Short-Term Rental Property Tax: Fill & Download for Free

Let me try to give the perspective of someone who has already done this in San Francisco.It makes total financial sense if you are in a major city with lots of tourist and business travelers (SF, LA, NY, Paris, etc). With all due respect to the other folks on this thread who claim there are inherently high vacancy rates with short term rentals they obviously aren't AirBnB hosts and don't know what they are talking about. I've got 9 units I operate in San Francisco and I run them all at 80% occupancy (usually closer to 90% from March - October) and I know from talking to AirBnB employees and other hosts that occupancy rates in bigger cities like NY and Paris can be even better.Here are how the numbers break down on a small apartment I just purchased for this purpose:Purchase Price: $450K20% down: $90KLoan: $360K (7 year ARM at 3.25% 30 year term)Payment: $2000 per month (includes taxes, insurance interest, etc)HOA dues: $500 per monthTOTAL: $2500 per monthSo I need to make at least $2500 per month to break even on this AirBnB property that I own.Here is a typical monthNumber of bookings: 7Nights rented: 25Average nights per booking (3.7)Average cost per night: $175Gross Revenue: $4375Costs:Cleaning: $350 ($50 per booking x 7)Supplies: $175 ($25 per booking for wine, chocolate, TP, coffee, etc)Utilities: $200 (internet, power, cable tv)TOTAL: $725NETGross Revenue: $4375Costs: -725Mortgage and HOA: -2500Net: $1150So breaking it all down I net over $1000 each month while building equity in the property. I net more during really hot months like May, June, July and less in January and December but average over $1000 net per month.UPDATE OCTOBER 2016:Doing strictly short term rentals (less than 30 days per guest) has become increasingly difficult in San Francisco. The HOA for this apartment I purchased has become more vigilant about owners like me doing short term rentals (HOA rules require 30-day minimum for leasing) but a bigger problem has been the Office of Short Term Rental which is part of the city government. They are proactively policing AirBnB, VRBO and Flipkey for units and issuing fines when they pinpoint the building location. I have been fined once.So my new strategy has been to keep the apartment furnished and still advertise on AirBnB (and VRBO, Flipkey, CHBO, HomeSuite, etc) but I now have a 30-day minimum.Is it worth it? It does not gross as much money as renting by the night. I am averaging $3500 per month now (compared to $4375 from before). So now the numbers look like this:Gross Revenue: $3500Costs: -300 (way less cleaning, less supplies, utilities stay same)Mortgage and HOA: -2600 (HOA fees went up)Net: $700So in the end I am still glad I purchased the condo as it has appreciated about $100K to $550K but the cash flow is not as strong as it once was.My next purchase of a property to do AirBnB will be in an area and HOA where I have some confidence that I can do short term (less than 30 day) rentals for a long while. Of course many cities where AirBnB would be the most profitable also tend to try and regulate it the most.

An owner sold this Pebble Beach (CA) home in August 2016 for $4.45 million more than the price they purchased it in April 2008 during the housing crisis. That’s over 7 times the amount of a 20% down payment of $580K on the initial purchase price.An owner sold this Destin (FL) home in October 2013 for $2.5 million more than the price they purchased it in November 2010 during the housing crisis. That’s over 10 times the amount of a 20% down payment of $240K on the initial purchase price.An owner sold this Scottsdale (AZ) home in January 2011 for $3.9 million more than the price they purchased it in April 2007 during the housing crisis. That’s over 6 times the amount of a 20% down payment of $620K on the initial purchase price.An owner sold this Las Vegas (NV) home in June 2014 for $2.7 million more than the price they purchased it in June 2010 during the housing crisis. That’s over 27 times the amount of a 20% down payment of $100K on the initial purchase price.An owner sold this Pacific Beach (CA) home in July 2014 for $800K more than the price they purchased it in April 2011 during the housing crisis. That’s over 5 times the amount of a 20% down payment of $160K on the initial purchase price.I want to go dumpster diving for cheap, discounted high-end destination residential properties in the most heavily affected locations of the crisis and cover my monthly/annual expenses (mortgage, property taxes, maintenance, etc.) by renting out the property as a short-term rental (more information here in this utlimate guide to short-term rentals that I recently helped collaborate on with some other professionals in the industry) while I bide my time for prices to rise once again.

An owner sold this rental property (1 BR condo) in Denver’s Union Station neighborhood in October 2016 for $135K more than the price they purchased it in June 2015. That’s a 250% return on the amount of a 20% down payment of ~$54K on the initial purchase price.An owner sold this rental property (2 BR condo) in Denver’s Lincoln Park neighborhood in September 2016 for $51K more than the price they purchased it in September 2012. That’s a 320% return on the amount of a 20% down payment of ~$38K on the initial purchase price.Check out Lincoln Park & Union Station in Denver. They have been super hot right for some of the investors that I have come across.The smart investors are covering (or even making more profit on top of) their holding period monthly/annual expenses (mortgage, property taxes, maintenance, etc.) by renting out the property as a short-term rental (more information here in this utlimate guide to short-term rentals that I recently helped collaborate on with some other professionals in the industry) while biding their time for the market to rise as Millennials and Empty-Nest Boomers continue to spike prices as they flock into theses cities in droves.