How do you analyze STR different than LTR?

Question

I am looking at a property on Lake Michigan.  I have developed a schedule on the amount of time I believe it will rent per month -- less in the winter, more in the summer.

How do you determine nightly rate?  What other factors do you use SPECIFIC for STR?

I don't believe I can rent this monthly for what I need to make it work financially.  Is that my answer?

Jon Crosby · Answer

@Greg Todrank

Below is a file I share for analyzing STRs on BP, it's located in their file place repository. As for getting ADR (average daily rate) and occupancy, you can get high level figures on your area from AirDNA. Just be advised that the ADR they provide includes cleaning fees so unless you plan on cleaning it yourself, I would back out 15-20% of what they are showing to be safe.
Additionally as Paul mentioned, you can simply look at similar homes on Airbnb and VRBO in the area to see what they are charging to help verify your estimates.

Best of luck!

https://www.biggerpockets.com/...

Brian G. · Answer

@Greg Todrank I would add that a knowledgeable REA will be able to tell you an accurate range of expected gross revenue which is a great starting point. From there you can calculate all your expenses. As a new STR owner my biggest surprise has been the amount of gross income (approx. 15-20%) that goes to my cleaners ($130/clean) though they are worth every nickel and the expense is directly paid for by the guests. In the end, the largest driver of profitability is the demand in the market you choose to invest in.

Greg Todrank · Answer

@Luke Carl -- Excellent post.  Appreciate the info.  Not sure why that didn't pop up when I did an initial search for the info.  Much more timely than 2013 posts that did...  Thx.

Luke Carl · Answer

@Greg Todrank.

click here :)

Paul Sandhu · Answer

Look at your competition on Airbnb.  See how much they are charging.  See their vacancy and occupancy rates.  If you can make those numbers work for your property, you should try it.  But remember, those other people know what they are doing to run an STR.  Do you?

There are also people that will try to put you out of business.  I know this guy that has a bunch of STRs in refinery town.  When someone else comes up with a furnished rental, putting them out of business is one the things he does.  Then those people ask this guy if he would buy their furnished house.  He declines.

John Underwood · Answer

You also have many expenses on a STR that you don't on a LTR.

To name a few:

utilities

furnishings

commercial insurance

cleanings

constant advertising

lawn care

snow removal for the Yankees

etc.

How do you analyze STR different than LTR?

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