Start with the full cost
The purchase price is only part of the budget. Add closing costs, non-included furnishings, necessary equipment, and a reserve for contingencies. Ask for documented amounts for the specific property under consideration rather than general estimates.
Separate gross income from net income
Gross rental income must be reduced by management fees, booking commissions, condo fees, maintenance, insurance, and applicable tax obligations. Verify who pays for each expense in the management contract.
Test multiple scenarios
Prepare a conservative scenario, a central scenario, and a favorable scenario with explicit assumptions. Vary occupancy, average rates, and costs. Also account for the weeks you wish to occupy the property: they cannot generate rental income simultaneously.
Compare before deciding
Compare several properties using the same method and request the data that justifies each assumption. Latitud365 can assist you in this comparison and direct you to the appropriate professionals. No future return can be guaranteed; this article does not constitute personalized financial or tax advice.
