I've been back and forth on the idea of using our savings to invest in a STR. I've read how it has changed people's lives, but have been super apprehensive seeing how saturated the STR market has become since 2020. I work for myself, have a small kid and one on the way. My wife and I are ready to do something different to replace my income. However, this is a situation where I need to be right the first time. I'd say being right means cash flowing at least 3k per month. Now how do I get to that point and what market to do that? I have no idea.
I thought about purchasing a property using owner finance option and using our savings to build a smaller home. The plan is to use the cash flow to pay the land off.
It seemed like the only option. With interest rates being high, it seems ridiculously dumb to purchase an existing home in this market.
Am I missing something? Seems like another case of dollar short, day late.
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
You need to take a step back @Jayme B., because I hear you asking the wrong questions, and with the wrong focus.
First you need to decide if your going to INVEST that capital, or Launch a Business with it. And yes, these are 2 very different directions.
STR is a BUSINESS. Yes, it has a component of Real Estate, but it is NOT Real Estate Investing, it is HOSPITALITY business. The "STR Trail" is strewn with graves marked "I thought it would be easy" and "but the books said". NOT everyone can do it CORRECTLY, well, proficiently, profitably. Problem is many get confused for fact any can do it, with any can do it PROFITABLY, which no, MOST don't. Just look-up AirBnB, look at all the janky places, charging near to nothing, with few to little bookings, and then that "one" jumps out that's booked solid. Now think, that's ONLY those failing now, today, that's not the grave-yard of those who already failed.
STR is a HOSPITALITY Business, and coming into it with anything less than a focus on building a Hospitality business is planning to fail.
And that whole needing a 4-sure homerun hit out the gate, STOP, that does not exist in a startup business of any kind more or less a hospitality business which is one of the single most competitive in existence.
You want assurances, INVEST via a Pro. Yeah, it means lower returns, but that comes with safety. You don't know, so put your $ with someone who DOES. It's just that simple. And than learn from the experience until you grow your knowledge base to be empowered to do something on your own. Book smart is still only book smart and trust me, once in the trenches, with your $ on the line, yeah things are a whole lot different.
This $3k mnthly cash-flow off $100k, not realistic. Not to start, with low risk etc.. Reward and Risk are a married couple, you don't get more of one without more of the other.
I disagree with this statement. People in this community are very willing to share their knowledge and help. You’ve already had a ton of comments on this post alone with people sharing their knowledge and giving great insights.
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
3y
I am surprised all of these people are even pretending you can make $3k net a month off $100k. Has BP gotten this guru scammy? That's a 36% COC return. The only way to make that NET after all costs/financing debt costs is by doing several BRRR projects which are very unlikely and close to impossible in majority 2023 markets with 7%+ investment cash out refinance rates. This is coming from someone has has done a large BRRR project successfully and brokered over 40 million of investment properties largely to BP buyers. I like to just be honest with clients/buyers so they have realistic expectations and don't feel they got "sold" some ridiculous return projections.
I am surprised all of these people are even pretending you can make $3k net a month off $100k. Has BP gotten this guru scammy? That's a 36% COC return. The only way to make that NET after all costs/financing debt costs is by doing several BRRR projects which are very unlikely and close to impossible in majority 2023 markets with 7%+ investment cash out refinance rates. This is coming from someone has has done a large BRRR project successfully and brokered over 40 million of investment properties largely to BP buyers. I like to just be honest with clients/buyers so they have realistic expectations and don't feel they got "sold" some ridiculous return projections.
Yeah I was basing that off my original plan of funding with cash a small build 600 sq ft cabin in the mountains on an inexpensive property. I've talked with an owner that was able to pull that plan off with $100k with little to no debt. From what I've read 20% COC would be ideal with debt.
Rental Property Investor · California, CA · Member since 2015 · 41 posts · 28 votes
3y
Just thinking in a different direction. You may want to consider purchasing land on a river, lake with some acreage and renting it out as a camping or couple camping spots.
Just thinking in a different direction. You may want to consider purchasing land on a river, lake with some acreage and renting it out as a camping or couple camping spots.
Yes, we have thought about that kind of scenario and we like it. We used to live in AZ and know the traffic that is near the Grand Canyon. We had thought about offering a private campground out there for RVers. Campgrounds are almost always booked up out there. Municipalities, HOAs and county ordinances make that difficult. Just gotta find the right one. If anyone has experience in that, I'd love to hear more.
Lender · 92703 · Member since 2022 · 326 posts · 538 votes
3y
STR can be a lot of work and yes its definitely going to be tough to get 3k cashflow as your will need to establish yourself in the market and become super host. 3k cashflow as fist investments property can be challenging. Depending on the market where you plan to purchase is where to challenge will be to get 3k in cashflow. I would recommend looking into a multi family investment where you and your family can live in one unit and have the other units pay for your mortgage or most of it. That will help alleviate a good chunk of your expenses as paying for a place to live usually takes up a good chunk of your income. If your able to at lest live for free thats a huge win. Good luck with your search.
