I am looking at a condo in a resort area that has the potential to be a good deal with the right occupancy rate. I’ve confirmed the nightly rate, which averages out to be $135 per night. This has been confirmed by multiple sources (AirDNA, Mashvisor, Evolve, looking at comps). However, I’m getting all sorts of numbers in regards to the occupancy! I called Evolve to see if they would quote me their numbers, and they said that occupancy at their properties in this area are 30 to 40%. When I looked at the spreadsheet from Mashvisor, that also came out to around 40% on average. AirDNA estimates 56%.
I need a total revenue of about $25,000 for this deal to be worth my time - in other words, if we are using the $135 average, I need it to come in at about 54% occupancy. The comps that I pulled on AirDNA are supposedly making $25,000 at the low end, and some that are more updated/better designed are making quite a bit more. I noticed that these particular comps weren’t listed on the spreadsheet provided by Mashvisor.
So now I’m confused and frustrated because this completely makes or breaks the deal. What data points should I be trusting here? On the one hand, I feel like it’s safest to be conservative and assume that if I can’t make the numbers work at 40%, then the deal is dead. But on the other hand, if AirDNA is correct, then I’m missing out on a great opportunity due to cold feet. Any advice? What would you do?
