Another month has gone by and now it’s time to do the Vacation Rental report for August. After a blockbuster month in July, it’s time to come back down to earth. Technically, we are still in the busy season, but I’ve noticed a remarkable change in the number of bookings in August as compared to July. That makes some sense. In August, school is back in session and so one would expect demand to slow down a bit. In any case, this blog is all about transparency. So, without further adieu, lets see how much vacation rental income I earned in August 2022.

Vacation Rental Profit/Loss

Let’s see how much profit/loss I made for the month.

A. Vacation Rental Income

During the month of August, I earned $4,854 in income broken down as follows:

Wow. As you can see, I had a sizeable drop in revenue in August, as compared to July. In fact, the amount I earned in August was more akin to that earned in March or April of this year. In any case, it is what it is.

For what it’s worth, I chose to use the condo one weekend during August, which of course didn’t help things. Even though my use was only for one weekend, that made it difficult to rent the condo the few days before and after that weekend (as most people who rent typically rent over a weekend period). In any case, the condo is there for my enjoyment as well and I have no regrets. If I’m in a position to use the condo again next year August, I will!

B. Vacation Rental Expenses

During the month of August, I incurred $5,297 in expenses as shown below:

An interesting position. My expenses in August were relatively normal. But, and there’s a but, my expenses in August exceeded my income. Therefore, I incurred a LOSS of $443 for the month! In the grand scheme of things, that’s not bad.

What’s interesting is that when I was first looking at buying a condo, the math didn’t initially work out. In other words, when I did my back-of-the-napkin calculations, it was hard to cash flow. So, to justify buying the condo, I would say to myself that I would be happy if the condo broke even, or incurred a small loss. It’s interesting how I rationalize bad investment decisions. I don’t think I’m the only one.

Having experienced a loss in August, when in reality, I should have incurred a profit, I can tell you that I am NOT happy! But, I am realistic. The condo has generated a lot of revenue for the year, and I’m still profitable overall. So, no complaints from me. Going forward, I would be quite content if the condo could generate enough income to at least cover the expenses until we get to next year March.

Time will tell if this will happen. I’ve turn down numerous requests for snowbirds this year because I want to see if I can cover my expenses without them. I am hoping that will be the case. In looking ahead at the calendar, September will likely bring in a small profit, but at the time of this writing, my October calendar (and beyond) are pretty much wide open.

C. Profit/Loss Statement

Based on the rental income and expenses for August, I incurred a LOSS for the month. The total loss was $443. It could be worse. However, what’s more impactful to me is the overall profit since the year started. Year-to-date, the total profit experienced so far is $14,779. I am very pleased with the results so far.

I anticipate another $5000 in extra expenses before the end of the year. I plan on buying a larger washer and dryer and updating my fridge. I am really hoping that I will be able to still have $15000 in profits after that. It’s anyone’s guess how the year is going to end. Bookings have slowed and we are entering the slow season.

Worst case scenario (assuming I earn enough in the slow months to break even), I end up with about $10,000 profit for the year. But I am hoping for something better than worst case scenario.

Annual Income And Expenses

As this is my first year investing in a vacation rental, I don’t have any annual income to compare it to. However, for purposes of this section, here is a graphical representation of the revenues earned in August 2022 in relation to the revenues earned in previous years:

Here is a graphical representation of the expenses incurred in August 2022 in relation to the expenses incurred in previous years:

As you can see, the charts are exactly the same (except in style) as indicated above. This annual comparison section will make a lot more sense come 2023 when I am able to make a comparison. I will be able to see a trend not just from month-to-month, but also from year-to-year.

Finally, I am mindful that as we are possibly heading to a recession, the vacation rental market might be one of the first industries to be negatively affected. So, I am under no illusions that I may not be able to rely on these revenues forever. In fact, there is no guarantee that I will be able to post higher numbers next year. But thankfully, I am still in a position to be able to afford the expenses on my own, if push comes to shove. It will be tough and I may have to live on beans and rice, but it is one of the reason why I chose this particular unit as the first one to purchase.

Conclusion

August was a relatively modest month in terms of income. In fact, I incurred a small loss because my expenses were actually higher than my income.

As this is my first year doing vacation rentals, my expenses are elevated. That’s because I am trying to improve the property little by little so it creates the maximum value for my guests. That being said, come 2023, I plan on focusing A LOT on keeping my expenses low, so that I can start saving for a down payment on my next property.

I am trying to end the year with $15k profit. That will be used to help me towards the down payment on my next purchase. I also have a small balance on my credit card, and I will use some of that profit to bring me back to zero. But for now, I will try and breakeven for the remainder of the year and until I can get back to the busy season next year.

Wish me luck.

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