A short-term rental investment memo is the decision document you would want to read if you had not attended any of the sales calls. It should explain why the property fits, where the numbers came from, what could invalidate them, and what price and conditions you are willing to accept. Keep evidence, assumptions and conclusions visibly separate.
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Start with the decision you are requesting
Use a direct opening: approve an offer up to a stated price subject to specified conditions, request additional evidence, or decline the purchase. Include the exact property, intended use and buyer’s objective. Avoid beginning with a long market narrative while hiding the cash requirement and open risks at the end.
For every major number, show its source and date. Distinguish seller history from comparable-property observations and from your own modeled performance. Historical results under a different host, manager or availability pattern do not automatically become your forecast. Record which operating changes you assume and what they cost.
Use a consistent memo structure
| Memo section | Required content |
|---|---|
| Decision | Price ceiling, conditions and approval requested |
| Property fit | Address, guest use, legal-use status and buy-box fit |
| Capital | Cash through launch and separately identified reserve |
| Operating case | Revenue basis, expenses and financing assumptions |
| Downside | Lower revenue, delayed opening and major cost exposures |
| Open gates | Evidence still needed, reviewer and deadline |
| Recommendation | Proceed, renegotiate, investigate or reject |
Show the arithmetic and its limits
Illustrative only: assume $100,000 annual revenue, $45,000 operating costs, $35,000 debt service and $5,000 planned replacement-reserve contribution. The modeled owner cash remaining is $15,000. With $180,000 total initial cash committed, that is an 8.3% simple cash-on-cash measure under this definition. Label whether the denominator includes reserves and whether cash flow includes reserve contributions so another reviewer can reproduce the calculation.
If revenue falls to $80,000, costs do not necessarily fall by $20,000. Recalculate variable expenses while retaining fixed obligations. If operating costs become $41,000 with unchanged debt service and reserve contribution, modeled cash remaining becomes negative $1,000. This is an arithmetic example, not a forecast or an acceptable-return recommendation. Financing approval alone does not validate the owner’s investment case.
Identify what would reverse your conclusion
Finish with the facts that would make you change your mind: a lower supported revenue range, an unavailable permit, a materially higher insurance quote, or repair work that consumes the reserve. An approval that cannot be reversed by new evidence is not a useful decision framework. Keep the original memo and issue a revised version when terms change so enthusiasm does not quietly replace the original investment criteria.
Continue your purchase research
- Return to the buyer workbook
- Work backward to an offer ceiling
- Build the downside case
- Review specific client examples
Prepared by BNB Accelerator. These worksheets support a purchase discussion and do not replace property-specific legal, lending, insurance, tax or inspection advice. Examples are hypothetical and do not promise investment results.