CFD 594 – Short Term Rental Math and Your Magic Number

February 24th, 2020

How would it feel to earn an entire year’s salary in only one month? When you understand the power of a short term rental business and crunch the numbers involved, the path becomes clear. J is going to break down everything you need to know about your Magic Number and how the Cashflow Diary Roadmap can help you achieve your business goals.

  • If your short term rental business magically tripled overnight, how much more time would you have to spend running your business?

If your answer is anything other than 0 extra time to deliver your service, you’re not operating as efficiently as you could. You’re not earning the highest revenue, or your expenses are higher than they need to be, or you’re investing too much of your time into delivering the service.

With the right systems in place, you will be able to deliver more value to the marketplace without having to spend more time doing it. If the thought of your business tripling in 24 hours causes you anxiety around a particular area, that’s where the broken system is.

The more systems you implement the more reliable and consistent your business becomes.

  • Your Magic Number

Math equals money. The one way you can measure how much money one unit can make compared to another is a metric called Revenue Per Available Room, also known as RevPar. To calculate your RevPar, you take your average daily rate and multiply it by your occupancy. This gives you a metric that tells you how much you’ve earned per day, per room.

The occupancy rate for the entire hotel industry in 2019 was only 66.1%. The average daily rate for those hotels was $138.21 per stay.

The average Revenue Per Available Room for hotels in 2019 is $86.76. The average customer review score for those same hotels was 80% with Marriott and Wyndham being tied for first place since 2008.

To compare, J’s numbers for 2019 was an occupancy rate of 70.17%, an average daily rate of $128.34, a RevPar of $90.26, and average customer review score of 92.55%.

Think of all the things that you believe are holding you back, now imagine what would happen if all those obstacles were gone tomorrow. How many units would you have by the end of the year with nothing in your way? Take that number of units and run the numbers, multiply by both the average hotel RevPar and J’s RevPar and that will give you a range that will tell you exactly how much money you could make every day if you accomplished your goals. Multiply that number by 365 to get your earnings per year.

You can also break that number down even further and determine how much of an opportunity cost you’re paying each and every hour that you let those obstacles hold you back.

  • The Cashflow Diary Roadmap

J and the Cashflow Diary are dedicated to providing hands on and direct training to students that want to create their own six and seven figure short term rental businesses.

Members get access to hundreds of hours of content covering every aspect of building a short term rental business including cash flow, negotiations, operations, lead generation, seller financing, and more. Everything you need to develop the skills you need to become the bravest entrepreneur you can be.

The content is one thing, but knowledge alone isn’t going to get you to your goals. That’s why the program is designed with hands on training and accountability built in, training that shows you how to use expert tools expertly.

As Roadmap members you get access to every course and training J has produced over the last several years, some of which people have paid upwards of $5000 for, but you also get assigned a dedicated accountability to make it all happen. They will take you on a 12 month transformational journey through all three phases of the short term rental business, holding your hand each step of the way.

Members are also the first people who will get access to the Cashflow Diary app which will tie everything together. The app will connect the content and the community in a way that we’ve never been able to do before.

Links:

cashflowdiary.com/roadmap

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