You need to take a step back @Jayme B., because I hear you asking the wrong questions, and with the wrong focus.
First you need to decide if your going to INVEST that capital, or Launch a Business with it. And yes, these are 2 very different directions.
STR is a BUSINESS. Yes, it has a component of Real Estate, but it is NOT Real Estate Investing, it is HOSPITALITY business. The "STR Trail" is strewn with graves marked "I thought it would be easy" and "but the books said". NOT everyone can do it CORRECTLY, well, proficiently, profitably. Problem is many get confused for fact any can do it, with any can do it PROFITABLY, which no, MOST don't. Just look-up AirBnB, look at all the janky places, charging near to nothing, with few to little bookings, and then that "one" jumps out that's booked solid. Now think, that's ONLY those failing now, today, that's not the grave-yard of those who already failed.
STR is a HOSPITALITY Business, and coming into it with anything less than a focus on building a Hospitality business is planning to fail.
And that whole needing a 4-sure homerun hit out the gate, STOP, that does not exist in a startup business of any kind more or less a hospitality business which is one of the single most competitive in existence.
You want assurances, INVEST via a Pro. Yeah, it means lower returns, but that comes with safety. You don't know, so put your $ with someone who DOES. It's just that simple. And than learn from the experience until you grow your knowledge base to be empowered to do something on your own. Book smart is still only book smart and trust me, once in the trenches, with your $ on the line, yeah things are a whole lot different.
This $3k mnthly cash-flow off $100k, not realistic. Not to start, with low risk etc.. Reward and Risk are a married couple, you don't get more of one without more of the other.
I need the little money I have to work for me short term AND long term, not just long term. I can invest in the stock market and make 7-11% with no effort over the course of 20 years but it does very little to leverage the money I have in the near-term. I want to launch a business. I understand the difference in holding properties in a portfolio vs running a hospitality business.
Positioning yourself with the correct information and research does at times allow someone to have a better outcome the first time than those that do not put in the work to figure it out. I'm just not going to throw down $100k on a property and cross my fingers. Maybe 3k cash flow is unrealistic. That's why I'm on here asking those that have experience. I'm humble enough to learn from those that have done it before. Most don't want to share their knowledge or hand hold.
My first STR, nothing was a certainty. Going into it I was pumped, I had data backing my decisions but once that $ starts going out, the butt puckers a bit because all the unknowns start hitting. And I knew, I could have all the data and certainty in the world and end of day, it all falls apart.
So KEY item, I was very well liquid. I was NOT betting on a "sure thing". I wanted it, a capital loss would hurt, but if everything went wrong nothing in my life would have changed. I think it's wildly risky and foolish getting into STR betting on any kind of "sure thing".
I was hoping to average $4k mnthly after 90 days of operation. And over span of a year scale up in building traffic and audience to hopefully hit a stride of $7k mnthly average.
By 90 day mark, we were touching on $10k mnthly. Yes, I was pumped beyond words BUT, I didn't bet on it, I considered it just a happy surprise, and we kept grinding. By 6 months, it was at full stride, had blown away all expectations and an annual average of $12k mnthly looked a lot more realistic than $7k.
Everything went right, better than right, blew away expectations. Within months we had people booking out as far as 2yrs, and asking about "forever" bookings on certain dates.
Now, it's easy for people to look at stories like this and think "yeah, that's what I want". BUT DON'T FORGET, this was NOT part of the plan. This was a surprise. AND at start, it was a flip of the coin. I had solid reasons to "believe" in it, but there was plenty of data to suggest it would fail miserably and barely reach $2kmnthly and with that, significant losses. I had a "Plan Z" in place ready to execute the emergency exit.
I can not stress enough, it's NEVER a "sure thing".
The vast majority of those I know in STR similarly posting massive numbers and profits, same story, it was not obvious and apparent, and we had our own special twist on things we were going to do, and we built it as a business. This one above, it was not a "normal" STR, it is focused too memory care centers and visiting families. Others I know who equally are killing it, same story, doing things differently. I know one doing things with traveling nurses, another with hunting land, another doing Yurts. I don't know anyone "killing it" with just general properties in the obvious thought STR areas. I know people doing it, making some $, but nobody "killing it".
Again, your expectations are not realistic. You want short and long term, and "sure thing" at high return. Even your expectation of dumping it into Wall Street is unrealistic because NO your not guarenteed 7%+ returns dumping it into WallStreet today, you could very realistically have LOSSES for the next decade, and that's via every WS expert today, all talk is of a potential 50% drop that will last a decade.
There is NO sure thing, there is only OPPORTUNITY. You can try at something, put in the work, and see what happens. In STR, yeah you could loose it all, that's reality.
