What’s a good cash on cash return
Phoenix, AZ · Member since 2023 · 7 posts · 2 votes
What’s a good cash on cash return
Most Popular Reply
Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
3yPreviously I looked for 30%, in this market I'm around 20-25%. It also depends on what I'm looking to add to my portfolio. Territory, quality of property, etc. I might be willing to accept a lower ROI because I'm satisfying other goals on rounding out my portfolio.
22 Replies
- Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes3y
Previously I looked for 30%, in this market I'm around 20-25%. It also depends on what I'm looking to add to my portfolio. Territory, quality of property, etc. I might be willing to accept a lower ROI because I'm satisfying other goals on rounding out my portfolio.
- Phoenix, AZ · Member since 2023 · 7 posts · 2 votes3y
Quote from @Leslie Anne Morris:
Previously I looked for 30%, in this market I'm around 20-25%. It also depends on what I'm looking to add to my portfolio. Territory, quality of property, etc. I might be willing to accept a lower ROI because I'm satisfying other goals on rounding out my portfolio.
Thanks for your insight Leslie I really appreciate it!
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
For me it depends on the property. Sometimes I just love the property that I would be willing to indulge 15%. That would be somewhere I would want to visit from time to time.
Like @Leslie Anne Morris said, in this market, 20% would be considered a good return for sure.
- Phoenix, AZ · Member since 2023 · 7 posts · 2 votes3y
Quote from @Michael Baum:
For me it depends on the property. Sometimes I just love the property that I would be willing to indulge 15%. That would be somewhere I would want to visit from time to time.
Like @Leslie Anne Morris said, in this market, 20% would be considered a good return for sure.
Awesome, thank you for the tip Michael!
- 3ySarah KensingerPro MemberReal Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
Nothing less than 20% for sure! Tony Robinson has an analyzer you can download and of course a how-to video on how to use it.
- Phoenix, AZ · Member since 2023 · 7 posts · 2 votes3y
Quote from @Sarah Kensinger:
Nothing less than 20% for sure! Tony Robinson has an analyzer you can download and of course a how-to video on how to use it.
Really great info I’m shooting for 20%. I’ve been watching Tony on the real estate rookie podcast I’m definitely going to check it out thanks Sarah!
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes3y
Quote from @John Ferguson:
Hey everyone, I'm a super rookie in real estate investing. I've been house hacking my first property for the past 3 years and I'm finally in the process of fully renting that out. Now I have my eyes set on short term rentals and I'm trying to figure out how best to approach it. Right now I mainly want to learn the underwriting process and what a good cash on cash return is for STR in todays market. If anyone could provide some insight on that or suggest some resources I could use I would greatly appreciate it.
Looks like you are in Phoenix. I'm in Scottsdale/Phoenix/Mesa so I have a pretty good idea of what's going on in your local market.
Well, you start with the numbers.
Add up your monthly costs - mortgage payment, insurance, property taxes, power, water, internet, pool maintenance, landscaping, HOA, STR fees, etc. That gives you a monthly nut to crack. It takes time to ready an STR, so factor in holding costs of a couple of months. And your time and effort.
Then combine1. rehab/updating costs to the out of pocket amount to
2. furnish a house that people would want to stay at.
Those are more expensive than it seems at first.
Now you have three numbers. The amount you'd need to get started, the monthly costs and the cost to furnish. For most STRs right now (it's summer and 111 degrees) bookings are on the light side. According to AirDNA and AllThe Rooms you can generally expect about 60% to 65% occupancy after you have a few positive reviews. Getting those reviews can take a few months.
So now, you go to AirDNA and look at how much people are getting for their properties, take a look at the pictures so you can see what people are paying for and calculate the return.I can run the specific numbers for you over coffee and explain them to you to see if that is the direction you want to go. Most people, when we sit down and go over actual numbers decide that simply joint venturing with me for a greater return and less hassle better suits their goals. But, I'm always happy to sit down with anyone, as I do with folks from SoCal and locally, and go over their investing options, especially if they want to make 401(k)s and IRAs work for them, even if they insist on STRs. It just takes a little specialized information to succeed.
