Spoiler Alert! This isn’t going to be the fun and engaging blog posts. This one is way more X’s and O’s with spreadsheets and variable costs. Reader Beware!

When looking to purchase a vacation home/investment property, the two common questions we get are…

  • How much money will it make?
  • How much money will it cost?

In the first article in the Investment Series , we broke down ROI expectations and which type of home would make a good investment property. And as for this series, we’d like to look specifically at the homeowner costs and understanding what break-even will look like. Let’s dig in!

When understanding expenses, they can be broken into two main buckets:

  • Short-Term Rental Costs – these are costs associated with running a mini-business with your home. These are paying for cleaners, Airbnb listing fees, restocking in-home materials (paper towels, toilet paper…), etc.
  • Homeowner Costs – these are costs of owner a home whether or not you rent it out. Mortgage, Insurance, Utilities…

Short-Term Rental Costs:

Below you will find the different costs associated with running a short-term rental:

  • Cleaning Costs – Depending on the size of the home, cleaning costs can range from $100 to $200 per cleaning.
  • Listing Costs (Airbnb, VRBO) – These are the fees paid to Airbnb (3%) and VRBO (7.9%) for receiving a booking on their platform.
  • Restocking Materials – This includes restocking toilet paper, paper towels, pantry items, propane, welcome gift, and more. This can vary between
  • Management Fee – This is our fee for our services (https://poconorentalmanagement.com/our-services/), including maximizing revenue and taking the work off your hands.
Gross Revenue minus expenses
Look at “Net Difference” for Gross Revenue minus Expenses

Homeowner Costs:

Below are the costs associated with owning a home:

  • Mortgage, Taxes, Insurance – normal mortgage-related costs
  • Utilities – electricity, internet, water, trash.
  • Maintenance – landscaping, snow removal, routine inspections.
High End cost example
This is a high-end example of costs. More often than not, these costs will be lower

So let’s put it all together! Below, we look at…

Final Calculation

Net Profit = Gross Revenue – Homeowner Costs – Short-Term Rental Costs

So to use round numbers, we estimate the following monthly break-even numbers:

  • $150k home – $3k/mo break-even
  • $200k home – $4k/mo break-even
  • $250k home – $4.5k/mo break-even
  • $300k home – $5.5k/mo break-even

These numbers can change quite a bit depending on down payments, home size, and general profitability. These are intended to be directional so you have a general idea of what you need to accomplish to be profitable. Individual results may vary!

And if you’d like to get into the numbers yourself, you can check it out HERE , and as always, let me know if you have any questions! Hello@PoconoRentMan.com.