Costs to account for in Short Term Rentals

[Shahram Zarshenas]

Hey Everyone!

Excited to join this community and make my first post! I am interested in getting into the STR/VR market and am looking at several properties right now as a potential investment. I am building out a model to estimate their cash flow. As this is my first go-around I am not actually sure if I have accounted for all my costs and made the right estimations.

That being said, can anyone share the type of expenses they typically account for in their model? (maintenance, taxes, insurance, etc.) and even the rule of thumb for some of the expenses. For example, I am having trouble estimating what my annual maintenance should be.

Look forward to hearing everyone's responses!

[Jack Smith]

I can speak on the insurance piece. Short-term rentals are insured differently than a long-term rental property. These short-term rentals can be a bit more costly-- because the tenant exposure is so much higher. They are basically viewed as a motel. Without knowing the fire protection class code, location, or anything else, I am going to guess that a good insurance policy will cost roughly $1,300 - $1,800 annually.