Short term rental passive income in Avon can be very high, with an Average Daily Rate of $461 and average occupancy of 42%. But there’s plenty of variability in the $4331 monthly average revenue figure.
The ADR goes from $679 in February down to $305 in May. That’s because February–March is peak season for the town, with a 67% occupancy and $9319 monthly revenue in March! By October, occupancy falls to 23% and average revenue falls to $1470.
If you can handle the ups and downs, $52,000 a year is a good income. In terms of cap rates, we will assume a Net Operating Income of $49,400 (subtracting for fees from the listing platform and housekeeping). The average price of a house in Avon is $615,000, so $49,400/$615,000 gives us a current cap rate around 8%. There are other benefits as well…like having a house in Avon you can stay in whenever you want! Expenses like mortgage interest are tax deductible, and once the property is paid off, you can use a 1031 exchange to turn that equity into a larger purchase…while deferring capital gains taxes until THAT property is sold.
“Passive income”, though, is a little bit misleading. Unlike stocks, bonds, REITs, and other “I check E*Trade a couple times a year” investments, rentals require a certain amount of involvement.
That’s true with long term rentals, as you’ll need to find and manage tenants, leases, and complaints. And long term rental income is lower than short term. You can find a 2 bedroom for $2,500 a month, which is only $30,000 a year fully occupied! But short term rentals have a corresponding cost in time. You’ll need to be available on short notice to manage inquiries and bookings, find a reliable cleaning company, and deal with the general wear-and-tear that comes from vacationers. All in all, people who manage their own short term rentals report spending up to 40 hours a week on them! That’s likely for multiple listings, but even single listings can quickly feel like a drain on your time.
One solution is to use a short term vacation rental management company. At Away Agents, we specialize in maximizing your ROI. We know how to photograph and list the properties for maximum return, how to manipulate pricing to drive sales, and how to execute top notch customer service every time. The only thing you’ll have to worry about is what to do with your spare time and money! Contact us at scott@awayagents.comand we’ll share more about how we can help.