STRs & how to analyze deal differently than traditional rentals

[Amar P.]

Hello everyone. I am a relative newbie to BP.com and have been reading a lot on how to identify and analyze a good deal for rental real estate properties.  My question has to do with how those of you more seasoned in short term rental properties analyze these deals differently than more traditional rental properties.  Is cash flow less important?  Do you have to anticipate and expect more seasoning time due to more up front costs like furniture and other disposables?  Just trying to figure out how to analyze this type of deal as we are getting started with STRs in traverse city michigan.  Thanks in advance

[Anthony R.]

Hi Amar,

Yes - definitely different. If you're main goal is an STR I'd recommend not only manual analysis of comp properties in your desired location, but also using tools like airdna.co to help gauge expected occupancy & ADR. Cash flow is still very important and will likely be higher with an STR (one of the main advantages over LTR). Using the service like airdna you can also tell what the strong months/prime-time is. Furniture will be something you'll have to price out yourself based on your budget, target guest and taste. Consumables such as toilet paper, paper towels etc will also have to be estimates until you know what your consumption is broken down on a per night perspective (the best way to average it over the year assuming you won't ever achieve 100% occupancy).

Additionally, outside of BP, I'd highly recommend Short Term Rental University (Facebook Group/Youtube channel/podcast etc). Richard Fertig, the owner of that content, is an incredible resource. 

Hope this helps and best of luck in this fun journey.