When people desire to buy a dome as an investment to generate an income stream they need to complete their due diligence and gather some needed data.
One of the main financial ratios to assess is the return on investment. In order to fully understand the quality of this investment, the future owner to needs to create a mini business plan with the following information.
Total cost
Domes costs
– all expenses relating to permits such as surveyor, permits plans, permit fees, this is also part of what is commonly called soft costs
– the structure of the dome ( outer envelope)
– creating, bathroom, kitchenette, etc..
– mechanical systems, ( AC and heating)
– all expenses relating to permits such as surveyor, permits plans, permit fees, this is also part of what is commonly called soft costs
– the structure of the dome ( outer envelope)
– creating, bathroom, kitchenette, etc..
– mechanical systems, ( AC and heating)
Site preparation cost
– Site clearing
– foundation
– platform
Utilities
– electricity
– sewer
– water
Connecting utilities to dome
Most of this work will probably be completed by your General contractor.
The total of all those expenses will constitute the INVESTMENT.
Total projected revenues
Buyers of domes should be able to project their potential revenues. In order to so they need to estimate:
1) what should be the average daily rate they believe that they can charge throughout the year.
2) the potential occupancy rate
1) what should be the average daily rate they believe that they can charge throughout the year.
2) the potential occupancy rate
We suggest having a conservative approach in doing so.
Multiplying the average daily rate (adr) by the yearly occupancy rate will give you an idea of the total revenue. Read more about the Average daily rate and the occupancy rate.
Total expenses
The next step is to compute all operating expenses to rent your dome on a monthly and yearly expenses.
In this section all expenses should be computed under fixed costs or variable costs.
In this section all expenses should be computed under fixed costs or variable costs.
Fixed costs are expenses that are fixed that the dome is rented or not such as:
– insurance
– property taxes
– maintenance
– wifi
– full time employees if any
– website if applicable
– crm software, etc
– landscaping
– accounting
Variable costs are expenses that vary with occupancy such as:
– cleaning fees
– commission fee to Online travel agencies or platform such as airbnb
– credit card transaction fees
– marketing and advertising fee (if applicable)
– resort fees (if applicable)
– sales taxes or VAT (if applicable)
Total Revenue – total expenses = net profit
Return on investment is computed as Net Profit / total investment