I've been back and forth on the idea of using our savings to invest in a STR. I've read how it has changed people's lives, but have been super apprehensive seeing how saturated the STR market has become since 2020. I work for myself, have a small kid and one on the way. My wife and I are ready to do something different to replace my income. However, this is a situation where I need to be right the first time. I'd say being right means cash flowing at least 3k per month. Now how do I get to that point and what market to do that? I have no idea.
I thought about purchasing a property using owner finance option and using our savings to build a smaller home. The plan is to use the cash flow to pay the land off.
It seemed like the only option. With interest rates being high, it seems ridiculously dumb to purchase an existing home in this market.
Am I missing something? Seems like another case of dollar short, day late.
You have a small kid and one on the way and you want to take your savings and buy a STR to "replace " your income . Sorry thats not gonna happen first time out . Especially if you think it will replace your income . RE is not a get rich quick game . It takes time , sometimes you win some times you lose , be prepared for the latter and make sure it doesnt happen . I would play the long term rental game in areas that will appreciate , long term you will replace your income , risk is minimal
3K profit sounds extremely difficult. $1K might be realistic. Your best shot may actually be finding a diamond in the rough area where you can buy a house for $125K, put 75K down, and spend 25K to really design/furnish and improve the property. hope the design and uniqueness can bring in 4K/mo in rent. I'm convinced some of those communities still exist out there, they just aren't well known.
Ok guys, I'm not irresponsible. I never said that I was going to take food from my children's mouth and pour it into a bad investment 🙄 - I also never said that I want to replace my income with the first deal that I do - that's the goal EVENTUALLY. 3k would never come close to replacing my monthly income. I never thought it was a get rich quick game either.
Now, to you guys that say 3k isn't possible I beg to differ. You're probably right if I'm borrowing money. I'm wanting to use 100k creatively to produce income. For instance, If I buy 5 acres in the NC mtns (or owner finance the land) with 3 small glamping or minimal cabin rentals done tastefully, each charging $100/night with 60% occupancy that's $5400 gross. I could even do one small cabin at 60% occupancy and gross $1800. Take those profits and pour them back into the business and build the 2nd one and so on.
So yes, with creative thinking and sourcing materials unconventionally and doing much of the work myself - I could indeed turn 100k into 3k/month. The post was about other opinions on how to leverage that money in ways that perhaps I haven't thought of or expanding on the idea that I presented in the first post.
You need to take a step back @Jayme B., because I hear you asking the wrong questions, and with the wrong focus.
First you need to decide if your going to INVEST that capital, or Launch a Business with it. And yes, these are 2 very different directions.
STR is a BUSINESS. Yes, it has a component of Real Estate, but it is NOT Real Estate Investing, it is HOSPITALITY business. The "STR Trail" is strewn with graves marked "I thought it would be easy" and "but the books said". NOT everyone can do it CORRECTLY, well, proficiently, profitably. Problem is many get confused for fact any can do it, with any can do it PROFITABLY, which no, MOST don't. Just look-up AirBnB, look at all the janky places, charging near to nothing, with few to little bookings, and then that "one" jumps out that's booked solid. Now think, that's ONLY those failing now, today, that's not the grave-yard of those who already failed.
STR is a HOSPITALITY Business, and coming into it with anything less than a focus on building a Hospitality business is planning to fail.
And that whole needing a 4-sure homerun hit out the gate, STOP, that does not exist in a startup business of any kind more or less a hospitality business which is one of the single most competitive in existence.
You want assurances, INVEST via a Pro. Yeah, it means lower returns, but that comes with safety. You don't know, so put your $ with someone who DOES. It's just that simple. And than learn from the experience until you grow your knowledge base to be empowered to do something on your own. Book smart is still only book smart and trust me, once in the trenches, with your $ on the line, yeah things are a whole lot different.
This $3k mnthly cash-flow off $100k, not realistic. Not to start, with low risk etc.. Reward and Risk are a married couple, you don't get more of one without more of the other.
I need the little money I have to work for me short term AND long term, not just long term. I can invest in the stock market and make 7-11% with no effort over the course of 20 years but it does very little to leverage the money I have in the near-term. I want to launch a business. I understand the difference in holding properties in a portfolio vs running a hospitality business.
Positioning yourself with the correct information and research does at times allow someone to have a better outcome the first time than those that do not put in the work to figure it out. I'm just not going to throw down $100k on a property and cross my fingers. Maybe 3k cash flow is unrealistic. That's why I'm on here asking those that have experience. I'm humble enough to learn from those that have done it before. Most don't want to share their knowledge or hand hold.
If you need the money to work for you in both the short-term and long-term, you want to probably sit on T-Bills for a while until you find a really basic property to LTR on. You're not going to get 7-11% on equities again. The last 15-year run showed about 8.5%, and the 10 year run showed 11-ish %. That's in the lowest interest environment ever. Fed funds isn't going to sit at 0 or near 0 for a decade again, bake in 1.5-3% fed funds, you're looking at probably 5-8% returns with equities in the next decade. Still solid, but the physical resources of land diminishing + population growing likely will yield better but significantly more work and risk.
