Buying STR with current rates as a retirement plan?

New York, New York
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Buying STR with current rates as a retirement plan?

Kiko Mattoso
Member since 2021 · 28 posts · 6 votes

Hi everyone,

I want an honest answer about something. I own only one STR property upstate NY that gives me around 11% cash on cash return. This means, I get like around 10k per year, net. But reading some posts here on Biggerpockets, this deal will sound bad to a lot of investors who say they only consider deals that can generate at least 20%.

My long-term goal is to buy enough STR properties that will generate a cash flow of 20k/month, so I can retire in the next 15 years with live with this cash-flow money.

BUT, in NY the homes are expensive and with current interests rates, I am not sure now buying STR properties is the way to go. I probably can get 10% investing in stocks. Not sure I wanna go that route, though.

My thoughts: I could buy another house now that would generate another 10% Cash on Cash return, and get around 700 dollars per month in cash flow, but then I'd have to buy 25 properties to reach those 20k. I'd need to buy 2 per year, to achieve that, but I don't have the time or money to do that.  

I know some of you will say " find better deals, maybe not in NY" but how when you're on a 9 to 5 job?

Any advice? What is the best free tool to help me find the deals? I love real estate, so would prefer to find ways to make it right, than to invest in stocks.

Thanks a lot in advance!

3Reply
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Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
3y

One more unoriginal thought here - slow and steady still wins the race. 

Try to find your unfair advantage. Ours is that my wife is an interior designer. She does that for a living and has worked in $10M homes...she is actually a designer for a living, not "has an eye for design." It's a bit of a cheat code when buying short and medium term rentals. What is yours? Do you have specific hobbies or travel destinations that the masses do not know about as well as you? Do you have any advanced knowledge in construction? Do you have family member or close friends any interesting markets that will be helpful when building out boots on the ground? Find that unfair advantage, lean into it, and slowly, year by year, get the snowball rolling down the hill. 

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  • Andy Whitcomb
    Investor · Black Diamond, WA · Member since 2016 · 123 posts · 127 votes
    3y

    It's doubtful that you'll come up with "the" right strategy to make $20k/mo right off the bat, because as you move forward and invest in more properties you'll gain knowledge, strategies, connections, ect. that will give you better information on how to proceed. My thought is, start with what you can now and move forward. I think of that saying that goes something like "start where you are, with what you've got". 

    I'm sure you'll get some other great responses from folks here, but that's my thought on it for now. 

    5Reply
  • Brad Jacobson
    Realtor · Ogden, UT · Member since 2019 · 338 posts · 415 votes
    3y

    I was going to give my own thoughts on this but @Andy Whitcomb's answer was so good, I'm just going to second it!

    This has proven true for me as well.  I've switched strategies several times but I have held true to my "buy one property each year" plan and now that I'm six years and eight doors deeps, I continue to have new "doors" open for me and my strategies continue to revolve and change based on the opportunities that arise.

    Whatever you do, don't wait.  Go buy real estate!

    2Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    3y

    One more unoriginal thought here - slow and steady still wins the race. 

    Try to find your unfair advantage. Ours is that my wife is an interior designer. She does that for a living and has worked in $10M homes...she is actually a designer for a living, not "has an eye for design." It's a bit of a cheat code when buying short and medium term rentals. What is yours? Do you have specific hobbies or travel destinations that the masses do not know about as well as you? Do you have any advanced knowledge in construction? Do you have family member or close friends any interesting markets that will be helpful when building out boots on the ground? Find that unfair advantage, lean into it, and slowly, year by year, get the snowball rolling down the hill. 

    6Reply
  • Brooklyn McCarty
    Investor · Member since 2022 · 1k+ posts · 754 votes
    3y

    I would look in other markets. Deals are still out there. 

    Reach out to Avery Carl's team The Short Term Shop. They specialize in STR deals and then when you close the deal, they teach you how to self manage the property remotely.

    I’ve bought 4 properties with them. Self manage them all from 6 and 14 hours away. If I can do it, you can. She has a book called Short Term Rental, Long Term Wealth. It helps you get your systems in place so you are spending minimal time on them.

    3Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y

    Thats a lot of money and work for 10k profit. I can buy a house cash for 30k and net 10k profit with a lot less work.

    0Reply
  • Kiko Mattoso
    OP
    Member since 2021 · 28 posts · 6 votes
    3y
    Quote from @Brooklyn McCarty:

    I would look in other markets. Deals are still out there. 

    Reach out to Avery Carl's team The Short Term Shop. They specialize in STR deals and then when you close the deal, they teach you how to self manage the property remotely.

    I’ve bought 4 properties with them. Self manage them all from 6 and 14 hours away. If I can do it, you can. She has a book called Short Term Rental, Long Term Wealth. It helps you get your systems in place so you are spending minimal time on them.


     Thanks, that's very helpful. I'll look for those people. 

    0Reply
  • Kiko Mattoso
    OP
    Member since 2021 · 28 posts · 6 votes
    3y
    Quote from @John Underwood:

    Thats a lot of money and work for 10k profit. I can buy a house cash for 30k and net 10k profit with a lot less work.


