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Just made offer on a deal today. Will follow up tomorrow with numbers if anyone is interested.
Ok, here's the deal.
66m2 (710ft2) 1br/1ba apartment in center city (european city). Purchase price of eur97,000 ($107,000). I will spend around eur3000 ($3300) to renovate.
Based on comparables (and my experience) in the area, I can rent for 15-18 nights per month year round. Average rent will be eur70/night ($77).
Based on 15 n/m, that is eur70 X 15 nights X 12 months = eur12,600 ($13,900) in gross cap rate.
My pm fee is 25% and bills, prop insurance, prop tax, and maintenance is another 15%.
eur12,600 - 40% = eur7,560 ($8,300).
Based on the purchase price plus renovations my net cash yield is eur7,560 ($8300) / eur100,000 ($110,000) = 7.5%
Keep in mind that is using a low estimate on my rented nights per month and a low nightly rental. I used eur70/n as the base, but we charge more during holidays and events (eur100-120/n) on these properties and I frequently get more than 15 n/m.
Also keep in mind that this allows me to stay in my own property several days per month and still get a 7.5% net cash yield.
Basically I am able to earn a great passive cash yield AND have a free place to live.
Hope that helps.
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