- 3yNoah CorwickPro MemberRealtor · Phoenix, AZ · Member since 2021 · 276 posts · 117 votes
Hey John!
Great to meet a fellow Phoenix-ian!The PHX market is a bit crowded with STRs/AirBnB at the moment. A lot of landlords have reported not as optimized returns this year. Also with Scottsdale's now stricter rental and license policies, it's definitely a scenario to keep in mind.
Definitely not trying to deter you from this, just wanting to play devil's advocate. There are definitely STR deals to be had, it's just a bit harder in today's climate.
What parts of town are you targeting for the STR? - 3ySarah KensingerPro MemberReal Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votesYou're welcome! The step of analyzing a property is crucial to the success of your STR!! So, the more you can learn about analyzing and underwriting a property the better!
Quote from @John Ferguson:
Quote from @Sarah Kensinger:
Nothing less than 20% for sure! Tony Robinson has an analyzer you can download and of course a how-to video on how to use it.
Really great info I’m shooting for 20%. I’ve been watching Tony on the real estate rookie podcast I’m definitely going to check it out thanks Sarah!
- Investor · Member since 2022 · 1k+ posts · 754 votes3y
Going to depend from investor to investor. We use to look for 20%. Now, we’ll take 14% or higher depending on the cash flow
- Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes3y
Another vote for depends on the market, but 20% and up would probably be a good place to start.
- 3yAndrew SteffensBusiness MemberTampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
I think this is a personal question, as it depends on what you can get doing other things. Myself for example, can get 7-10% in stocks/bonds, 10-12% in Hard Money Loans. So anything better than 12% would be a good cash on cash return. However, with the inherent risk (and reward of appreciation) I would say no less than 15% but I will only do 20%+ as well. If it is possible for you to qualify for an investor loan and you find a decent fixer upper in a good STR area you could do a BRRR an really maximize CoC return.
Vacation Rentals of Florida53 Reviews - Phoenix, AZ · Member since 2023 · 7 posts · 2 votes3y
Quote from @Account Closed:
Quote from @John Ferguson:
Hey everyone, I'm a super rookie in real estate investing. I've been house hacking my first property for the past 3 years and I'm finally in the process of fully renting that out. Now I have my eyes set on short term rentals and I'm trying to figure out how best to approach it. Right now I mainly want to learn the underwriting process and what a good cash on cash return is for STR in todays market. If anyone could provide some insight on that or suggest some resources I could use I would greatly appreciate it.
Looks like you are in Phoenix. I'm in Scottsdale/Phoenix/Mesa so I have a pretty good idea of what's going on in your local market.
Well, you start with the numbers.
Add up your monthly costs - mortgage payment, insurance, property taxes, power, water, internet, pool maintenance, landscaping, HOA, STR fees, etc. That gives you a monthly nut to crack. It takes time to ready an STR, so factor in holding costs of a couple of months. And your time and effort.
Then combine1. rehab/updating costs to the out of pocket amount to
2. furnish a house that people would want to stay at.
Those are more expensive than it seems at first.
Now you have three numbers. The amount you'd need to get started, the monthly costs and the cost to furnish. For most STRs right now (it's summer and 111 degrees) bookings are on the light side. According to AirDNA and AllThe Rooms you can generally expect about 60% to 65% occupancy after you have a few positive reviews. Getting those reviews can take a few months.
So now, you go to AirDNA and look at how much people are getting for their properties, take a look at the pictures so you can see what people are paying for and calculate the return.I can run the specific numbers for you over coffee and explain them to you to see if that is the direction you want to go. Most people, when we sit down and go over actual numbers decide that simply joint venturing with me for a greater return and less hassle better suits their goals. But, I'm always happy to sit down with anyone, as I do with folks from SoCal and locally, and go over their investing options, especially if they want to make 401(k)s and IRAs work for them, even if they insist on STRs. It just takes a little specialized information to succeed.
