It’s official. Both of my condos are experiencing negative cashflow. In my August 2023 vacation rental report for Calypso Memories, I reported that my year-to-date LOSS was $8251. Additionally, in the vacation rental report for Emerald’s Corner, I reported that my year-to-date LOSS was $2601. Combined, I’ve experienced a total loss of $10,852 since the year started. Ouch! I don’t have unlimited funds and quite frankly, my serves are gone. So, how am I to weather this storm? Let’s dive in to see how I will try to survive this negative cash flow situation.
It’s Going To Get Worse Before It Gets Better
The fact of the matter is that I have a lot of financial hurt heading my way. I fully expect that this negative cash flow situation is going to get worse before it gets better. Here’s why.
A. Slow Season
For starters, we are heading into the slow season. So, I don’t expect to make as much money as I did over the summer. So that’s going to hurt. Moreover, I anticipate elevated expenses over the next couple of months. For example, I will be buying a new fridge at one of my condos next week.
Sufficed to say the struggle is real.
B. Calendar Already Filled
The other problem is that most of the calendar is already filled for the rest of the year and so there are very few spots available to make a difference. Not only that but the booking rates are low and so even with a relatively full calendar, it’s not making enough of a dent – in part because we are heading into the slow season.
I’ve done an unofficial projection of my income and expenses for the rest of the year and it is EXTREMELY UNLIKELY that I will end the year with a profit for either condo. What a year 2023 has been. Of course, this does not take into account the other benefits of investing in real estate, such as tax write offs and mortgage paydown.
But, a negative cashflow impacts how long I can last in the real estate investment game. Unless I reverse this situation, or am otherwise able to weather the storm, I will have no choice but to sell.
As of right now, my November calendar is wide open for both condos, and that’s about it. November will be a slow month, and so even if I get a full calendar, the rate at which I will be getting the bookings will be low. I’m not optimistic.
To be more specific, for Calypso Memories, half of October, all of November and December are currently wide open. The Calypso calendar is already booked through March 1, 2024. For Emerald’s Corner, only November is wide open. That calendar is already booked through March 15, 2024.
C. Snowbird Rates
To highlight how rough things are going to be, let’s consider the fact that both condos have snowbirds that are scheduled to rent the units. For Calypso Memories, January and February 2024 are rented to snow birds. For Emerald’s Corner, December 2023 – March 2024 are rented to snow birds.
Regardless of the condo, the snowbird rates is far less than what I would normally get for short-term rentals. It’s more akin to a long-term rate. I’ll use Emerald’s Corner as a prime example. My mortgage is over $5000, but the snowbird rate is less than half of my mortgage! Ouch!
Of course, prior to purchasing the condos, I knew that the condos were in a seasonal marketplace and that there was a slow season. But the fact of the matter is that I am experiencing what’s known as Airbnb Bust. Bookings have been down and even when I do get bookings, the booking rates have declined. It sucks.
Once we get to March, and definitely April and May of 2024, things should start looking up. I just have to last until then.
D. I’m Unemployed
In case you have forgotten, I don’t have a job right now. I lost my job last month, and it’s unlikely I am in a position to work another job again.
Recently, I posed about the fact that I May Get Another Job. But since that post, my health has taken a turn for the worst.
So How Do I Weather This Storm Of Negative Cashflow
The answer lies in my pension. Recently, I wrote about the fact that I have achieved financial independence. That’s in large part because I am receiving a pension from my previous job for the rest of my life. So, I consider myself blessed in that regard.
Of course, I am by no means rich. Quite frankly, I am far from it. The pension I am receiving doesn’t even cover the mortgage of my newest condo. But, if I scrape everything together, plus income from my other more successful real estate properties, I am at least able to pay the mortgage and HOA fee of my 2-bedroomm condo. That 2-bedroom condo is the only one I am worried about and the source of my financial stress.
Honestly, I do have to try and pay for the 1-bedroom condo as well out of my personal funds. If you look at my monthly vacation rental reports, you’ll notice that I lost a whole lot more on my 1-bedroom condo than I have my 2-bedroom unit. But, the cost to service the debt on my 1-bedroom condo is substantially less than the 2-bedroom condo.
In addition, I plan on getting a job or acquiring another income source. If this happens, then my financial stress would essentially go away. But we will see. I am still navigating my health issues and let’s just say the struggle is real in that department.
Final Thoughts
There’s no denying it. I am going to be in a world of financial hurt over the next 6 months due to negative cashflow. Although the negative cash flow is a source of my financial stress, I do not regret making my real estate purchases.
In a few days, I will head to the beach with my friends who will be staying at my penthouse corner unit. It gives me so much pleasure to host my friends. We are going on a boat tour and then we are going on a jet ski guided tour together. It’s going to be so much fun. I will be living life and not too worried about what else is going on in the world. It will be a relaxing and fun trip.
Of course, we could have just rented a place at someone else’s Airbnb and still have a great time, but to me it’s not the same thing. I get to host whenever and whomever I want and it’s hard to put a price tag on that. So, that’s just one example of the benefits of my real estate purchase. There are others, believe me.
But, I didn’t buy this 2-bedroom condo to lose money. I’m hoping to re-finance when interest rate comes down and I’m hoping that I can keep my expenses low next year so I can end the year in a profit. Until then, I will just have to weather the financial storm by using my pension to help cover my bills.
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