AirBnB Arbitrage Financial Model

 This spreadsheet was built at the request of a viewer from the live stream. It actually turned out to be a great use of some of the STR logic I have built in the past. One of my areas of expertise is building 5/10 year commercial real estate deal analyzers. This turned out awesome and works for up to 100 properties.

$45.00 USD

After purchase, you will have immediate access to the download. This template is also included in the real estate model and hospitality financial model bundles.


airbnb

The basic premise is pretty simple. What AirBnB arbitrage means is leasing properties (expense) and sub-letting the properties out on AirBnB, VRBO, and other short-term rental booking sites. The idea is that you can make higher monthly bookings revenue than the average monthly lease. The difference is your profit margin.

Note, you will need to account for other monthly expenses (cleaning, miscellaneous slush fund, and possibly other monthly costs). There could also be application fees, furnishing costs, and/or deposits). 

This financial planning spreadsheet / template will let you handle all of the above very elegantly. Here are the features:

General Assumptions and Expenses

  • Model up to 100 properties
  • Over a period of up to 10 years
  • Define the start month for each property (month 1-120)
  • Define monthly lease per property
  • Define annual expected lease increase
  • Define one-time costs upon signing lease
  • Define variable and fixed monthly expenses (the variable costs will vary based on seasonality assumptions) and this could include advertising costs
  • Define one-time startup costs that happen prior to doing any operating activity (such as legal / consulting fees)
Revenue
  • Define base daily rate per property
  • Define seasonality assumptions for each property (varies daily rate / varies occupancy rate)
  • Define annual increase in base daily rate
  • Define if you will have a discount on the daily rate for the first 'n' number of months of each property (sometimes people will do this to get good reviews on the property to start out)
Based on all the assumptions above, the model will produce a monthly and annual pro forma and cash flow analysis, DCF Analysis, IRR, ROI, and minimum equity requirement. These are just some of the key metrics you can find in the booking / travel industry.

It does have the option to add a joint venture where an investor (LP) comes in and provides part or all of the initial investment requirements in exchange for a share of future cash flow. This is driven off IRR hurdles.

I did add some insightful visualizations to the template as well that shows monthly cash flow, cumulative cash, cumulative properties, and total monthly lease.

The biggest risk to this business model would be that the short-term rental booking revenue doesn't cover your lease / other expenses. This is one of the reasons the financial model was built and it allows for testing various feasibilities.

Questions and Answers From Customers Who Purchased This Template:

Customer Question:
Hi Jason,
Thanks so much for the work you've done on the arbitrage spreadsheet. With a quick purchase I was able to present to investors a solid plan for our Arbitrage business in Puerto Rico. I'm wondering if you might be able to help?  I'd like to be able to calculate an ongoing expense for property management, by property as some are 20% some are 15%... 
Thanks in advance!

Answer:
Without having to change any logic, you can account for that in the 'fixed cost per month' row for each property. You would have to manually enter this cost for each property (in row 11 on 'cost assumptions' tab and in those boxes you may have other fixed costs per property. If I get enough requests, I can change the base template to have multiple slots for fixed costs per property, but for now, there is just that single input per property for those types of ongoing expenses.


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