Vacation Rental Analysis Help

[Account Closed]

Hi everybody!

My wife and I are looking to purchase a vacation home as rental property. I have seen many of you post success you have had with these types of rentals, however, I am having trouble finding property that will cash flow.

My numbers look like this:

• Purchase Price $175k

• Closing Cost (est) $5k

• Repairs $2k

• Down Payment $35

• Monthly Income $2000

• Maintenance $100/mth

• Capex $100/mth

• Electricity $200/mth

• Water/Sewer $55/mth

• HOA $250/mth

• Property Management $400/mth (20%)

• Insurance $62/mth

• Taxes $146/mth

• Debt Service $752/mth

• Internet/Phone/Cable $240/mth

• Total Expenses (rough est) $2300

This is one example of a property I have been analyzing, I have been using the same methodology each time. For those of you who have had success with vacation rentals, how did you find your property? Am I missing something? Everything I have looked at so far works out cash flow negative.

Please help me to understand if I am analyzing properly. Would appreciate any help and stories on how you started out.

Thanks!

[Jon Crosby]

@Account Closed  In general VR's don't cash flow well because of the high Op Ex Ratios so unless you are putting 30-50% down you are going to have to find that perfect combo of numbers to get it cash flowing.  That being said, it hasn't stopped me from continuing to expand my portfolio and having success with my current rental.  I actually built a fairly comprehensive  VR model and almost every property I put in doesn't cash flow, so don't be discouraged and just keep looking for that 'right' opportunity.  If you live close enough I would suggest a hybrid management solution which I use which is using a company like Evolve for booking and advertising at 10% (plus 2.5% payment processing) and then remote manage with help from exterior video cameras, digital door locks and a trustworthy housekeeping service.  I'm actually starting a Blog on my VR journeys very soon in which I plan to share my success and failures throughout, so PM me if you would like to learn more about that once I get it going.  Good luck to you!