AirDNA - Mortgage line item missing?

Question

Hi everyone.  On the Airbnb calculator on BP (which takes you to the AirDNA website) there doesn't seem to a be place to put our MORTGAGE info under the "Rentalizer" tool.  It seems like the annual expense of the mortgage should be listed under the “Annual Operating Expenses” column on the left (via the “Show Details” button), but its missing.  We've been having to calculate the annual mortgage payment then include it via the “Other" expense category, which is weird.  Its making us wonder if we’re missing something.  Are we using this calculator tool incorrectly?  Any input would be appreciated.  Thanks.

Evan Polaski · Answer

@Bill Olivent, I have never used this calculator, but mortgages are not an operating expense in real estate.  They are a below the line item, and as the other Bill mentions, even then you should only factor in the interest expense, since amortization cannot be expensed.

Now, if you are looking for a statement of cash flow, you can use the whole mortgage payment, which is likely what you are trying to achieve.  Just remember, when it comes to tax time, you will owe taxes on your net income, which can net out interest but not any principal repayment.  So your cash flow and taxable income are not the same.  And depending on how close you are cutting it each month, and how large the mortgage is, you may actually be negative cash flow each year.

@Terry N., in my limited experience, short term rentals are rarely as profitable as many people like to make it sound.  When I talk to a lot of hosts, they always talk about the how much gross rent they are bringing in.  And while I am sure there are lot of people that are happy with their returns, those that are truly making a lot of money likely bought their places quite a while ago, so have a lower mortgage balance tied to the property than a buyer today.  Of course, I haven't spoken to every host out there, but this is my hypothesis based on the conversations I have had.

Bill B. · Answer

Please don’t put your entire mortgage under expense. It would give a false low reading. If you want to put it under an expense you have to remove the principle portion of the payment. And since this number goes up every month the best you could do is check 6 months away in an amortization table and use that number. Then you’d have a 1 year average.

Terry N. · Answer

I’m wondering this too.  Did you ever find out? When I run numbers, if annual mortgage is put in ‘other’, the net income is quite low.