     But how do you find a house for 30k? But then you'll need how much for renovations and to furnish it?

    0Reply
  • Kiko Mattoso
    OP
    Member since 2021 · 28 posts · 6 votes
    3y
    Quote from @Travis Timmons:

    One more unoriginal thought here - slow and steady still wins the race. 

    Try to find your unfair advantage. Ours is that my wife is an interior designer. She does that for a living and has worked in $10M homes...she is actually a designer for a living, not "has an eye for design." It's a bit of a cheat code when buying short and medium term rentals. What is yours? Do you have specific hobbies or travel destinations that the masses do not know about as well as you? Do you have any advanced knowledge in construction? Do you have family member or close friends any interesting markets that will be helpful when building out boots on the ground? Find that unfair advantage, lean into it, and slowly, year by year, get the snowball rolling down the hill. 


     Thanks Travis, that makes sense.

    0Reply
  • Kiko Mattoso
    OP
    Member since 2021 · 28 posts · 6 votes
    3y
    Quote from @Brad Jacobson:

    I was going to give my own thoughts on this but @Andy Whitcomb's answer was so good, I'm just going to second it!

    This has proven true for me as well.  I've switched strategies several times but I have held true to my "buy one property each year" plan and now that I'm six years and eight doors deeps, I continue to have new "doors" open for me and my strategies continue to revolve and change based on the opportunities that arise.

    Whatever you do, don't wait.  Go buy real estate!


     Thanks!

    0Reply
  • Kiko Mattoso
    OP
    Member since 2021 · 28 posts · 6 votes
    3y
    Quote from @Andy Whitcomb:

    It's doubtful that you'll come up with "the" right strategy to make $20k/mo right off the bat, because as you move forward and invest in more properties you'll gain knowledge, strategies, connections, ect. that will give you better information on how to proceed. My thought is, start with what you can now and move forward. I think of that saying that goes something like "start where you are, with what you've got". 

    I'm sure you'll get some other great responses from folks here, but that's my thought on it for now. 


     thanks!

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y
    Quote from @Kiko Mattoso:
    Quote from @John Underwood:

    Thats a lot of money and work for 10k profit. I can buy a house cash for 30k and net 10k profit with a lot less work.


     But how do you find a house for 30k? But then you'll need how much for renovations and to furnish it?


     I don't furnish a LTR house.

    Thye last 7 houses I have paid less then 30k except for one. I paid 50k for it. The neighborhood is a 250k to 300k per sq ft neighborhood.

    I find houses via direct marketing and word of mouth.

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y
    Quote from @John Underwood:
    Quote from @Kiko Mattoso:
    Quote from @John Underwood:

    Thats a lot of money and work for 10k profit. I can buy a house cash for 30k and net 10k profit with a lot less work.


     But how do you find a house for 30k? But then you'll need how much for renovations and to furnish it?


     I don't furnish a LTR house.

    Thye last 7 houses I have paid less then 30k except for one. I paid 50k for it. The neighborhood is a 250k to 300k per sq ft neighborhood.

    I find houses via direct marketing and word of mouth.

    These could be STR's but not vacation rentals. I only Short term rent true vacation rentals. 


    0Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y

    I have 11 STR in the Smoky Mountains and I don't buy unless I can reach 20% cash on cash. My two deals last year put me at 23 and 24%. It is doable in strong markets to find a better return. You may contemplate what your ultimate strategy is - if you are flexible on market, then definitely look at the Smoky Mountains.

    2Reply
  • Kiko Mattoso
    OP
    Member since 2021 · 28 posts · 6 votes
    3y
    Quote from @Leslie Anne Morris:

    I have 11 STR in the Smoky Mountains and I don't buy unless I can reach 20% cash on cash. My two deals last year put me at 23 and 24%. It is doable in strong markets to find a better return. You may contemplate what your ultimate strategy is - if you are flexible on market, then definitely look at the Smoky Mountains.


     Thank! . Do you use airdna to find out about their profitability? And do you renovate and furnish them all? Because they have to look great to attract str guests and to do that it takes so much money and time, any advice there? Thanks again!

    0Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y

    I own a property management company so I primarily use data from our portfolio or from Key Data. I think AirDNA is too conservative lately. I do typically buy turnkey and leave room for a budget of $3500-5,000 to create some sort of fun or enhanced space. I have some case studies on Instagram about what I’ve done it’s @Leslie.Anne.Morris - check under story highlights. Specifically ‘Whiskey.’

    0Reply
  • Kiko Mattoso
    OP
    Member since 2021 · 28 posts · 6 votes
    3y

    awesome, thanks!

    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    Hey @Kiko Mattoso, I don't think that 11-12% CoC is that bad really. It is making you a bit of cash and you have an appreciating asset.

    Don't be afraid to look outside your area for the better deal. I try and find places that aren't in terrible shape so I don't have to do to much work.

    I guess you have to first decide where you might be interested in buying. Narrow it down. You don't have to stay in NY but could try and stay a little closer to home. 

