One of Boxwood Properties divisions is STR Management. We have locations in Nashville and surrounding cities. AirDNA is a great tool to use to gauge what kind of revenue your property can make on a STR platform. AirDNA Rentalizer tool will spit out a potential earning amount on your property based on the success of the 5 nearest STR properties.
This information is a great starting point, but I would not base everything on this number just yet. So many factors tie into generating the highest possible income. With a part time rental property, you may only see 20-40% occupancy. Some properties have restrictions on how often they can rent, if they can even be full time rentals. A full time rental should be 60-70% occupied over the year.
When I calculate wether a property would be a good investment or not, I use my STR Budget spreadsheet. When my expenses outweigh the net, or when the net is the same I could get for a long term lease, I don’t go for it. It’s relatively easy to use and is available here as a free digital download.
Basic information to input:
ADR: Average Daily Rate (term used in apartment management, you would see this as a nightly rate on your booking sites). Your ADR on weekend days is going to be higher than your ADR for weekdays. Further, weekends will book more often than weekdays. In this basic set up, I’m using 64% occupancy as my base, 135 weekend days per year and 98 weekday days per year.
Cleaning Fees: Cleaning fees will count as part of your overall income on both Airbnb and VRBO. I negotiate a cleaning fee per property with the cleaning service I use. They usually calculate the amount of laundry, cleaning, and frequency. I add $2-5 (property dependent) to each clean. While this extra amount can affect my income, it will be used in expenses to buy paper supplies, toiletries, and extra linens which I provide in each rental.
Fixed & Utility Expenses: STR Permits. Legally we must have these permits in Nashville, many surrounding cities have a similar permit process. The current price for STR in Nashville is $313 per unit, per year. Payment of yearly property taxes, and yearly insurance premiums are a required step in obtaining the STR Permit. Sales and Occupancy taxes are required in the City of Nashville and the State of TN, be sure to study up on your local municipality sales and occupancy taxes.
Utilities are a fluctuating expense, I find with my 60-70% occupancy I am still spending less than $500/month on all utilities including internet and cable. My highest utility expense is wifi and cable, we give our guests the high speed good stuff!
To help you figure out if an Airbnb will be a good investment for you or not, I’ve put together a budget that I’d like to share. For the free digital download go here.
The budget can be uploaded into Google Sheets (for free) or Excel. All formulas are provided, all you need to do is change your rates. The formulas for Sales and Occupancy taxes are made specifically for Nashville, TN.