Vacation Rental - Deal Analysis

[Chris Hyde]

Wanted to run a deal by you all and get some advice as well as see if you all see anything I may have missed:

• Short Term Vacation Rental - 
  • New construction ($499K including lot) (5bed 5bath - Sleeps 18)
  • Construction loan then converted to conventional financing (20% down)
  • Peak (90 days) Nightly Rental Rate = $499
  • Discounted (60 days) Nightly Rental Rate = $399
  • Advertising = $500/Year (other advertising will be passed through to renters)
  • HOA Dues = $3,650/Year
  • Insurance = $1,900/Year
  • Credit Card Fees (@ 3%) = $500/Year (other credit card fees will be passed through to renters)
  • Property Taxes = $3,000/Year
  • Supplies = $1,000/Year
  • Utilities = $5,800/Year
  • Misc = $1,000/Year

I've calculated: Net Cash Flow = $22,746/Year, Cash on Cash Return = 21.50%, CAP Rate = 10.31%, & Annual ROI = 22.08%. There's a massive upfront initial investment as the builder wants the full 20% down up front ($99,800) and construction won't start until Fall (builder doesn't build in the community during Peak Season) and will finish in the Spring (I won't get any return until around May/June of next year). It will also cost $30K to furnish (including hot tub, etc...). I'll manage this myself. My breakeven is 100 Nights/Year and Payback won't occur for 21 Months. I've already fully vetted the area to ensure Nightly Rentals are legal, etc...

Let me know if there's any other info I can provide!