    1Reply
  • Kiko Mattoso
    OP
    Member since 2021 · 28 posts · 6 votes
    3y
    Quote from @Leslie Anne Morris:

    I own a property management company so I primarily use data from our portfolio or from Key Data. I think AirDNA is too conservative lately. I do typically buy turnkey and leave room for a budget of $3500-5,000 to create some sort of fun or enhanced space. I have some case studies on Instagram about what I’ve done it’s @Leslie.Anne.Morris - check under story highlights. Specifically ‘Whiskey.’


     So I must be doing things totally wrong. I purchased my cabin that wasn't in terrible shape for 222k with 10% down, but then I spent 70 renovating it, making it look attractive to guests. In the next house I buy, if I'm to spend 5k tops, it needs to be in really good shape already because 5k would be just for external painting and nothing else in NY. 

    Still learning everything, thanks for taking the time to write :)

    0Reply
  • Kiko Mattoso
    OP
    Member since 2021 · 28 posts · 6 votes
    3y
    Quote from @Michael Baum:

    Hey @Kiko Mattoso, I don't think that 11-12% CoC is that bad really. It is making you a bit of cash and you have an appreciating asset.

    Don't be afraid to look outside your area for the better deal. I try and find places that aren't in terrible shape so I don't have to do to much work.

    I guess you have to first decide where you might be interested in buying. Narrow it down. You don't have to stay in NY but could try and stay a little closer to home. 


     Yeah, I'd love to stay around NY, but might have to look in CT, PA or NJ. Thanks a lot Michael!

    0Reply
  • Dave Skow
    Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
    3y

    @Kiko Mattoso- thanks - great outline  ....take small steps and try locating / purchasing  properties that  work for you  ( even if they dont meet the  20%  return )  ....if they  work  for you    you  can  continue  to  search for  more and   before you know it - you will  be closer to your LT goals  -make sure you  have your financing / pre approvals in place for the  next proeprty   so you can  be aware of the  numbers  needed for the next purchase  - good luck 

    0Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y
    Quote from @Kiko Mattoso:
    Quote from @Leslie Anne Morris:

    I own a property management company so I primarily use data from our portfolio or from Key Data. I think AirDNA is too conservative lately. I do typically buy turnkey and leave room for a budget of $3500-5,000 to create some sort of fun or enhanced space. I have some case studies on Instagram about what I’ve done it’s @Leslie.Anne.Morris - check under story highlights. Specifically ‘Whiskey.’


     So I must be doing things totally wrong. I purchased my cabin that wasn't in terrible shape for 222k with 10% down, but then I spent 70 renovating it, making it look attractive to guests. In the next house I buy, if I'm to spend 5k tops, it needs to be in really good shape already because 5k would be just for external painting and nothing else in NY. 

    Still learning everything, thanks for taking the time to write :)

    Yeah the 5k is just when it’s turnkey to add special items. Like in my Whiskey cabin I did a whiskey theme and added decor and barrels etc. Some minor painting too. 
    0Reply
  • Quincy Baker
    NC · Member since 2023 · 2 posts · 0 votes
    3y

    @Kiko Mattoso

    I would also consider four plex

    0Reply
  • Ryan Rock
    Sacramento · Member since 2019 · 54 posts · 24 votes
    3y
    Quote from @John Underwood:

    Thats a lot of money and work for 10k profit. I can buy a house cash for 30k and net 10k profit with a lot less work.


     Where can you buy a house for 30 that nets 10?

    0Reply
  • Bernadette Trafton
    Flipper/Rehabber · MA/NH · Member since 2014 · 38 posts · 6 votes
    3y

    If your main focus is monthly cash flow, you may want to reach out to landlords who are sick and tired of dealing with long term rental tenants. The moratorium on evictions during covid, left many frustrated (at least in my area). If the property is in an area that supports STR, you may be able to lease or even lease/option it with the agreement you will be able to sublet the units. It's a win for the owner because you will be managing the property for them without charging them 10%, they won't have to deal with tenants, they will get their rent on time every month, STR is far less wear and tear on the property than LTR and will cashflow better, you and they won't have to deal with traditional landlord/tenant laws as STR's don't have the same rights as LTRs, it's a win for you because you don't have to come up with a huge down payment, pay closing costs, high interest rates, broker fees, etc and if 65% occupancy leaves enough monthly cashflow for you, then it's a deal. We have a training on the Boston AREIA site and it works everywhere if you are interested dm me and I will share it. The training is free to watch. The speaker is selling a course (as many do), but, if you are comfortable with STR's the training should give you quite a few golden nuggets you can use without buying the course. In any case, you can use this strategy until this market is in a better place to buy/hold. And, always see if an owner will entertain terms.

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y
    Quote from @Ryan Rock:
    Quote from @John Underwood:

    Thats a lot of money and work for 10k profit. I can buy a house cash for 30k and net 10k profit with a lot less work.


     Where can you buy a house for 30 that nets 10?


     All over the place. I am in the Upstate of SC. Heck we bought a double wide with land for 6k a few month back from a motivated seller. We are collecting $800/month from tenant and I have never seen the inside of the property. 

    The owner had to sell and thanked us for helping them.

    1Reply
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