Projecting STR Revenue ?

Question

I have a property on a Lake in ND that will post for the first time in the next 2 weeks.  I am having trouble figuring out what the revenue might be from this property.  it seems that Airdna is basing their calculations off the other STRs in the area which are mostly low level properties and not lake side.  What is the best way to figure the income on an STR that is not normal for the area?

Michael Baum · Answer

Hey @Buck Dabill, let's back up a second. Where is it located? What lake? Do you have any photos you can post?

I wouldn't add any motorized toys. We have a lake front STR and no way I would have those available. I point them to the local watersports rental company that drops boats and ski's right at the local marina.

Regarding kayaks and bikes, that is a crap shoot IMHO. Yes they are a nice bonus, but you could find yourself on the end of a lawsuit due to a guest getting injured or even killed. Even if you write a bunch of text into a contract for those items, it probably won't matter much. Too risky for us.

Regarding additional guest packages, you can easily change your tax situation by offering what the IRS calls "significant services". It is a fine line really. I have talked at length with CPAs and IRS people about it and it can cause you a problem. I would check with your CPA before setting anything up.

If you are talking about referring people to local fun businesses like the boat rental, restaurants, amusement parks etc then there is no problem. If you offer a in house chef to cook meals, daily cleaning service etc. then that crosses the line.

So, where is it at and show us some pics. I think @John Underwood and I who own lake front properties might be able to help get you a baseline nightly rate.

John Underwood · Answer

I agree with finding quality comparable properties and basing your income off these.

If there aren't any, why is that? Maybe they are not allowed?

Garrett Brown · Answer

Hey Buck, there are no lakeside properties to compare to? Are you allowed to STR in this area? I find it strange that no one has if it's allowed, but if you are first to market, you are essentially the guinea pig. I have launched in markets and have been the unique high end stay. AirDNA would project one thing and we would beat it 3-4x each time. Your best bet is to make sure to stand out with great pictures, competitive pricing, great hostings, and being aware of what your market guest avatar wants. Learn ways to maximize your revenue like mabe additional guest packages to sell on top of the stay.

Collin Hays · Answer

If you are contemplating a vacation rental in an area that doesn't have any, it is certainly a risk. But if you buy the property well, your downside risk is that it is short term rentals don't work, and you can simply sell it for hopefully no less than what you paid.

That would be my mindset. Nothing ventured, nothing gained!

Buck Dabill · Answer

This is a great idea...Thankyou...have a great day!

Andrew Kubik · Answer

Wow - having one of the only water front properties in the area will be awesome! I bet your property will do well. I would make sure you have all your licenses up to date. I would start out by only opening the first few months to see what hits. You can then adjust the pricing in the summer to make sure you're maximizing your revenue.

Andrew Steffens · Answer

Most lenders I know that lend on projections just go off AirDNA cut and dry.

Are you using the premium version of AirDNA that allows your to see the comps or just going off the generated number

If there are no lakefront comps, I am afraid you will be sort of winging it.  You could maybe look at other nearby lakes to see if there are comps?

Buck Dabill · Answer

Garrett, thankyou for your feedback!  I am 99% sure its not an issue, there are other STRs within city limits and so is my property. Just no STRs on the Lake Front.  I really like your idea of "additional guest packages". I have thought about having some kayaks there and maybe some bikes.  It sounds like you would make them available at an additional cost? what would be a good price to charge for these things. Are there other packages you would add? Would jet skies and or a boat be advisable?

Buck Dabill · Answer

My wife and I will manage it.  The issue I am running into is in the refinancing of it, now that the construction is finished.  The lender is basing the amount they will lend on the income of the other STRs in town....I am trying to figure out how to deal with this...I really appreciate your time...Thoughts?

Denver McClure · Answer

Hey @Buck Dabill, it's difficult to say without the data, but we would assume if the property is on a lake (especially one used for fishing or summer activities) you could demand a higher nightly rate. Are you self managing or do you have a PM running it?

Projecting STR Revenue ?

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