You're wanting to hit a grand slam on your first at base. I hope it happens, but you're better off playing it safer if you're family life is going to get more occupied. I know you want to quit your job and do this, but that reality is a farce. People could do that 10 years ago when anything you bought cash flowed, right now even buying an intrinsic property is almost impossible. All these dreams that come on here that post how they want "financial freedom', good luck that **** is ********. You're going to enter financial prison and in a nightmare if you do it like people did 10 years ago all levered up.
Fortunately, you are already asking the right question--is it enough? If we're factoring in OTM houses, reserves, closing costs, etc.---it's likely not in a good area. Sure, buy in a declining market like cleveland or detroit or something, and hope it rebounds but you also need a safety net in your case. I'd buy T-Bills and suppressed ETFs, after paying off any dumb debt. Keep your job, you're going to need it. Life isn't coming in cheaper.
You need to take a step back @Jayme B., because I hear you asking the wrong questions, and with the wrong focus.
First you need to decide if your going to INVEST that capital, or Launch a Business with it. And yes, these are 2 very different directions.
STR is a BUSINESS. Yes, it has a component of Real Estate, but it is NOT Real Estate Investing, it is HOSPITALITY business. The "STR Trail" is strewn with graves marked "I thought it would be easy" and "but the books said". NOT everyone can do it CORRECTLY, well, proficiently, profitably. Problem is many get confused for fact any can do it, with any can do it PROFITABLY, which no, MOST don't. Just look-up AirBnB, look at all the janky places, charging near to nothing, with few to little bookings, and then that "one" jumps out that's booked solid. Now think, that's ONLY those failing now, today, that's not the grave-yard of those who already failed.
STR is a HOSPITALITY Business, and coming into it with anything less than a focus on building a Hospitality business is planning to fail.
And that whole needing a 4-sure homerun hit out the gate, STOP, that does not exist in a startup business of any kind more or less a hospitality business which is one of the single most competitive in existence.
You want assurances, INVEST via a Pro. Yeah, it means lower returns, but that comes with safety. You don't know, so put your $ with someone who DOES. It's just that simple. And than learn from the experience until you grow your knowledge base to be empowered to do something on your own. Book smart is still only book smart and trust me, once in the trenches, with your $ on the line, yeah things are a whole lot different.
This $3k mnthly cash-flow off $100k, not realistic. Not to start, with low risk etc.. Reward and Risk are a married couple, you don't get more of one without more of the other.
I need the little money I have to work for me short term AND long term, not just long term. I can invest in the stock market and make 7-11% with no effort over the course of 20 years but it does very little to leverage the money I have in the near-term. I want to launch a business. I understand the difference in holding properties in a portfolio vs running a hospitality business.
Positioning yourself with the correct information and research does at times allow someone to have a better outcome the first time than those that do not put in the work to figure it out. I'm just not going to throw down $100k on a property and cross my fingers. Maybe 3k cash flow is unrealistic. That's why I'm on here asking those that have experience. I'm humble enough to learn from those that have done it before. Most don't want to share their knowledge or hand hold.
If you need the money to work for you in both the short-term and long-term, you want to probably sit on T-Bills for a while until you find a really basic property to LTR on. You're not going to get 7-11% on equities again. The last 15-year run showed about 8.5%, and the 10 year run showed 11-ish %. That's in the lowest interest environment ever. Fed funds isn't going to sit at 0 or near 0 for a decade again, bake in 1.5-3% fed funds, you're looking at probably 5-8% returns with equities in the next decade. Still solid, but the physical resources of land diminishing + population growing likely will yield better but significantly more work and risk.
You're wanting to hit a grand slam on your first at base. I hope it happens, but you're better off playing it safer if you're family life is going to get more occupied. I know you want to quit your job and do this, but that reality is a farce. People could do that 10 years ago when anything you bought cash flowed, right now even buying an intrinsic property is almost impossible. All these dreams that come on here that post how they want "financial freedom', good luck that **** is ********. You're going to enter financial prison and in a nightmare if you do it like people did 10 years ago all levered up. I'd buy T-Bills and suppressed ETFs, after paying off any dumb debt. Keep your job, you're going to need it. Life isn't coming in cheaper.
I don't know where you guys are getting that I want to hit a grand slam. I said I wanted to have a property that was the right fit for this type of business. Again, I also never said that I expected to replace my income on the first swing at this. I also never said I was quitting my job in the near future. I guess I should have written a novel with every single point listed out.
You need to take a step back @Jayme B., because I hear you asking the wrong questions, and with the wrong focus.
First you need to decide if your going to INVEST that capital, or Launch a Business with it. And yes, these are 2 very different directions.
