Newest Investor Training
Before You Buy a Short-Term Rental: Five Numbers You Must Know
A beautiful property with impressive projected revenue can still produce disappointing cash flow. Before making an offer on a short-term rental, investors should understand five critical numbers: realistic rental income, true operating expenses, total housing payment, debt-service-coverage ratio and cash-on-cash return.
In this video, Lisa Stepp explains how these numbers work together, and why qualifying for financing does not automatically mean a property will be a profitable investment.
Five Numbers to Review
- 1Verify realistic gross rental income.
- 2Calculate the property's true operating expenses.
- 3Determine the complete monthly housing payment.
- 4Understand how the lender will calculate the debt-service-coverage ratio.
- 5Estimate cash-on-cash return using the total amount invested.
Have a Short-Term Rental Property in Mind?
Send Lisa the property address, asking price and available rental projections. She will help you review the financing side of the deal before you move forward.
Information is for educational purposes only and is not a commitment to lend. Loan programs, rates, terms and qualification requirements are subject to change. Equal Housing Opportunity. Lisa Stepp-Seritt, NMLS #680403. Mpire Financial, NMLS #2108504.