BNB Accelerator buyer decision desk · Hypothetical worksheet

Buying a 3-bedroom city townhouse: capital replacement allowance

A cash reserve for replacement is different from a tax deduction or annual operating invoice. Include the reserve when judging distributable cash.

This is a worked example for a 3-bedroom city townhouse, not a claim about a particular property or market. All purchase prices, rates, occupancy, revenue and costs are hypothetical. Edit them below using quotes and records for the property you are evaluating.

What matters for this property

A 3-bedroom city townhouse calls for evidence about parking, shared walls, neighborhood demand and use restrictions. Confirm parking and guest access, read the governing documents and obtain written confirmation of the intended rental use before underwriting revenue.

Before making an offer, connect the inspection, legal-use confirmation and seller records to the purchase budget. A concession is valuable only if the resulting agreement still leaves enough cash for closing, opening and unexpected work.

Base assumptions

The example starts at $485,000 with 25.0% down, a 7.5% hypothetical fixed annual rate and 30-year amortization. It assumes $290 per paid night at 51.5% occupancy of 365 available nights. Accommodation revenue excludes lodging taxes and guest cleaning charges.

Management is 20.0%, booking fees 4.0%, routine maintenance 5.0% and capital replacement reserves 3.0% of accommodation revenue. Annual property tax is $5,820, insurance $4,650, utilities $5,300 and association dues $0. Closing costs use a 3.0% allowance, furnishing is $36,000, launch is $7,000 and cash reserves are $25,000. Service fees default to zero and must be added if applicable.

Capital replacement allowance: three cases

Fraction inputs use decimals: 0.25 means 25%. Each comparison changes only the inputs named in its first column. All other base assumptions stay fixed. This isolates a financial effect; it does not predict how demand, prices or financing will behave.

Decision evidence to request

1. Roof and mechanical ages
2. Replacement cost estimates
3. Reserve account policy

Confirm parking and guest access, read the governing documents and obtain written confirmation of the intended rental use before underwriting revenue. Record who supplied each item and when it was checked. Replace an unsupported seller estimate with a quote, a reconciled record or an explicitly labeled assumption. If rental use is not confirmed, model the alternative lawful use before committing funds.

Customize the worksheet

How the numbers work

Accommodation revenue equals available nights multiplied by occupancy and nightly rate. Operating income subtracts management, booking fees, routine maintenance and fixed operating bills. Owner cash flow also subtracts mortgage principal and interest plus the replacement reserve. Total entry cash includes down payment, closing allowance, furnishing, launch and retained reserves, with any scenario-specific additional cash requirement.

Base modeled break-even occupancy after replacement reserves is 64.3%. This is the paid-night threshold under the stated cost structure, not a forecast of booking demand. The base reserve covers approximately 6.5 months of fixed bills and debt with no revenue. It does not cover major unplanned repairs. The model excludes income taxes, depreciation, appreciation, sale taxes and unquoted service fees.

Apply this to your acquisition

Bring the property address, seller revenue records, proposed financing and opening budget to an acquisition discussion. BNB Accelerator can discuss the sourcing and evaluation process and the scope of support available for your purchase.

Reference tools

• CFPB mortgage Loan Estimate explainer: a reference for reading applicable mortgage quotes; lender documents and requirements vary by loan.
• Airbnb Help Center: verify the fee and hosting rules for your specific arrangement.

Continue your research

All 3-bedroom city townhouse worksheets · Browse all property scenarios