Thanks Waylon. Your story, resources, goals and timelines are different from other people, yet the same. All of you still have to follow a Path, just different timing and results needed for your goal.
Action:
1. On a new Excel spreadsheet make up 10 tabs and name them based on the above 5 items. 1A- Cost template; 1B- Profit template; 2A, 2B, so forth. Now there already exists templates in BP. I don't know where they are and haven't used them. Why not go directly to them. Because I want you to build the templates and understand the logic. Learn the hard way.
2. Just on the first two tabs, build the following template below.
Take the prior checklist template and drop it in 1A and we will build a cost model from it.
Go out on the web and find a STR property for sale similar to what you are thinking. Don't worry about is it a good price or not. Capture the detail and post here. Let's see the Cost and if they show rental rates and occupancy. If not, you look up and establish a Rental rate. Then we will address occupancy %.
Template 1B use the following:
Annual Revenue: Approx $52k at 100% occupancy / $36k at 70% occupancy
Occupancy %: 70% annually (my close friend owns cabin in Blue Ridge, he averages 70 - 75% occupancy rate
Addl revenue items
Net Revenue:
Expenses:
Property taxes- $1200.00 - 2021
Insurance- $1465 annually
Utilities
- Water- $25 / $300 annually
- Sewer- Septic no county or city sewage
- Electricity - $200 / $2400 annually
- Natural gas - $75?? / $900 annually - I don't have natural gas at my primary home. I am all electric so not familiar with this cost.
Repairs and Maintenance - ?? 12-15 years $5k - 6K for HVAC / 25 -30 years $15k for roof replacement / 5 years refinish flooring $5k / New paint 5 years - $5k / Log cabin exterior insect treatment - Approx. $4K?
Repairs and maintenance - $35k total over 20 years.... Estimate $1750 per year for maintenance and repair? $35,0000 / 20 = $1750 annually.
Capex funding ??
Landscaping - Little to no landscaping cost. Wooded lot with gravel drive. No grass
Management fee - Wife is stay at home mom. She will manage. Cost will be her time but we do not plan to hire a management team at this time. We also handle advertising marketing. May change in the future.
Advertising - Same as above.
Payroll - N/A
Sales Tax? 4% from what I can find in Georgia. Not sure how this is calculated? Is it charged on a per stay basis? Does websites such as air bnb and vrbo calculate sales tax and deduct that from your rental?
Other fees
HOA fee - $900 annually
Total Operating Expenses - $8915 annually approx
Net Operating Income - If I maintain a 70% occupancy rate that would generate $36k in gross revenue. $36k - $8951 = $27,049 net operating income.
Depreciation??
Interest expense??
Pretax income??
Income Taxes??
Net income
Principal Payments Principal and interest would be around $1650 per month. (20% down, 30 yr fixed and 5.79% interest rate)
Cash Flow= Net income plus Depreciation expense less principal payments.
Based on the information I have (not sure about depreciation, interest expense, pretax income, etc)
$36k gross revenue - $8951 annual expenses - $19,800 (principal and interest) = $7249.00 annual cash flow. One thing I did not include is how much AirBnb and VRBO charges. I need to add that.
Here is a link to the property I used for this exercise.
https://www.zillow.com/homedet...
We will do a separate Loan payment schedule.
Improve on the above. Make a separate post. Ask for people to analyze your Cost worksheet and Your Income statement and cash flow work sheet. Tell them you are intentionally building from scratch versus using the BP calculators; to understand the logic better. Once you have done the above 5 examples then re do them using the BP calculator.
Please do 1A and 1B. Do not get perfect. You want to blast through both of them together in about 2 hours. We will perfect later. Want to get through the process first. If you get stuck on anything, just place ?????? marks and keep moving. Again, it's about getting through the process versus getting it right for now.
