Big Bear Lake Airbnb Breakeven Numbers

Short-Term & Vacation Rental Discussions
6yFollow

Big Bear Lake Airbnb Breakeven Numbers

Dan Edwards
Member since 2019 · 7 posts · 0 votes

Hi Everyone- relatively new Bigger Pockets member here. I am considering purchasing in Big Bear Lake to use as a vacation property 3-4x per year (I live in LA) and to Air BNB the rest of the time. I am currently looking at a few deals and am trying to figure out what my breakeven revenue would need to be, but, I am generally guessing on a lot of the numbers and was hoping there may be someone on here with experience in Big Bear who can take a look at/comment on my numbers. I have searched other topics on Big Bear and haven't found anything yet.

Assumptions: $325-350k purchase price, 10% down. No third party property management fees included in current analysis. Assumes comes fully furnished, if not then would add another 10k or so into first year.

  • Mortgage: 2k/month; $24k per year, includes insurance, principal/interest and property taxes.
  • Electricity: $100/month; $1200 per year
  • Gas: $200/month; 2k/year
  • Internet: $100/month; 1200/year
  • Water: $100/month; 1200/year
  • Snow removal: $500/year
  • Repairs: $200/month; 2000/year
  • Supplies: $2k/year
  • Cleaning: $8-10k/year

Total annual expense: $43k

+ local transient tax of 11%, likely around $5/year (on 45k/year revenue)

Based on my numbers it looks like the breakeven would be around 48-50k in revenue when factor in the 11% transient tax, and then would go up 20-30% if needed third party property management. Anything I am missing or that seems way off?

0Reply
108 views

14 Replies

Jump to latestLatest
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    Your water and Internet look high to me. maybe that is the costs in this area?

    What about furnishing the house?

    Also given that this is a true vacation destination you many do well to list on VRBO also. I get most all my bookings via Homeaway/Vrbo.

    0Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @John Underwood:

    Your water and Internet look high to me. maybe that is the costs in this area?

    Looks high to me too.  But the electricity looks low.  The only time I have a $100 electric bill is if the property stays vacant.  The two anomalies offset each other when you look at your total expenses. 

    0Reply
  • Dan Edwards
    OP
    Member since 2019 · 7 posts · 0 votes
    6y

    @John Underwood yes the internet and water are probably high (my internet in LA is $60/month), I was trying to be conservative. As far as furnishings, one of my assumptions was it was fully furnished already (the deals I am looking at are) so that would be covered but might spend a little but on some different furnishings. 

    @Paul Sandhu thanks for the input on the electricity, I will adjust that- what would you say is average for electricity? To your point the difference in the electricity being estimated too low and the water/internet being too high will probably net out overall. 

    0Reply
  • Joey Morea
    Lender · Tampa, FL · Member since 2018 · 149 posts · 102 votes
    6y

    @Dan Edwards

    The cleaning fee is added on to the booking as a pass through so I would not include that number into your numbers the way you calculated it. What kinda of yearly gross can a 325-350k place in big bear bring? I would make sure you know those numbers and research that a good amount.

    0Reply
  • Dan Edwards
    OP
    Member since 2019 · 7 posts · 0 votes
    6y

    @Joey Morea- One of the deals I am looking at comes fully furnished and comes with their existing Airbnb page (decent amount of reviews and superhost), they are currently doing a little over 40k gross, but my understanding is the 40k includes the cleaning fees that they collected and the total for the cleaning for the year for them was around 8k, so their gross is 32k once the cleaning fees come out. So if I took the cleaning out of my expenses then the annual breakeven would be in the $38-42k range. 

    AirDNA has the two places I am currently looking at grossing an estimated 42 and 45k. I am also chatting with an existing host in Big Bear who is giving me some good info, I dont have his gross number yet though. 

    Overall from what I have found in my research (and unless my expense #s are way off, which I dont think they are going to be that off to make a meaningful difference), unless you REALLY hustle or get a steal of a deal on the property, its hard to cash flow and it would really be a renter subsidized vacation home either covering all the expenses or coming close, with the potential for appreciation upside long term. At the end of the day I think I just need to decide if its worth it to me to tie up 40k+ in capital to have a "free" vacation home (although it would be a lot of work to self manage) with the possibility of making money off a future sale or put my money elsewhere. 

    0Reply
  • Mark Miles
    Rental Property Investor · Philadelphia, PA · Member since 2016 · 543 posts · 716 votes
    6y
    Originally posted by @Dan Edwards:

    @Joey Morea- One of the deals I am looking at comes fully furnished and comes with their existing Airbnb page (decent amount of reviews and superhost), they are currently doing a little over 40k gross, but my understanding is the 40k includes the cleaning fees that they collected and the total for the cleaning for the year for them was around 8k, so their gross is 32k once the cleaning fees come out. So if I took the cleaning out of my expenses then the annual breakeven would be in the $38-42k range. 

    AirDNA has the two places I am currently looking at grossing an estimated 42 and 45k. I am also chatting with an existing host in Big Bear who is giving me some good info, I dont have his gross number yet though. 

    Overall from what I have found in my research (and unless my expense #s are way off, which I dont think they are going to be that off to make a meaningful difference), unless you REALLY hustle or get a steal of a deal on the property, its hard to cash flow and it would really be a renter subsidized vacation home either covering all the expenses or coming close, with the potential for appreciation upside long term. At the end of the day I think I just need to decide if its worth it to me to tie up 40k+ in capital to have a "free" vacation home (although it would be a lot of work to self manage) with the possibility of making money off a future sale or put my money elsewhere. 

