First STR with $100k or less?

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First STR with $100k or less?

Member since 2022 · 42 posts · 16 votes

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.

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James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

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.

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Jayme B.
OP
Member since 2022 · 42 posts · 16 votes
3y
Quote from @Michael Baum:

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?
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.

Hey bud, yeah I gathered data on several STRs in the area.

Winter bookings wouldn't be a problem because it's a paved road to the lot and gravel into the lot. It would be heated. Mini splits most likely would do the job for a cabin that small. We get cold winters at times, but nothing like N Idaho.

Grundfos pumps are great pumps for solar systems. Check em out.

Yeah plenty of hiking out there. It's only about an hour from Boone NC.

0 Reply
Wilson Vanhook
Rental Property Investor · Oklahoma City · Member since 2021 · 108 posts · 103 votes
3y
Quote from @Jayme B.:

Quote from @Wilson Vanhook:

Quote from @Jayme B.:

Quote from @V.G Jason:

Quote from @Jayme B.:

Quote from @V.G Jason:

Quote from @Jayme B.:

Quote from @James Hamling:

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.

I see. So I highly recommend not going through the hassle of building. There are “turnkey” properties that are already short term rentals, and they come fully furnished, ready to rent. That’s my suggestion for what you need. Just close on the property and start renting it right away. Plus with a $500k+ property your cash flow may be more like $1-2k out the gate, but you’ll have ~3% of appreciation every year AND principle paydown. This will really up your return on investment.
0 Reply
Jayme B.
OP
Member since 2022 · 42 posts · 16 votes
3y
Quote from @Wilson Vanhook:

Quote from @Jayme B.:

Quote from @Wilson Vanhook:

Quote from @Jayme B.:

Quote from @V.G Jason:

Quote from @Jayme B.:

Quote from @V.G Jason:

Quote from @Jayme B.:

Quote from @James Hamling:

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.

I see. So I highly recommend not going through the hassle of building. There are “turnkey” properties that are already short term rentals, and they come fully furnished, ready to rent. That’s my suggestion for what you need. Just close on the property and start renting it right away. Plus with a $500k+ property your cash flow may be more like $1-2k out the gate, but you’ll have ~3% of appreciation every year AND principle paydown. This will really up your return on investment.

I prefer not to have the stress of covering another mortgage when it's not necessary. Just my opinion.
0 Reply
Tom Powers
Rental Property Investor · Loveland, CO · Member since 2023 · 7 posts · 3 votes
3y
@James Hamling how do you invest through a pro?
0 Reply
Wilson Vanhook
Rental Property Investor · Oklahoma City · Member since 2021 · 108 posts · 103 votes
3y
Quote from @Jayme B.:

Quote from @Wilson Vanhook:

Quote from @Jayme B.:

Quote from @Wilson Vanhook:

Quote from @Jayme B.:

Quote from @V.G Jason:

Quote from @Jayme B.:

Quote from @V.G Jason:

Quote from @Jayme B.:

Quote from @James Hamling:

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.

I see. So I highly recommend not going through the hassle of building. There are “turnkey” properties that are already short term rentals, and they come fully furnished, ready to rent. That’s my suggestion for what you need. Just close on the property and start renting it right away. Plus with a $500k+ property your cash flow may be more like $1-2k out the gate, but you’ll have ~3% of appreciation every year AND principle paydown. This will really up your return on investment.

I prefer not to have the stress of covering another mortgage when it's not necessary. Just my opinion.

Well if that’s the case you should probably be looking into tiny homes or something.
0 Reply
Steven Gore
New to Real Estate · NH · Member since 2022 · 32 posts · 10 votes
3y
I purchased my first STR in Kissimmee, FL. I live in NH. I manage and run my home myself. I was super nervous purchasing my first STR especially when I knew that I would be managing it myself. I learned a ton during the process. I ended up getting an excellent cleaning crew and excellent handyman.

There is so much that you will need to learn in order to run a successful STR. From setting your prices to messaging guests, the list goes on and on. BUT with all that being said, I am doing well. I make sure I respond to my guests ASAP and ensure they have a great experience. You need to make them feel like they are your number one priority.

Another thing to keep in mind is the tax benefits you can get with an STR. There are some loopholes that managing an STR can bring you like doing a cost segregation. I just did one and just found out what my tax return was and it's kind of insane how much I am getting back. I was able to also take advantage of 100% bonus depreciation. My point is, don't just think about the cash flow as the only incentive when purchasing an STR. Think about the tax benefits and also equity you can build in the home.

Feel free to reach out with any questions. I am happy to help. I know how confusing and nerve racking it can be.

4 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
Well alrighty then @Jayme B.! Sounds like you are farther along in the process. Every STR is a risk, but you mitigate it with the data.
Have you looked into builders to get an idea of cost?
I would see about cleaners before I did anything. An hour is about the outer limit. We are an hour down lake from Coeur d'Alene and a lot of the cleaners I contacted didn't want to do the drive.
I have Grunsfos recirc pumps on our boiler. I replaced an ancient Grundfos sewage pump a few year ago in our lift tank. I would just be concerned about building out a solar system to run it all. For the mini split, would you have a propane tank?
0 Reply
Wilson Vanhook
Rental Property Investor · Oklahoma City · Member since 2021 · 108 posts · 103 votes
3y
Quote from @Michael Baum:

Well alrighty then @Jayme B.! Sounds like you are farther along in the process. Every STR is a risk, but you mitigate it with the data.
Have you looked into builders to get an idea of cost?
I would see about cleaners before I did anything. An hour is about the outer limit. We are an hour down lake from Coeur d'Alene and a lot of the cleaners I contacted didn't want to do the drive.
I have Grunsfos recirc pumps on our boiler. I replaced an ancient Grundfos sewage pump a few year ago in our lift tank. I would just be concerned about building out a solar system to run it all. For the mini split, would you have a propane tank?

