STR Revenue Target vs Purchase Price

[Zane Abner]

For a STR is there a target % of purchase price that generally equates to a successful STR property? Similar to the 1% rule.

[Jonathan Dempsey]

@Pretty Khare

These are great numbers, awesome to hear about the niche in Tampa.

To quickly sift and compare apples to apples, the minimum a property gross to purchase price ratio needs to be 1.67% in markets I underwrite in.

So for a 500K house, gross rent would need to hit at least $5000x1.67%, or $8,333 gross.

Generally I see STR expenses to be between 35-40% of gross if you have management in place, cleaning revenue, maintenance, utilities, etc.

Being conservative this leaves 60% of gross as NOI typically. If you want 1% rule on NOI (a minimum standard for a good deal in STR), then you'll need 1.67% gross (1/.6).

I know @Josh Messinger is seeing this in the Poconos as this is a market I invest in heavily, and I’m sure most of those Tampa rentals mentioned are in a similar boat.

STR is my sole focus, always ready to chat STR if you reach out!

Live Free,

JD