Chicago, IL · Member since 2018 · 8 posts · 0 votes
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
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.
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.
We use AirDNA, our pricing software wheelhouse, our past STR houses data, and also Airbnb.com to look at new comps before we take on a deal. I would say Chase flow is the #1 most important factor when analyzing a potential STR deal. We plan on about 20% of gross revenue for cleaning expenses, and about $50-$80 per month in consumable supplies (because we offer lots of amenities).
Don’t forget to thoroughly inspect the property for ongoing maintenance issues that can cost money. When it is a short term rental, your business depends on the house being in top working order, or guest will not be happy and you will pay refunds. Like, don’t take on a house that is going to cost $80 to shovel the snow every time it snows. Instead take on a house with a short sidewalk. Look for newer “turn-key” properties, with little or no Cap-Ex.
Also, don’t buy the August lock systems. They don’t work well in the cold!
With our 23 STRs the most important things are Bedrooms and Bathrooms. Dining areas are inconsequential, I try to put a real bed or a sofa bed in dining areas. The sleeping capacity of a house is mostly determined by the number of bathrooms, it's lesser determined by the number of bedrooms.
This applies to my market, and not necessarily others like yours. My renters are contractors. The scary looking guys with neck tats that work on the large upright rigid structures of steel at a petrochemical refinery.