Maybe it’s in my blood. Maybe it’s because my dad was a bank manager. For whatever reason, I love numbers and stats. I love lists and budgets. They help me think clearly. They give me knowledge on which to make decisions and they give me confidence in those decisions. So, I have budgeted and analyzed this building project from every angle I can think of. For example, here are 10 questions I have answered with research and budgeting…
1) What are the monthly expenses of owning a cabin?
2) What monthly mortgage payment am I comfortable with?
3) How many nights can we conservatively expect the cabin to rent per month?
4) What are the peak and slow months?
5) How much can we reasonably expect to charge per night?
6) Can we afford the payments even if the cabin fails to rent out?
7) Is my other income stable enough to support the cabin long-term if need be?
8) How much of a savings buffer do I need to fall back on if the cabin doesn’t rent out?
9) How does the cabin fit into my long range financial and retirement plans?
10) How much do I need to save for a down payment and furniture?
As you can see, I try to think very realistically when it comes to planning and budgeting. I usually think “worst case scenario.” What if the cabin doesn’t rent at all? What if my business slows down and my other income becomes unstable? What is COVID gets worse and people stop travelling again? I really look forward to this new venture but I don’t want to be under constant financial stress and I don’t want to be “house poor.” Basically, I had 2 touchstone questions I used to make my final decision on building this cabin.
1) Using realistic figures on nights per month rented and cost per night, will the cabin pay for itself?
2) If the cabin does not generate any income, will I still be able to afford the mortgage and other expenses?
Fortunately, we were able to answer YES to both questions. So, my conservative, budget obsessed, worst-case scenario, son of a bank manager mind was able to make this decision with confidence.
My Townsend Cabin 