In March 2018, our Chief Property Hunter (Craig) and myself spent a week in the Bahamas looking at property to purchase as the first offer for Partbnb. In this article we will take you with us on our journey, and break down all of the numbers.
Photos of our arrival in Exuma
Why Exuma?
When we investigated the market for Vacation rentals in the Bahamas, Exuma stood out as an island which had
Lower property prices
High Occupancy
Direct Access from the mainland US/Canada (Miami, Ft Lauderdale, Toronto)
During our research phase we found a number of properties that were currently used as vacation rentals, and had a reasonable occupancy, but under better management could be renovated to a higher standard, and achieve a better utilization.
As is our standard strategy, we looked to see how we could improve the overall revenue, with some investment into the property.
Examining the Market
As part of our research, we utilize AirDNA in addition to our own research to provide us with information on nightly pricing, occupancy & seasonality. Some of the key metrics that we considered for Exuma
More information and access to AirDNA live data can be found by visiting their website
Average Nightly Rate = $400+
* Based on 3 bedroom properties of a similar quality
Palmetto Place - The property we purchased
After viewing many properties on the island we were most impressed with a 3 bedroom, 2 bath house located near to George Town, the main town on the island. It had an excellent view out to the ocean, was well protected from the weather, minutes from the beach and in quiet surroundings.
Costs / Pricing Information
In an effort to provide you with all of the information I have broken down the total costs of acquisition (pre-renovation) of the property. As you are aware there are some additional costs involved with property purchases in the Bahamas, with the major component of that being Stamp Duty.
In the Bahamas, Stamp Duty is a total of 10% - which is split between the buyer & the seller. There are also legal costs around local company formation, and “Overseas Investment Board approvals”.
Renovation Forecast
Using a local contractor we have commenced renovations of this property. The main focus is on the interior Kitchen / Bathrooms and living areas. This will include a complete replacement of the Kitchen & Bathrooms, new flooring throughout the property, re-painting and replacement of appliances.
Here is a breakdown of the work being carried out by our contractor
Predicted Numbers / Comparison
When contemplating the purchase of this property we considered what additional return we would be able to achieve with a fairly major renovation of the interior of the property.
NOTES
Estimated ROI is a gross (pre expense) figure - More work needs to be done to lock down the likely expense to give a NET yield figure. This is an estimation and not a solicitation of investment.
*This is the valuation as considered by the sellers, we were able to negotiate a discount on the purchase from the vendors
The post renovation amount also includes our 10% development margin to ensure a clear picture is given on the Gross ROI for investors.
After investing approximately $88,000 of renovations into the property, we are able to achieve an increase in revenue by around $20k, and achieving a higher gross return (pre-expenses) of 19.3%
It should also be noted that the renovation work carried out will slightly reduce the ongoing maintenance costs given that a number of issues with the property have been resolved during this update.
Based on the figures provided by AirDNA we believe that the nightly rate achieved could be much higher, however given the type of properties in Exuma that were included in the 3 bedroom category, we felt our nightly rate would likely be lower than the average, and have used a very conservative $275 per night for our projections.
Interested in being a part owner of this property?
Make sure you sign up for updates, we intend to launch this property as our first listing towards the end of January 2019. If you are interested in investing, please be sure to check back in with us then, or follow us on Facebook / Twitter for updates.