How to Calculate Vacation Rental Profits (In 5 Minutes)

Before you buy any vacation rental/short-term rental investment, you’ll need to calculate exactly how much it will cost and profit each month. With some mastery of short-term rental analysis, you’ll be able to easily look at a property and see what features and amenities can be used to massively boost your ROI.

Avery Carl, master of everything short-term rental-related, walks through two properties with different bedroom counts and how to calculate profits on both. Avery shows how a simple bedroom addition could be the difference between tens of thousands in profit annually, higher cash-on-cash return (CoC), and a higher cap rate.

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00:00 Analyzing Short-Term Rental Properties
00:27 Property 1: Revenue and Details
01:39 Property 1: Using the BP Calculator
04:47 Property 2: Revenue and Details
05:34 Property 2: Using the BP Calculator

[housefanman]

No mortgage insurance, no cost for furniture, no cost for rehab, only 10% down, like 5% vacancy, etc. And because it is self-managed, it is not scalable. Especially with 95% occupancy! Come on BiggerPockets show more realistic videos.

[duanehensley]

Great video. Quick question... Why include cleaning fees if you are passing those fees onto the guests?

[mrp]

Pretty good tips. I note all of them down.

[DanielKauffman]

I'm loving your videos Avery! Before you, Bigger Pockets did not have the same quality of content for short-term rentals...

[lemorrisneely]

Great info! I was adding 5% to vacancy not realizing it was included in the gross amount. Thanks!

[michaelwarren]

The 750k home would not qualify as a vacation mortgage due to it being over the jumbo loan limit. You would have to put at least 20% down.

[wlf]

Great analysis. Loved the insight on the 2 vs. 4 bedroom COC return.

[linguamichael]

I appreciate the walk through. Are all your acquisitions recently renovated and furnished? Those are huge setup costs that you didn't discuss, and they would drop the CoC return quite a bit.

Can you do another video to show us how you analyze a property that you would need to renovate and furnish?

[watchusfliphouses]

Great numbers walkthrough on STRs! Thanks for the info.

[kasbas]

First property shows $188 rent a night so if you multiply that by 365 days that equals = 68, 620 a year and you estimated that it’s “gross income” is 65, 000, which doesn’t makes sense to me !!

One would be lucky to get %50 occupy rate on a short term rental in normal times (pre-Covid-19 era) so your real income should be half of that (if ones lucky) !

[whiskey]

Anyway you can show one that is little more realistic for average person, ..not half million or more cabins🙏?

[paulgugger]

I have a vacation rental I bought on the central coast of California. I put 50% down on a 1031 exchange. I have owned it for 15 years and have never turned a profit. We love going there or I would have sold it. I recently paid it off after selling another rental and thought I would finally turn a profit. But just got a $30, 000 repair bill. I have around $300, 000 in passive losses so it will take some time to use them up. I keep seeing articles about vacation rentals being such a good investment and I don't see it? just a few years ago I saw a video by Robert Kyosocki saying they are the worst investment to own. Now it seems everyone is pushing them?

[theskepticalinvestorwithja]

Is there mortgage insurance attached to this at all at 10% down? I would imagine but I didn't get to see it in the numbers. The returns are amazing though! :D

[AK-rza]

Thanks for taking the time to do a walkthrough and get people's wheels turning on STR. Clearly a rockstar in her industry.

I bet she would ask quite a bit more for these units on MLS. She will have investors blowing up her email and inbox for 1600mo cash flow on a 2 bedroom for $450k on a 2 bed. The "simulated" selling price is what drives the returns on this.

[tangoember]

Thanks for all the great content and suggestions! In the first example, it seems we're assuming an occupancy rate of 95% (= 65000/188/365). Is that realistic, or, are there other components of revenue I'm missing? Thx again!

[jamphotostudio]

I appreciate all the information!! I'm new to the vacation rental game, and my question is what amount of time do you need to spend in the property per year to be able to get the 10% down instead of 20%? also, are your examples based on someone buying these properties personally, or with an LLC or S-Corp for legal protections? Thanks so much ofr all the info and great job on the video!!

[allenpearson]

Do you have any videos or examples of short term rental investments that are international?

[NickinNashville]

the question I most wanted is how to analyze all of those other websites to come up with $65, 000

[jasontucker]

What do you figure for thr vacancy rate, what is typical?
Also, what percentage of time does the purchaser of the property have to spend there to qualify for a 10% money down mortgage?

[tdzdyst]

How are you getting 10% down payment? Wouldn’t you have to live there full time for a year?