Which cap rate would attract investors for short term SFR?

6 Replies

Hello, everybody, first post here. Currently I have 3 properties in desert cities near Palm Springs, CA. I rent them all short term through Airbnb, each property brings roughly $6K each month, season or not. All of them I purchased for $350K with 20% down plus closing, reno and furniture took about $50K each. My cap rate calculation give me 12 x $6K = $72K - 36K(operating cost - mortgage, property tax, insurance, utilities, maintenance) = $36K : $125K = 0.288 = 28%, average cap rate I see between 8-10%, that's pretty much high in my case.  I have couple properties for sell which fits purpose and I need an investor/partner to go 50/50 or 30/70? Thank you

I'd recommend including management cost in your return calculations so that you are not mixing pay for your services in your investment return.  Should consider including cap ex reserves as well.

Cap rate does not include the mortgage payment.  What you are calculating is the cash-on-cash return.

I do manage myself all my properties, it's part time job(hobby) for me, sometimes it's seems like full time job though.

Originally posted by @Sam Tee :

I do manage myself all my properties, it's part time job(hobby) for me, sometimes it's seems like full time job though.

 That's my point exactly.

Sam - Are you interested in selling  one or all of these or looking for a partner to do more deals with?

@Nathan Diones Sorry for the late reply, I'm not planning to sell any of my properties in near future. I have a couple of leads from my broker, give me some time please and I'll get back and thank you for your offer!

You cap rate calculation is wrong. Plus the use of cap rate is best utilized for multufam not single fam. Nothing wrong with using cap rate on single fam but can be misleading.

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