STR is a BUSINESS. Yes, it has a component of Real Estate, but it is NOT Real Estate Investing, it is HOSPITALITY business. The "STR Trail" is strewn with graves marked "I thought it would be easy" and "but the books said". NOT everyone can do it CORRECTLY, well, proficiently, profitably. Problem is many get confused for fact any can do it, with any can do it PROFITABLY, which no, MOST don't. Just look-up AirBnB, look at all the janky places, charging near to nothing, with few to little bookings, and then that "one" jumps out that's booked solid. Now think, that's ONLY those failing now, today, that's not the grave-yard of those who already failed.
STR is a HOSPITALITY Business, and coming into it with anything less than a focus on building a Hospitality business is planning to fail.
And that whole needing a 4-sure homerun hit out the gate, STOP, that does not exist in a startup business of any kind more or less a hospitality business which is one of the single most competitive in existence.
You want assurances, INVEST via a Pro. Yeah, it means lower returns, but that comes with safety. You don't know, so put your $ with someone who DOES. It's just that simple. And than learn from the experience until you grow your knowledge base to be empowered to do something on your own. Book smart is still only book smart and trust me, once in the trenches, with your $ on the line, yeah things are a whole lot different.
This $3k mnthly cash-flow off $100k, not realistic. Not to start, with low risk etc.. Reward and Risk are a married couple, you don't get more of one without more of the other.
I need the little money I have to work for me short term AND long term, not just long term. I can invest in the stock market and make 7-11% with no effort over the course of 20 years but it does very little to leverage the money I have in the near-term. I want to launch a business. I understand the difference in holding properties in a portfolio vs running a hospitality business.
Positioning yourself with the correct information and research does at times allow someone to have a better outcome the first time than those that do not put in the work to figure it out. I'm just not going to throw down $100k on a property and cross my fingers. Maybe 3k cash flow is unrealistic. That's why I'm on here asking those that have experience. I'm humble enough to learn from those that have done it before. Most don't want to share their knowledge or hand hold.
If you need the money to work for you in both the short-term and long-term, you want to probably sit on T-Bills for a while until you find a really basic property to LTR on. You're not going to get 7-11% on equities again. The last 15-year run showed about 8.5%, and the 10 year run showed 11-ish %. That's in the lowest interest environment ever. Fed funds isn't going to sit at 0 or near 0 for a decade again, bake in 1.5-3% fed funds, you're looking at probably 5-8% returns with equities in the next decade. Still solid, but the physical resources of land diminishing + population growing likely will yield better but significantly more work and risk.
You're wanting to hit a grand slam on your first at base. I hope it happens, but you're better off playing it safer if you're family life is going to get more occupied. I know you want to quit your job and do this, but that reality is a farce. People could do that 10 years ago when anything you bought cash flowed, right now even buying an intrinsic property is almost impossible. All these dreams that come on here that post how they want "financial freedom', good luck that **** is ********. You're going to enter financial prison and in a nightmare if you do it like people did 10 years ago all levered up. I'd buy T-Bills and suppressed ETFs, after paying off any dumb debt. Keep your job, you're going to need it. Life isn't coming in cheaper.
I don't know where you guys are getting that I want to hit a grand slam. I said I wanted to have a property that was the right fit for this type of business. Again, I also never said that I expected to replace my income on the first swing at this. I also never said I was quitting my job in the near future. I guess I should have written a novel with every single point listed out.
$3k cash flow a month is a grand slam. At least $3,000 a month is your words.
You also say you need to be right the first time which was preceded by saying you needed to be doing something different to replace your income.
I mean, what did you expect us to think when you told us that?
You need to take a step back @Jayme B., because I hear you asking the wrong questions, and with the wrong focus.
First you need to decide if your going to INVEST that capital, or Launch a Business with it. And yes, these are 2 very different directions.
STR is a BUSINESS. Yes, it has a component of Real Estate, but it is NOT Real Estate Investing, it is HOSPITALITY business. The "STR Trail" is strewn with graves marked "I thought it would be easy" and "but the books said". NOT everyone can do it CORRECTLY, well, proficiently, profitably. Problem is many get confused for fact any can do it, with any can do it PROFITABLY, which no, MOST don't. Just look-up AirBnB, look at all the janky places, charging near to nothing, with few to little bookings, and then that "one" jumps out that's booked solid. Now think, that's ONLY those failing now, today, that's not the grave-yard of those who already failed.
STR is a HOSPITALITY Business, and coming into it with anything less than a focus on building a Hospitality business is planning to fail.
And that whole needing a 4-sure homerun hit out the gate, STOP, that does not exist in a startup business of any kind more or less a hospitality business which is one of the single most competitive in existence.
You want assurances, INVEST via a Pro. Yeah, it means lower returns, but that comes with safety. You don't know, so put your $ with someone who DOES. It's just that simple. And than learn from the experience until you grow your knowledge base to be empowered to do something on your own. Book smart is still only book smart and trust me, once in the trenches, with your $ on the line, yeah things are a whole lot different.
This $3k mnthly cash-flow off $100k, not realistic. Not to start, with low risk etc.. Reward and Risk are a married couple, you don't get more of one without more of the other.
