Our deal sheets show total entry cost alongside purchase price, and the two numbers frequently surprise people. A $570,000 property in Panama City Beach carried a total entry of $320,457. A $540,000 property in Denver carried $185,619. The spread is the point.
What total entry includes
| Line | Typical range |
|---|---|
| Down payment | 20 to 25% of price |
| Closing costs | 2 to 4% of price |
| Prepaid escrows | Varies by insurance and tax |
| Furnishing and design | $25K to $90K+ |
| Photography and listing setup | $1K to $3K |
| Initial supplies | $2K to $5K |
| Permits and registration | $100 to $2K+ |
| Operating reserve | 6 months of full carry |
The purchase price is roughly 70% of what it actually takes, and the remaining 30% varies enormously depending on financing structure, furnishing scope and how large a reserve the property's seasonality requires.
Why the ratio varies so much
Financing structure is the largest variable. A DSCR loan at 25% down with reserves required at closing consumes far more cash than conventional financing at 20% down.
Furnishing scope is the second. A four-bedroom needing a full premium-tier furnishing package plus a hot tub is a different number from a property where furnishing conveys.
Reserve size is the third and the most often ignored. A property in a market with a severe seasonal trough needs a larger reserve than one with a flat calendar, and the reserve is real capital that has to be there.
Why the reserve is not optional
Six months of full carry, meaning mortgage, insurance, property tax, utilities and association dues, held in cash and untouched.
This is the line that gets cut when the furnishing budget runs over, and cutting it is the most common reason a fundamentally sound property becomes a distressed sale.
The events it exists for are ordinary: a slow first quarter while reviews accumulate, an underperforming shoulder season, an HVAC failure, a storm closing the market for three weeks, or an insurance renewal that reprices sharply. None of those are unusual.
What it does to the return calculation
Cash-on-cash return is annual net cash flow divided by total cash invested, and total cash invested means total entry cost, not the down payment.
A property with a $185,619 total entry and $22,000 of annual net cash flow is producing roughly 12%. A property with a $320,457 total entry and the same $22,000 is producing under 7%. The gross booking figures might be identical.
Using the down payment as the denominator, which is common in casual analysis, overstates the return substantially and makes properties with different capital requirements look comparable when they are not.
The buyer's version of the calculation
- Down payment at the actual structure your lender requires.
- Closing costs, itemized from the lender rather than estimated as a percentage.
- Prepaid escrows, using an actual insurance quote for the address and property tax reassessed at your purchase price.
- Furnishing at the tier the comparable set requires, not the tier you would prefer.
- The amenity gap against the comparable set, priced and included.
- Photography, supplies, permits and registration.
- Six months of full carry as reserve.
Where buyers get caught
The furnishing budget overrunning is the most common, followed by insurance coming in far above the estimate, followed by property tax reassessment.
Each of those individually is manageable. Together they can consume the reserve entirely, which converts a well-capitalized purchase into an undercapitalized one before the property has taken a single booking.
The defense is to model total entry cost properly before the offer and to treat the reserve as a fixed requirement rather than a residual. If the deal only works because the reserve was skipped, the deal does not work.
Why we publish it
Because purchase price alone is not a comparable number across properties, and buyers deserve to see the capital requirement rather than discovering it at closing.
It also disciplines the analysis on our side. A property that looks cheap on price and requires $110,000 of amenity investment to compete is not cheap, and putting the total entry figure next to the price makes that visible immediately.
The same discipline eliminates a meaningful share of the roughly one thousand deals we screen each week. A property that works on purchase price and fails on total entry cost is a rejection, and it is one that a buyer working from listing prices alone would not see.
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Frequently asked questions
What is total entry cost for a short-term rental?
Down payment plus closing costs, prepaid escrows, furnishing, photography, supplies, permits and a six-month operating reserve. Purchase price is typically about 70% of what it actually takes to open the property.
Why does total entry cost vary so much between properties?
Financing structure is the largest variable, since DSCR loans require more down and reserves at closing. Furnishing scope is second, and reserve size is third, driven by how severe the market's seasonal trough is.
Should I calculate return on the down payment or total entry?
Total entry cost. Using the down payment overstates return substantially and makes properties with different capital requirements look comparable when they are not.