Hey Mike, really appreciate the breakdown. I'm a little late to see your post but awesome information. Yes, I live in north phoenix looking for properties closer to the Westgate area in Glendale. I found Tony Robinsons STR Analysis calculator so I'm following what your saying. I'd love to get to know some investors in the area and I'm open to alternative investment strategies. Perhaps we can direct message. - Phoenix, AZ · Member since 2023 · 7 posts · 2 votes3y
Quote from @Noah Corwick:
Hey John!
Great to meet a fellow Phoenix-ian!The PHX market is a bit crowded with STRs/AirBnB at the moment. A lot of landlords have reported not as optimized returns this year. Also with Scottsdale's now stricter rental and license policies, it's definitely a scenario to keep in mind.
Definitely not trying to deter you from this, just wanting to play devil's advocate. There are definitely STR deals to be had, it's just a bit harder in today's climate.
What parts of town are you targeting for the STR?Hey Noah, yes nice to meet someone who stays in the area! I know Phoenix is a fast growing city and I think everyone's caught on at this point lol but I'm still hoping to carve out my own piece of the real estate market here.
I'm looking for a property close to the Westgate area in Glendale, I'm thinking south of the 60 but north of the 10,still need to do some market research. Everyone here has given such great advice. Thanks for your input!
- Phoenix, AZ · Member since 2023 · 7 posts · 2 votes3y
Quote from @Andrew Steffens:
I think this is a personal question, as it depends on what you can get doing other things. Myself for example, can get 7-10% in stocks/bonds, 10-12% in Hard Money Loans. So anything better than 12% would be a good cash on cash return. However, with the inherent risk (and reward of appreciation) I would say no less than 15% but I will only do 20%+ as well. If it is possible for you to qualify for an investor loan and you find a decent fixer upper in a good STR area you could do a BRRR an really maximize CoC return.
Thank you for the advice Andrew! I didn't think to consider other investment vehicles like that to put it into perspective. I'm not quite ready for a BRRR but hope to be one day!
- 3yNoah CorwickPro MemberRealtor · Phoenix, AZ · Member since 2021 · 276 posts · 117 votesHey John, hope you're surviving the summer heat (it's supposed to monsoon this week and next)!
Quote from @John Ferguson:
Quote from @Noah Corwick:
Hey John!
Great to meet a fellow Phoenix-ian!The PHX market is a bit crowded with STRs/AirBnB at the moment. A lot of landlords have reported not as optimized returns this year. Also with Scottsdale's now stricter rental and license policies, it's definitely a scenario to keep in mind.
Definitely not trying to deter you from this, just wanting to play devil's advocate. There are definitely STR deals to be had, it's just a bit harder in today's climate.
What parts of town are you targeting for the STR?Hey Noah, yes nice to meet someone who stays in the area! I know Phoenix is a fast growing city and I think everyone's caught on at this point lol but I'm still hoping to carve out my own piece of the real estate market here.
I'm looking for a property close to the Westgate area in Glendale, I'm thinking south of the 60 but north of the 10,still need to do some market research. Everyone here has given such great advice. Thanks for your input!
There definitely is rental opportunity out there, just have to dig a bit more than we previously had to. If you have a good contractor team around you, then a forced appreciation or BRRRR method might make sense.
Glendale is opening up the new Mattel Adventure Park and a ton of crazy resorts (one is a man-made beach) out in Westgate, so I completely understand the appeal and now would be the time to strike.I'd love to brainstorm with you sometime if you're open to it!
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes3y
Quote from @John Ferguson:
Quote from @Account Closed:
Quote from @John Ferguson:
Hey everyone, I'm a super rookie in real estate investing. I've been house hacking my first property for the past 3 years and I'm finally in the process of fully renting that out. Now I have my eyes set on short term rentals and I'm trying to figure out how best to approach it. Right now I mainly want to learn the underwriting process and what a good cash on cash return is for STR in todays market. If anyone could provide some insight on that or suggest some resources I could use I would greatly appreciate it.
