STR Analysis in Nashville IN

[Keagan Scott]

Hey everyone!  Just looking to help out my fellow investors here in Indiana and post a deal I like. I found one in Nashville, IN that I think makes a lot of sense and would love to hear feedback on the analysis. It's currently listed near $400k. Revenue projections:

Rabbu - $85k (49% occupancy and $522 ADR)

Airdna - $118k (57% occupancy and $570 ADR)

Airbtics - $101k (52% occupancy and $520 ADR)

If we assume revenue of $100k. Length of stay is around 2.6 days. That's 73 turnovers and at $200 per cleaning, we're at $14,600 for the year. $400 a month for utilities, $500 for misc expenses like toiletries, maintenance/repairs, landscaping etc. $150 a month for insurance (this might be low?). There's other expenses like taxes, prop mgmt software etc.

Total operating expenses for the year come to $32k. Mortgage is $25k for year assuming 20% down at 7% (with a purchase price of $375k). Annual cash flow is around $40k.

Total initial investment is around $120k. Down payment of $75k and improvements/furniture of around $40k.

Would love to hear your guys thoughts on this!

[John Underwood]

I would use the lower estimate if you want to guess, but why guess?

Check the competition manually on Vrbo and Airbnb to get the most accurate numbers possible.

Google the enemy method if you don't know how to do it.

[Annie Seurer]

What improvements does the home need and how many bedrooms? For rev projections - what are the comps? You'll need to compare apples to apples. 40k seems like a low number to design, furnish and amenitize a competitive short term rental projected to do $100k. 

[KiKi Wood]

Hi Keagan! This sounds awesome, looks like the numbers are working for you! Congrats on that. Nashville, IN is known to have rental restrictions on STRs in the area, so I would double check the regulations. Best of luck, it seems like a good deal!

[Keagan Scott]

Yup you're exactly right. It's too close to an existing one unfortunately. I thought we were alright, but was wrong. Thanks for the insight! Onto the next one!

[Dina Schmid]

The Nashville area is one that my husband and I have been interested in for a vacation home/STR but with all the restrictions on STRs in Brown County we've mostly been looking elsewhere. (We did put an offer down on a property that was just outside of Brown County but lost out on that one.) Does this place have a STR license or can it get one?

[Luka Milicevic]

Quote from @John Underwood:

I would use the lower estimate if you want to guess, but why guess?

Check the competition manually on Vrbo and Airbnb to get the most accurate numbers possible.

Google the enemy method if you don't know how to do it.

Here's the link. I saved someone a 3 second google search 

The enemy method

[Keagan Scott]

Quote from @Dina Schmid:

The Nashville area is one that my husband and I have been interested in for a vacation home/STR but with all the restrictions on STRs in Brown County we've mostly been looking elsewhere. (We did put an offer down on a property that was just outside of Brown County but lost out on that one.) Does this place have a STR license or can it get one?

This exact home is too close to an existing STR. The rule I was told from the planning folks is at least 0.25 miles from existing STR and at least 250ft from nearest residence. It's a great area, it's just difficult finding the right home

[Dina Schmid]

Quote from @Keagan Scott:

Quote from @Dina Schmid:

The Nashville area is one that my husband and I have been interested in for a vacation home/STR but with all the restrictions on STRs in Brown County we've mostly been looking elsewhere. (We did put an offer down on a property that was just outside of Brown County but lost out on that one.) Does this place have a STR license or can it get one?

This exact home is too close to an existing STR. The rule I was told from the planning folks is at least 0.25 miles from existing STR and at least 250ft from nearest residence. It's a great area, it's just difficult finding the right home

 I'm pretty sure I know exactly which one you are talking about. I shake my head at the 1/4 mile restriction because the idea that you can be prohibited from doing something with your home because one of your neighbors is already doing it doesn't seem right to me. I really think that regulation is ripe for a legal challenge. 

[Todd Goedeke]

@Keagan Scott how many beds/baths for the prop? What amenities does property have? Double check on insurance costs for a 400k STVR not a regular residential home. Did you get property tax amount based on what assessed valuation amount?

Is the property mentioned currently licensed as a STVR?

[Todd Goedeke]

@Keagan Scott how many beds/baths for the prop? What amenities does property have? 
What makes Nashville Indiana, pop 1300, a decent STVR location?

[Heather Martini]

@Keagan Scott It would be nice to know the details of the property for your analysis but, I took a look at some of the backend data, it looks like only a small handful of homes in Nashville IN make over 100K. These top performing homes have an annual occupancy running a bit higher at 62% and ADR is higher for those, about 10 homes, at $580. 

Looking at those top performing listings you will want to invest in design and amenities to stand out and be competitive. Depending on repairs and updates, $40K could get you close to furnishing the home, but if you want to add profitable amenities such as a game room or hot tub, it would be more. 

Properties that are bringing in over 100K are able to host 10+ people, almost all cabins and are overall accommodating to large groups. 

Let's connect if you want guidance on how to setup your STR versus these competitors in this market. Best of Luck!