Reply to Ideas to scale up from a single vacation rental bringing over $26,000/month

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[quote=Anonymous][quote=Anonymous]My business partner and I came up with a unique short-term vacation rental idea and hired a general contractor to build it from scratch. It took 10 months, and our all-in costs were $528,000. We used our personal cash, no loans. It only has 2 full bedrooms and 2 other sleeping areas for a total of 8 guests. We hoped our average rate would be $350/night, yet, three months after construction, we've been 100% booked, averaging over $860/night and its trending up. Our expenses are less than 20% of the revenue. Neighborhood occupancy 10miles around us is just 46%, which is very low compared to other locations where we could copy-paste the structure.

Since this is the most significant opportunity I've ever come up with, I want to scale this up all over the US. It seemed that the next best step was to cash-out refinance? So we did that. The property was appraised at 87% of our all-in-costs, and the refinancing gave us 75% out. After all the closing costs, we have the 60% of the funds needed ($316,000). And since construction takes about 10 months, the first property would provide $26,000*80% = $208,000. Adding both together = we have the exact amount to do the second property without using personal cash.

[b]How can we scale this faster?[/b] I would love to quit my day job, and do 5-7 of those structures, each in a different state, in the next 12 months. This will prove the model even more. We thought about construction loans, but we don't have the 2-year business tax history that most lenders require.[/quote]

There are risks. My town we had a super host who drove everyone nuts. The neighbors did a Catch 22 on him. Building department charged him for operating a hotel without a license. But he could not get a license. They then pulled CO for house. He then went and rented anyhow but town now had a $1,000 a day penalty.

We have rentals in town I rent. But this person really maximized and made it a hotel. So there is always that risk [/quote]

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