How To Take a Hard Look at Finances
Most of my colleagues have a handle on money coming in, but no clue how much is going out. Costs include: tax (sales, occupancy, property, business, etc), mortgage, utilities, insurance (typically at a premium if you have the right STR coverage), tools and technology, maintenance and more.
Thank goodness I spent a fair amount of time last year and earlier this year setting up Quickbooks so I was able to easily see every single penny that was going out as well as recurring charges. I was able to isolate charges that wouldn’t be incurred without guests (rental taxes, cleaning, supplies) versus expenses that would still be there no matter what (mortgage, property taxes, etc).
Editor's Note: This is a recurring theme. Read Andrew McConnell's Finding a New Cost Equilibrium
From there, I began to call, email or simply cancel where I could. My biggest expenses and calls were in these categories:
- Mortgage & utilities
- Rental tools
I was considering temporarily shifting my strategy from short term rental to extended stay rentals. Doing the analysis and calling everyone to know my options helped me determine my bottom line number- the number I would need to cover costs without draining our savings. I also plan to do more research on the SBA loans available.
IMPORTANT NOTE: PLEASE do your research on the legalities between short and long term rentals and make sure whatever you choose you are covered for.