Tampa Bay Area Short Term Rental Investing- How To Evaluate A Property Before Purchasing

Dated: December 28 2021

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Below is a step-by-step example of a recent short-term rental property evaluation for a client looking to purchase in Largo. The home is a 4 bed, 2.5 bath with a pool and the client is considering purchasing for $522,000 with a monthly property management fee of 20%. (standard fees are 20-30%)

 

Step One - Calculate the zoning regulations in the area. 

  • This is extremely important as many areas of Pinellas have 30-day minimum stays which will drastically affect your profits.
  • Largo has no rental restrictions(outside of HOAs), which will allow the client to get maximum occupancy and nightly rates.


Step Two- Calculate the upfront money needed to purchase, repair, and furnish the home.

  • Down Payment- $78,300 (15% down on single-family investment)
  • Closing Costs- $0- Paid by the seller (it would be 3.5% of purchase price)
  • Furnishing- $12,000 (3K per room in the home on average)
  • Repairs- $0 (fully remodeled home)

Step Three- Calculate your monthly payment.

  • Principal and Interest-$1,943.21- Contact your lender or use bankrate.com
  • Utilities- $300- Contact the utility provider for an estimate or ask the sellers for previous bills.
  • Insurance- $3,000- Contact your insurance provider and make sure to tell them it is a short-term rental
  • Property Taxes- $8,954 - Use the Pinellas County Tax assessor site and don’t select homestead.

Step Four- Estimate what the property should make in monthly revenue. 

  • There are multiple online programs that allow users to pay to see what any property is profiting on Airbnb and VRBO. I currently pay for premium AIrdna.
  • The closest comparable property on Airdna is generating $99,500 annually in this case. I will be dividing this number by 12 to get a projected monthly income of $8,291.

Step Five- Plug all numbers into an investment spreadsheet to calculate the monthly and annual returns as seen below.

This spreadsheet is a custom spreadsheet created by Mangrove Bay Realty. Please email mangrovebayrentals@gmail.com if you would like a copy or have any additional questions regarding the Tampa Bay Real Estate market.



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Troy Nowak

Success in real estate stems from experience, integrity, knowledge, and most importantly, relationships. A successful real estate professional navigates many waters for their clients, and I am here to....

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