For R2R SA, start with the actual cash you need to get the unit live, then check how quickly the monthly profit pays that money back.
- Add every upfront cost - deposit, first month or upfront rent, deal sourcing fee, refurb, staging, furnishing and any other setup costs.
- Adjust for rent-free or deposit-free deals - if you have a rent-free period or no deposit, leave those costs out or reduce them.
- Use a realistic nightly rate and occupancy - this estimates the monthly gross income.
- Add fixed monthly costs - rent to the owner, utility bills, maintenance, council tax, OTA commission and channel manager costs.
- Check payback and break-even - the result shows how long it takes to get your initial cash back and what occupancy you need to break even.