STR Deal Analysis (AirBNB VRBO) in Tampa Florida (Brandon area)

[Amelia Casalenuovo]

Hi!

Looking to see other's input on this deal in brandon, FL. The property is in a great location, just 20 min from downtown tampa and just over 1 hr from disney /east orlando. This will be our first investment property! Planning to turn it into a short term rental (air BNB, VRBO) with a backup strategy of short term rental to travel nurses, etc.

Deal details:

Location: Brandon, FL

Price: 365K purchase price, Rehab/Furnish costs: 64 K (putting 20% down, paying our own closing costs). Interest rate 7.5%

Property details: 4 Bed, 2 Bath, fully enclosed pool, 2195 sq ft living area (planning to have at least 14 guests)

Anticipated revenue: 5k/month (this is conservative end)

Total Expenses/month: 3.9k (mortgage + taxes + insurance = 2.8k/month)

Cash on Cash return: 9%

The issue we found on our original numbers vs what is coming back now from the mortgage lender is that the insurance is MUCH higher than anticipated (77/month flood and approx 360/month property). Going to spend the day today calling around seeing if I can get a better rate but wanted to get the forum's perspective because there is a pretty good demand for larger groups/short term renals in this area. The property is in pretty good shape (just needs some TLC plus a full new HVAC system) and that price is well below most other properties in the area and has been sitting on the market for a few months so we were able to negotiate a lower price. I got multiple estimates during the inspection so I'm pretty confident in the rehab costs. Our full inspection contingency period is up on monday, so any comments/thoughts you're willing to share would be much appreciated!

[Eric Yu]

Quote from @Amelia Casalenuovo:

Hi!

Looking to see other's input on this deal in brandon, FL. The property is in a great location, just 20 min from downtown tampa and just over 1 hr from disney /east orlando. This will be our first investment property! Planning to turn it into a short term rental (air BNB, VRBO) with a backup strategy of short term rental to travel nurses, etc.

Deal details:

Location: Brandon, FL

Price: 365K purchase price, Rehab/Furnish costs: 64 K (putting 20% down, paying our own closing costs). Interest rate 7.5%

Property details: 4 Bed, 2 Bath, fully enclosed pool, 2195 sq ft living area (planning to have at least 14 guests)

Anticipated revenue: 5k/month (this is conservative end)

Total Expenses/month: 3.9k (mortgage + taxes + insurance = 2.8k/month)

Cash on Cash return: 9%

The issue we found on our original numbers vs what is coming back now from the mortgage lender is that the insurance is MUCH higher than anticipated (77/month flood and approx 360/month property). Going to spend the day today calling around seeing if I can get a better rate but wanted to get the forum's perspective because there is a pretty good demand for larger groups/short term renals in this area. The property is in pretty good shape (just needs some TLC plus a full new HVAC system) and that price is well below most other properties in the area and has been sitting on the market for a few months so we were able to negotiate a lower price. I got multiple estimates during the inspection so I'm pretty confident in the rehab costs. Our full inspection contingency period is up on monday, so any comments/thoughts you're willing to share would be much appreciated!

It's not a home run deal, but will be a good experience to have under your belt. It's more difficult to find really great cash flowing properties for STR these days, so I'd view this as win! 

My usual rule of thumb is checking if revenue = 15% of purchase price + rehab costs. In your post, I wasn't sure if your rehab/furnish costs included down payment + closing costs, but if you're pulling in $60k of revenue a year, the price + rehab should be $400k or less.