I need the little money I have to work for me short term AND long term, not just long term. I can invest in the stock market and make 7-11% with no effort over the course of 20 years but it does very little to leverage the money I have in the near-term. I want to launch a business. I understand the difference in holding properties in a portfolio vs running a hospitality business.
Positioning yourself with the correct information and research does at times allow someone to have a better outcome the first time than those that do not put in the work to figure it out. I'm just not going to throw down $100k on a property and cross my fingers. Maybe 3k cash flow is unrealistic. That's why I'm on here asking those that have experience. I'm humble enough to learn from those that have done it before. Most don't want to share their knowledge or hand hold.
If you need the money to work for you in both the short-term and long-term, you want to probably sit on T-Bills for a while until you find a really basic property to LTR on. You're not going to get 7-11% on equities again. The last 15-year run showed about 8.5%, and the 10 year run showed 11-ish %. That's in the lowest interest environment ever. Fed funds isn't going to sit at 0 or near 0 for a decade again, bake in 1.5-3% fed funds, you're looking at probably 5-8% returns with equities in the next decade. Still solid, but the physical resources of land diminishing + population growing likely will yield better but significantly more work and risk.
You're wanting to hit a grand slam on your first at base. I hope it happens, but you're better off playing it safer if you're family life is going to get more occupied. I know you want to quit your job and do this, but that reality is a farce. People could do that 10 years ago when anything you bought cash flowed, right now even buying an intrinsic property is almost impossible. All these dreams that come on here that post how they want "financial freedom', good luck that **** is ********. You're going to enter financial prison and in a nightmare if you do it like people did 10 years ago all levered up. I'd buy T-Bills and suppressed ETFs, after paying off any dumb debt. Keep your job, you're going to need it. Life isn't coming in cheaper.
I don't know where you guys are getting that I want to hit a grand slam. I said I wanted to have a property that was the right fit for this type of business. Again, I also never said that I expected to replace my income on the first swing at this. I also never said I was quitting my job in the near future. I guess I should have written a novel with every single point listed out.
$3k cash flow a month is a grand slam. At least $3,000 a month is your words.
You also say you need to be right the first time which was preceded by saying you needed to be doing something different to replace your income.
I mean, what did you expect us to think when you told us that?
I wanted to know if $100k could yield $3k per month or creative ways to get to that point. I'm not wanting to take out a loan on a 500k house. I gave a scenario as to how I think it could work. I do need to be right the first time. Right doesn't mean knocking it out of the park, it simply means not losing money forever. I do want to replace my income, but I'm not that naive to think I could replace my income on the first deal I ever do.
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
So @Jayme B. I think 3k a month on a 100k investment is an awesome return. I don't think anyone on here has that kind of return on their investments. If I could drop 100k somewhere and get 3k a month net, I would do it right this second.
So, is it possible? Yes. Is it probable? Probably not. I don't mean to be negative but I have been looking for our next property and I can't get that kind of return on what I can afford.
We are just trying to level set expectations.
It sounds like you have a plan you want to do. Go find that 5 acres and run with it. I have no idea if it will be successful as the glamping/yurt/no amenities kind of STR isn't my thing. Have you looked at the NC mountains area to see what is out there now?
In north Idaho where I am at, a glamping place in the mountains (still accessible) is well under $100 a night. Just my 2 cents.
So @Jayme B. I think 3k a month on a 100k investment is an awesome return. I don't think anyone on here has that kind of return on their investments. If I could drop 100k somewhere and get 3k a month net, I would do it right this second.
So, is it possible? Yes. Is it probable? Probably not. I don't mean to be negative but I have been looking for our next property and I can't get that kind of return on what I can afford.
We are just trying to level set expectations.
It sounds like you have a plan you want to do. Go find that 5 acres and run with it. I have no idea if it will be successful as the glamping/yurt/no amenities kind of STR isn't my thing. Have you looked at the NC mountains area to see what is out there now?
In north Idaho where I am at, a glamping place in the mountains (still accessible) is well under $100 a night. Just my 2 cents.
Hey Michael - thanks for the kind reply. I think what I'm saying is taking the first $100k to build a small cabin 400-600 sq ft and cash flow $1000-$1500 per month. Use that money and any extra savings I can add to the pot and build a 2nd cabin, get it cash flowing and repeat again.
There's a property I'm checking out now that is 5 acres and is unrestricted in the NC mountains. Already has a driveway cut back into the property. Complete solitude but on a paved road. I have experience in the solar industry so we can put in a small system for our needs. No need to pay for power to be run back there. Wells are easy there. Septic is cheap.
There are at least 4 state parks within 40 minutes of the property. Based on data that I've seen, it would be 68-70% occupancy in that area. Rents are going for around $100-250 per night in fairly run of the mill properties, depending on the size of course.
You need to take a step back @Jayme B., because I hear you asking the wrong questions, and with the wrong focus.
