STR Vacancy savings rate

[Josh Taves]

Hey all. I'm a primarily long and mid-term investor looking to pick up my first full STR. and I'd like some feedback on my monthly savings numbers. I'm taking the principles I use for my other rentals and applying it to the STR but I'm not sure that is necessary. Looking for feedback from experienced STR operators.

My biggest question is vacancy. AirDnA says that in the market I am looking at, I can expect 55% occupancy as it is a seasonal beach area. if my mortgage is $1500/month, and I will have vacancy of 55%, then my yearly amount of mortgage payment during "vacant times" should come to $8,100, which would equate to $675/month if annualized. If my projected monthly revenue (annualized) comes to $3000/month, then I would need to estimate saving 22.5% savings every month just to cover vacancy. This number has really killed the deal and makes me wonder if I'm calculating it correctly. That coupled with my experience with CapEx and Maintenance means I came up with these numbers for monthly savings. What do you use as an experienced STR operator?

Vacancy: 22.5%

Maintenance: 8%

CapEx: 8%

[Andrew Steffens]

What is the projected ADR for the property?  My formula typically looks like:

Income: XYZ (ADR x 365 x % of occupancy)

- PITI (Principal, Interest, Taxes, Insurance)

- Misc Expenses (CapEx, Management if applicable, Utilities, Maintenance, etc)

= P/L