     Electricity varies greatly by where you are. You need to figure that out for your location. Kansas power costs do not correlate to Big Bear.

    Factor in the cost of furniture where necessary - it can be a lot. Don’t miss this in up front costs.

    You can’t transfer an airbnb page so dont put any value in that

    0Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    6y

    @Dan Edwards  Temperatures here are over 100 in the summer and get down below freezing in the winter.  Electric for cooling, gas for heating.  In the summer my electric bills are around $200-$350, gas is about $30.  In the winter, my gas bills are around $200-$300, and my electric bills are about half the summer amount.

    0Reply
  • David VanWert
    Member since 2018 · 105 posts · 34 votes
    6y

    The biggest thing that I would look into is annual gross per bedroom. We have a place in Mammoth that will gross around 20-25K per bedroom. Take that projected gross and subtract that from you debt service and expenses and you will know if you can make it work. As mentioned above your utilities look off, I also wouldn't worry about the cleaning too much as that along with TOT should be considered mostly a pass through. Also not sure if Big Bear has HOA's or not so may need to figure for that as well.

    0Reply
  • Joey Morea
    Lender · Tampa, FL · Member since 2018 · 149 posts · 102 votes
    6y

    @Dan Edwards

    Do keep in mind Airbnb will not let you keep the previous reviews or Superhost status you will have to gain that yourself on your listing. VRBO/HA will let you transfer reviews if seller gives permission. You will won’t both of those at very minimum to maximize your exposure.

    Yes I always look at gross rent not including cleaning.

    10% down I think is a bit risky on a lifestyle asset as you sound like you want it to be for you and your family. I am a fan of at least 20 to avoid mortgage insurance and give you a better equity position and better cash flow position.

    0Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    You need to see if there are sewer fees.  There WILL be fire prevention fees and weed abatement costs.  The fire one is statewide for high fire risk areas.  The weed one is what you will pay to keep the weeds and pine needles up, like a landscaper.  There likely is a fee to get the rental permit from the county.  Make sure you check the county's current rental rules, and if in the city proper, the city's rules.

    Furnished properties generally do not include the personal items, which likely means you need towels, bedding, kitchen stuff, lamps, clocks, etc.

    You also likely did not include enough for insurance.  It is real important to know what zone the house is in as the cost varies a lot by the zone. That is a real big deal in the San Bernardino Mountains.  Many companies will not write a fire policy so you may have to go with non-registered providers such as Lloyds of London or a combination of the state fire and then a regular company for everything else such as liability.  I would not recommend going without insurance.   And the rates go up a lot each year, do not use last year's rate, get a quote.

    If you have decks, you will need to waterproof or seal them each year...maybe two.

    0Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    6y

    @Dan Edwards This is a bigger dog than you can handle.

    0Reply
  • Denise H.
    Member since 2018 · 40 posts · 21 votes
    6y

    Hi Dan, I have a vacation home in Lake Arrowhead so I will assume the utilities will be comparable. Our gas averages around 175-200, people like the fire going constantly, electric is slightly less but our cabin is only about 1200 square feet. Our insurance is around 3700 per year, we are in a high fire area and there are no companies that will currently write insurance in Lake Arrowhead so we have had to go with California Fair Plan and a wrap around policy, Big Bear may not have the same limitations. Even if you can get insurance through another source it is going to be very expensive and you really need the STR coverage. My cable/internet is around 200, I know I am over paying but haven't gotten around to shopping it, however I have found people want cable in their rental. The good news is that our cabin is rented all the time, it will gross around 80k this year but we do opt to use a management company that takes a big chunk. Good luck!

    0Reply
  • Dan Edwards
    OP
    Member since 2019 · 7 posts · 0 votes
    6y
    Originally posted by @Denise H.:

    Hi Dan, I have a vacation home in Lake Arrowhead so I will assume the utilities will be comparable. Our gas averages around 175-200, people like the fire going constantly, electric is slightly less but our cabin is only about 1200 square feet. Our insurance is around 3700 per year, we are in a high fire area and there are no companies that will currently write insurance in Lake Arrowhead so we have had to go with California Fair Plan and a wrap around policy, Big Bear may not have the same limitations. Even if you can get insurance through another source it is going to be very expensive and you really need the STR coverage. My cable/internet is around 200, I know I am over paying but haven't gotten around to shopping it, however I have found people want cable in their rental. The good news is that our cabin is rented all the time, it will gross around 80k this year but we do opt to use a management company that takes a big chunk. Good luck!

    Thanks Denise that is helpful. A couple questions regarding your gross of 80k for the year, is that typical of the Lake Arrowhead area or is yours an over performer, large/luxury or anything special about it? How long did it take to get to those levels/has it always been that high? Also do you think your property management company plays a big role in the high bookings that it makes it worth it to pay them whatever % they are charging? From what I have seen so far 80k/year doesn't seem very likely in Big Bear (at least not in the size/price point i am looking at) so curious about yours since Lake Arrowhead isn't too far away. 

    0Reply
  • Denise H.
    Member since 2018 · 40 posts · 21 votes
    6y

    We bought a fully-furnished, luxury, existing STR and have the previous manager/owner manage it for us now so we were able to hit the ground running. We are in a really good location, very easy walk to village and lake. One of the keys as well is our manager owns a couple of docks stocked with kayaks and SUPs and includes their use for summer rentals. With all that being said and as well as it's doing revenue wise we are still only making a small return on our investment. Our goal is more to have a place to use every now and then now and once we retire spend more time up there.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free