First you need to decide if your going to INVEST that capital, or Launch a Business with it. And yes, these are 2 very different directions.
STR is a BUSINESS. Yes, it has a component of Real Estate, but it is NOT Real Estate Investing, it is HOSPITALITY business. The "STR Trail" is strewn with graves marked "I thought it would be easy" and "but the books said". NOT everyone can do it CORRECTLY, well, proficiently, profitably. Problem is many get confused for fact any can do it, with any can do it PROFITABLY, which no, MOST don't. Just look-up AirBnB, look at all the janky places, charging near to nothing, with few to little bookings, and then that "one" jumps out that's booked solid. Now think, that's ONLY those failing now, today, that's not the grave-yard of those who already failed.
STR is a HOSPITALITY Business, and coming into it with anything less than a focus on building a Hospitality business is planning to fail.
And that whole needing a 4-sure homerun hit out the gate, STOP, that does not exist in a startup business of any kind more or less a hospitality business which is one of the single most competitive in existence.
You want assurances, INVEST via a Pro. Yeah, it means lower returns, but that comes with safety. You don't know, so put your $ with someone who DOES. It's just that simple. And than learn from the experience until you grow your knowledge base to be empowered to do something on your own. Book smart is still only book smart and trust me, once in the trenches, with your $ on the line, yeah things are a whole lot different.
This $3k mnthly cash-flow off $100k, not realistic. Not to start, with low risk etc.. Reward and Risk are a married couple, you don't get more of one without more of the other.
I need the little money I have to work for me short term AND long term, not just long term. I can invest in the stock market and make 7-11% with no effort over the course of 20 years but it does very little to leverage the money I have in the near-term. I want to launch a business. I understand the difference in holding properties in a portfolio vs running a hospitality business.
Positioning yourself with the correct information and research does at times allow someone to have a better outcome the first time than those that do not put in the work to figure it out. I'm just not going to throw down $100k on a property and cross my fingers. Maybe 3k cash flow is unrealistic. That's why I'm on here asking those that have experience. I'm humble enough to learn from those that have done it before. Most don't want to share their knowledge or hand hold.
If you need the money to work for you in both the short-term and long-term, you want to probably sit on T-Bills for a while until you find a really basic property to LTR on. You're not going to get 7-11% on equities again. The last 15-year run showed about 8.5%, and the 10 year run showed 11-ish %. That's in the lowest interest environment ever. Fed funds isn't going to sit at 0 or near 0 for a decade again, bake in 1.5-3% fed funds, you're looking at probably 5-8% returns with equities in the next decade. Still solid, but the physical resources of land diminishing + population growing likely will yield better but significantly more work and risk.
You're wanting to hit a grand slam on your first at base. I hope it happens, but you're better off playing it safer if you're family life is going to get more occupied. I know you want to quit your job and do this, but that reality is a farce. People could do that 10 years ago when anything you bought cash flowed, right now even buying an intrinsic property is almost impossible. All these dreams that come on here that post how they want "financial freedom', good luck that **** is ********. You're going to enter financial prison and in a nightmare if you do it like people did 10 years ago all levered up. I'd buy T-Bills and suppressed ETFs, after paying off any dumb debt. Keep your job, you're going to need it. Life isn't coming in cheaper.
I don't know where you guys are getting that I want to hit a grand slam. I said I wanted to have a property that was the right fit for this type of business. Again, I also never said that I expected to replace my income on the first swing at this. I also never said I was quitting my job in the near future. I guess I should have written a novel with every single point listed out.
$3k cash flow a month is a grand slam. At least $3,000 a month is your words.
You also say you need to be right the first time which was preceded by saying you needed to be doing something different to replace your income.
I mean, what did you expect us to think when you told us that?
I wanted to know if $100k could yield $3k per month or creative ways to get to that point. I'm not wanting to take out a loan on a 500k house. I gave a scenario as to how I think it could work. I do need to be right the first time. Right doesn't mean knocking it out of the park, it simply means not losing money forever. I do want to replace my income, but I'm not that naive to think I could replace my income on the first deal I ever do.
You’re not wanting to take out a loan on a property? I’m confused how you plan to get involved in a short term rental. Genuinely asking for clarity.
You need to take a step back @Jayme B., because I hear you asking the wrong questions, and with the wrong focus.
First you need to decide if your going to INVEST that capital, or Launch a Business with it. And yes, these are 2 very different directions.
STR is a BUSINESS. Yes, it has a component of Real Estate, but it is NOT Real Estate Investing, it is HOSPITALITY business. The "STR Trail" is strewn with graves marked "I thought it would be easy" and "but the books said". NOT everyone can do it CORRECTLY, well, proficiently, profitably. Problem is many get confused for fact any can do it, with any can do it PROFITABLY, which no, MOST don't. Just look-up AirBnB, look at all the janky places, charging near to nothing, with few to little bookings, and then that "one" jumps out that's booked solid. Now think, that's ONLY those failing now, today, that's not the grave-yard of those who already failed.
