a unique experience. We currently manage over 225 properties ranging from 1 bedroom to 12 bedroom vacation rentals. Our 4 bedroom, depending upon amenities and location in 2022 for only nightly revenue (does not includes cleanings/sales tax/insurance) over $50,000 to $75,000. We are on target to duplicate this success for 2023 as well.
At those purchase prices $50k - $75k (on the high end) are really pretty poor returns that will likely not cash flow for someone buying at those prices.
Cosmic Vacations4.9174 Reviews - Property Manager · Branson Missouri · Member since 2022 · 73 posts · 51 votes3y
@John Morgan Curious what your 2022 closed out for just nightly revenue. I can DM if you would like. We have a 2 bedroom located on Bells in Stonebridge that brought the owner (after management fees) an average of $1800 a month for 2022.
- Realtor · Branson, MO · Member since 2018 · 274 posts · 283 votes3y1. Cost of furnishings - luckily in our market the majority of properties come fully turnkey meaning, I write my contracts like so: Personal Property included with the sale, any furniture, décor, lamps, kitchen and household wares, linens, electronics, appliances, all patio and deck furniture, fire pits, hot tubs, rugs, currently located at the residence at no additional value. Of the condo's I've personally transacted, less than 10% came without furnishings included in the acquisition price. So nobody is really spending $30,000 unless they are getting something at a steep discount that needs lots of help. Also, $30,000 for a 2BR is a pretty hefty budget and definitely overkill.
Quote from @Nathan Gesner:
@Paul Wolfson The breakdown from William is nice, but I see some things missing.
1. Cost of furnishings. If you spend $30,000 to furnish a place, that should be broken down into an annual/monthly cost, spread over five years (or whatever you think the life-span of furnishings would be). $30,000 in five years comes to a monthly cost of $500.
2. Nothing set aside for capex? While the HOA takes care of the exterior, you still need funds to replace flooring, furnace, and other large expenses.
3. You traditionally want 10% set aside for ordinary maintenance (broken doorknob, repair the washing machine, etc.) which is closer to $200 a month but he only accounts for $125.
4. Your time is not accounted for, which is a common mistake with DIY short-term rental owners. If you spend three hours a week managing the rental and your time is worth $40 an hour, that's $160 in expenses.
It's 4:30AM and maybe I missed/misunderstood something.
The reason others may be "making it" is because many of them paid cash for their properties, many bought their properties more than four years ago when prices and mortgage rates made more sense, and many of them do not realize they are getting a 4% return when they think they are making 15%.
2. Capex is totally up to the owner. How should someone quantify that in a financial model? $0 a year? $10,000 a year?
3. A good renters insurance policy can offset a lot of the maintenance issues. I've been able to utilize an insurance policy to replace: a lamp, a king bed frame, a queen bed frame, chairs on my sun porch, a new kitchen table, and a new pull out couch with zero deductible insurance policy because guests broke those items.
4. If we're going to quantify time as an expense on a financial model for an STR, someone owes me $500 for spending time to post this on Bigger Pockets. - Property Manager · Branson Missouri · Member since 2022 · 73 posts · 51 votes3y
@Ryan Moyer The $50K to $75K is not for the Rocky Shores development. For the Rocky Shores area we are expecting the year to bring in around $100K+. This is a new area and does not have the experience or history. We are basing this $100K for an area called Branson Cove that is close by that is yielding higher results.
- Property Manager · Indianapolis · Member since 2022 · 21 posts · 8 votes3y
@William Beck high level information. Would be great to get in touch and talk to you about this market and STR condo strategy!
- Realtor · Branson, MO · Member since 2018 · 274 posts · 283 votes3y
Quote from @Paul Wolfson:
@William Beck thank you for your concise response, that’s great info. Do you know if there is much demand for 4-bedroom cabins there? As I see that 90% of the market is 2/2 condos.
Hey Paul, Branson really isn't a cabin market. Taney County and Stone County have put in place performance zoning essentially creating a funnel to certain communities that allow STR's. There are 4BR cabins in Stonebridge and a few in Crowne View as was already mentioned. There are also 4BR condo properties. The interesting thing is that these are still technically "Detached Condos" because of the HOA's involvement. Without getting too much into advisory from a buyer's agency relationship I'll just say that the zoning does prevent a huge amount of STR inventory from flooding into the area. There have been some large build developments in the 6-10 bedroom range in the last few years but there was a significant lack of properties in that size to begin with. Those are the lodge properties close to the lake in the Branson Cove, Branson Canyon, Chateau Cove, Chateau Mountain and some others. There is absolutely demand for 4BR & 5BR properties. There is a new development coming up on the lake that has some 3-4 bedroom options but you should ask your agent about those.
- 3yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
Quote from @Valerie Budd:
@John Morgan Curious what your 2022 closed out for just nightly revenue. I can DM if you would like. We have a 2 bedroom located on Bells in Stonebridge that brought the owner (after management fees) an average of $1800 a month for 2022.
$2300/month after management fees. $39,420 for the year -$11,376 in management fees. But all the fees add up which cuts in the profits. $783 for restocking fees. $1400 in credit card fees. $1200 for sudenlink cable and wifi. $750 travel against commissions. Annual fees and the COA and HOA dues add up. What do you charge for management fees? I'm on Mayberry Circle.
- Property Manager · Branson Missouri · Member since 2022 · 73 posts · 51 votes3y
We do not charge cc fees to the owner and do not nickel and dime our owners. We treat each property as our own investment to optimize the returns of the owner. Our % depends upon the property but I can state it would be in the area of 20 to 22%. We have just opened a coffee shop right across the street from the entrance to Stonebridge. Our goal with this company investment is to reach out to those guests that are staying in Stonebridge that return back. We are officially opening tomorrow and today (I am here now) we received our first guest walk in who is staying at Stonebridge. We of course took their info and they said they will book with us next time for their frequent returns.
What is the $750 travel against commissions charge?
- 3yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votesThat was a typo. Travel agent commission I meant to say. Lol
Quote from @Valerie Budd:
We do not charge cc fees to the owner and do not nickel and dime our owners. We treat each property as our own investment to optimize the returns of the owner. Our % depends upon the property but I can state it would be in the area of 20 to 22%. We have just opened a coffee shop right across the street from the entrance to Stonebridge. Our goal with this company investment is to reach out to those guests that are staying in Stonebridge that return back. We are officially opening tomorrow and today (I am here now) we received our first guest walk in who is staying at Stonebridge. We of course took their info and they said they will book with us next time for their frequent returns.
What is the $750 travel against commissions charge?
- Property Manager · Branson Missouri · Member since 2022 · 73 posts · 51 votes3y
@John Morgan so you PM charges you the travel agent commission along with their %?
- 3yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
Quote from @Valerie Budd:
@John Morgan so you PM charges you the travel agent commission along with their %?
Yes
@Paul Wolfson I own several 2/2 condos in the Pointe so I am speaking from experience. Your purchase price is low (a decent unit is going to be about $250k now) and your COA is low (mine are $218 and $268/month).  There has been a tremendous amount of purchasing and upgrading of units in that development over the last year or so, so your competition is going to be tough. You’re going to have to make sure you have a very nicely done condo to compete. That said, occupancy should run better than 50% if you take those steps. However, it is hard to make it pencil out at today’s prices. I know, because I am looking every day for our third unit. 
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