He doesn't want a mortgage. He wants something less than $100k total. He's not serious about getting a STR.
0 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
Quote from @Wilson Vanhook:

He doesn't want a mortgage. He wants something less than $100k total. He's not serious about getting a STR.

Yeah, no mortgage, but the area @Jayme B. is looking isn't a crazy high property value area. There are a lot of ways to do STRs and be successful. I think it is doable. I am not going to say he's not serious. He just has a different plan.

2 Reply
John Wharton
Member since 2020 · 1 post · 1 vote
3y
What is your current return on your $100k? I would use that as your measuring stick when comparing to RE investing. If you can get close to what you are making now with cash on cash return then the other benefits of owning RE will tip the scales. Cash Flow is just one benefit…Appreciation, Depreciation (write offs), and Equity Build Up are the phantom returns that are realized over time as well.
Check out these 2 instagram posts from Rob Abasolo that ring true…
https://www.instagram.com/reel...
https://www.instagram.com/reel...
“It’s hard to be rich and it’s hard to be poor. Pick your hard.” -Not sure who said it, but it’s true.
1 Reply
Jayme B.
OP
Member since 2022 · 42 posts · 16 votes
3y
Quote from @Wilson Vanhook:

Quote from @Michael Baum:

Well alrighty then @Jayme B.! Sounds like you are farther along in the process. Every STR is a risk, but you mitigate it with the data.
Have you looked into builders to get an idea of cost?
I would see about cleaners before I did anything. An hour is about the outer limit. We are an hour down lake from Coeur d'Alene and a lot of the cleaners I contacted didn't want to do the drive.
I have Grunsfos recirc pumps on our boiler. I replaced an ancient Grundfos sewage pump a few year ago in our lift tank. I would just be concerned about building out a solar system to run it all. For the mini split, would you have a propane tank?

He doesn't want a mortgage. He wants something less than $100k total. He's not serious about getting a STR.
You don't know what you're talking about bro. If you don't have something useful to add to the conversation then go elsewhere. Your way isn't the only way.
0 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
Quote from @Tom Powers:

@James Hamling how do you invest through a pro?

The "How" is pretty simple, it's the "Who" that many find most difficult.
In my group, for the "How" we do things one of 3 ways. We do via debt with some persons, who want to retain maximum control but just deploy capital and have necessary factors to make it work. For others they get in as equity partners, and other they jump into one of our equity share groups. Individual situation's vary the "how" but there are several.
Now for the "Who", that's a whole lot of complicated. Some just google syndicators and are ok handing Grant Cardone there hard earned money and getting a 4% ROI off there promised 6. Really, there is no shortage of syndicators out there. Or one can go to a local REIA group and just put themselves out there.
A fundamental law of REI is OPM. I don't discriminate on my OPM, I am happy to use a persons OPM vs a banks and make them a profit vs the bank. And there are many who think similar to myself in this regard. As long as I have deal volume, which I have in spades, I will use OPM, it's just simply how it works. And again, I am far from the only one.
So for the "Who", a person will have to roll up there sleeves and do the work to find potentials, research them and filter down to best fits.
0 Reply
David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
3y
Quote from @Jayme B.:

I feel like having another mortgage is a huge risk for us. I know how it goes - no risk, no reward. Thinking about covering the mortgage, cleaning fees etc and worry about the occupancy rates otherwise you come out of pocket for it gets me worried. I know you have to calculate conservatively as much as possible, but it would be nice to pick someone's brain that has done this before and knows a good deal when they see it. I don't have enough savings to practice haha.
I know my wife loves Orlando, but it seems that market is so dang saturated. We spend a lot of time there, so thoughts are that it would be beneficial.
What's a solid expectation for return on 80-100k investment per month doing STR?
Thanks for all the feedback.

Read up on "rent arbitrage". That is, rent the unit (SFR) with the understanding that you will be doing a hospitality business out of it, and charge enough per night to cover your costs and make some profit.
Yes - STR is NOT real estate investing! It's the Hospitality Industry.
My $0.02 ...
1 Reply
Ricardo Hidalgo
Real Estate Agent · Member since 2019 · 569 posts · 257 votes
3y
Quote from @Jayme B.:

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.

Have you thought about buying something that needs a light rehab and establishing a good theme for the property so it's possible to increase the rents and desirability of the STR? 100k is more than enough to buy on the emerald coast. I would recommend a beach house or townhome since the majority of condos are getting big assessments and you have to pay higher points to finance it.
0 Reply
Jayme B.
OP
Member since 2022 · 42 posts · 16 votes
3y
Quote from @Ricardo Hidalgo:

Quote from @Jayme B.:

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.

Have you thought about buying something that needs a light rehab and establishing a good theme for the property so it's possible to increase the rents and desirability of the STR? 100k is more than enough to buy on the emerald coast. I would recommend a beach house or townhome since the majority of condos are getting big assessments and you have to pay higher points to finance it.

Hi Ricardo - I just wonder if it's the same situation as in Orlando where you have a saturated market and low rents. The thought of a mortgage and meeting desired occupancy to fund it is stressful to think about. Not likely we would have another covid anytime soon, but it certainly is a reason to think about all potential risks of having additional debt.
0 Reply
Ricardo Hidalgo
Real Estate Agent · Member since 2019 · 569 posts · 257 votes
3y
Our market is more limited in inventory and completely different than Orlando. Values hold better and rents stay strong due to high demand in a small area. As long as numbers make sense, enough overhead to cover for a year and location is great... I see limited risk in real estate in comparison to the other asset classes. I have 100% confidence in my market and the infrastructure being built out will fundamentally support exponential growth.
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