STR is a HOSPITALITY Business, and coming into it with anything less than a focus on building a Hospitality business is planning to fail.
And that whole needing a 4-sure homerun hit out the gate, STOP, that does not exist in a startup business of any kind more or less a hospitality business which is one of the single most competitive in existence.
You want assurances, INVEST via a Pro. Yeah, it means lower returns, but that comes with safety. You don't know, so put your $ with someone who DOES. It's just that simple. And than learn from the experience until you grow your knowledge base to be empowered to do something on your own. Book smart is still only book smart and trust me, once in the trenches, with your $ on the line, yeah things are a whole lot different.
This $3k mnthly cash-flow off $100k, not realistic. Not to start, with low risk etc.. Reward and Risk are a married couple, you don't get more of one without more of the other.
I need the little money I have to work for me short term AND long term, not just long term. I can invest in the stock market and make 7-11% with no effort over the course of 20 years but it does very little to leverage the money I have in the near-term. I want to launch a business. I understand the difference in holding properties in a portfolio vs running a hospitality business.
Positioning yourself with the correct information and research does at times allow someone to have a better outcome the first time than those that do not put in the work to figure it out. I'm just not going to throw down $100k on a property and cross my fingers. Maybe 3k cash flow is unrealistic. That's why I'm on here asking those that have experience. I'm humble enough to learn from those that have done it before. Most don't want to share their knowledge or hand hold.
If you need the money to work for you in both the short-term and long-term, you want to probably sit on T-Bills for a while until you find a really basic property to LTR on. You're not going to get 7-11% on equities again. The last 15-year run showed about 8.5%, and the 10 year run showed 11-ish %. That's in the lowest interest environment ever. Fed funds isn't going to sit at 0 or near 0 for a decade again, bake in 1.5-3% fed funds, you're looking at probably 5-8% returns with equities in the next decade. Still solid, but the physical resources of land diminishing + population growing likely will yield better but significantly more work and risk.
You're wanting to hit a grand slam on your first at base. I hope it happens, but you're better off playing it safer if you're family life is going to get more occupied. I know you want to quit your job and do this, but that reality is a farce. People could do that 10 years ago when anything you bought cash flowed, right now even buying an intrinsic property is almost impossible. All these dreams that come on here that post how they want "financial freedom', good luck that **** is ********. You're going to enter financial prison and in a nightmare if you do it like people did 10 years ago all levered up. I'd buy T-Bills and suppressed ETFs, after paying off any dumb debt. Keep your job, you're going to need it. Life isn't coming in cheaper.
I don't know where you guys are getting that I want to hit a grand slam. I said I wanted to have a property that was the right fit for this type of business. Again, I also never said that I expected to replace my income on the first swing at this. I also never said I was quitting my job in the near future. I guess I should have written a novel with every single point listed out.
$3k cash flow a month is a grand slam. At least $3,000 a month is your words.
You also say you need to be right the first time which was preceded by saying you needed to be doing something different to replace your income.
I mean, what did you expect us to think when you told us that?
I wanted to know if $100k could yield $3k per month or creative ways to get to that point. I'm not wanting to take out a loan on a 500k house. I gave a scenario as to how I think it could work. I do need to be right the first time. Right doesn't mean knocking it out of the park, it simply means not losing money forever. I do want to replace my income, but I'm not that naive to think I could replace my income on the first deal I ever do.
You’re not wanting to take out a loan on a property? I’m confused how you plan to get involved in a short term rental. Genuinely asking for clarity.
I may ask the seller to owner finance on a small note, it really depends on what I can find out in regards to building costs. I could be GC myself or build it myself and save money. If I can buy the property with no finance and do a small build within my budget then great. I'd rather finance the land than finance the build. Keeps the bank's red tape out of it.
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
Hey @Jayme B.. Well all of that sounds reasonable. Where did you get the data? AirDNA is notoriously unreliable when there isn't many comps to add to the algorithm. Have you taken a look on AirBNB and VRBO to see what similar properties in the area are going for? What is their occupancy?
A 70% occupancy rate means that you will have possible winter bookings? Mud season bookings? Seeing as you are talking more of a camping experience vs a heated place with electricity that could be tougher IMHO.
How would the well be powered? A well jet pump or centrifugal pump are often 240v 1hp units. That is up to 1800w starting and 750 or more watts running.
I understand quite a bit about solar, but haven't really looked at it as I don't see any ROI in our area in a reasonable time.
What is the most visited state park? What is there? Lots of hiking? A nice lake? I would make sure I was closest to the most cool stuff to do. I think 40 minutes is too far overall.
How far from town? You need to get these places cleaned and maintained so that is a consideration as well.
My personal opinion would be to plan on putting electricity in there eventually.
The cabins will need to be on foundations that meet local codes, have some kind of plumbing and electric in order to be considered real property. Other wise it is a shed.