Looks like you are in Phoenix. I'm in Scottsdale/Phoenix/Mesa so I have a pretty good idea of what's going on in your local market.
Well, you start with the numbers.
Add up your monthly costs - mortgage payment, insurance, property taxes, power, water, internet, pool maintenance, landscaping, HOA, STR fees, etc. That gives you a monthly nut to crack. It takes time to ready an STR, so factor in holding costs of a couple of months. And your time and effort.
Then combine1. rehab/updating costs to the out of pocket amount to
2. furnish a house that people would want to stay at.
Those are more expensive than it seems at first.
Now you have three numbers. The amount you'd need to get started, the monthly costs and the cost to furnish. For most STRs right now (it's summer and 111 degrees) bookings are on the light side. According to AirDNA and AllThe Rooms you can generally expect about 60% to 65% occupancy after you have a few positive reviews. Getting those reviews can take a few months.
So now, you go to AirDNA and look at how much people are getting for their properties, take a look at the pictures so you can see what people are paying for and calculate the return.I can run the specific numbers for you over coffee and explain them to you to see if that is the direction you want to go. Most people, when we sit down and go over actual numbers decide that simply joint venturing with me for a greater return and less hassle better suits their goals. But, I'm always happy to sit down with anyone, as I do with folks from SoCal and locally, and go over their investing options, especially if they want to make 401(k)s and IRAs work for them, even if they insist on STRs. It just takes a little specialized information to succeed.
Sure, I answer all direct messages. Just click on my handsome avatar and then on MESSAGE
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
Quote from @Account Closed:
Quote from @John Ferguson:
Hey everyone, I'm a super rookie in real estate investing. I've been house hacking my first property for the past 3 years and I'm finally in the process of fully renting that out. Now I have my eyes set on short term rentals and I'm trying to figure out how best to approach it. Right now I mainly want to learn the underwriting process and what a good cash on cash return is for STR in todays market. If anyone could provide some insight on that or suggest some resources I could use I would greatly appreciate it.
Looks like you are in Phoenix. I'm in Scottsdale/Phoenix/Mesa so I have a pretty good idea of what's going on in your local market.
Well, you start with the numbers.
Add up your monthly costs - mortgage payment, insurance, property taxes, power, water, internet, pool maintenance, landscaping, HOA, STR fees, etc. That gives you a monthly nut to crack. It takes time to ready an STR, so factor in holding costs of a couple of months. And your time and effort.
Then combine1. rehab/updating costs to the out of pocket amount to
2. furnish a house that people would want to stay at.
Those are more expensive than it seems at first.
Now you have three numbers. The amount you'd need to get started, the monthly costs and the cost to furnish. For most STRs right now (it's summer and 111 degrees) bookings are on the light side. According to AirDNA and AllThe Rooms you can generally expect about 60% to 65% occupancy after you have a few positive reviews. Getting those reviews can take a few months.
So now, you go to AirDNA and look at how much people are getting for their properties, take a look at the pictures so you can see what people are paying for and calculate the return.I can run the specific numbers for you over coffee and explain them to you to see if that is the direction you want to go. Most people, when we sit down and go over actual numbers decide that simply joint venturing with me for a greater return and less hassle better suits their goals. But, I'm always happy to sit down with anyone, as I do with folks from SoCal and locally, and go over their investing options, especially if they want to make 401(k)s and IRAs work for them, even if they insist on STRs. It just takes a little specialized information to succeed.
When are you going to sit down and learn from me?
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes3y
Quote from @Eliott Elias:
Quote from @Account Closed:
Quote from @John Ferguson:
Hey everyone, I'm a super rookie in real estate investing. I've been house hacking my first property for the past 3 years and I'm finally in the process of fully renting that out. Now I have my eyes set on short term rentals and I'm trying to figure out how best to approach it. Right now I mainly want to learn the underwriting process and what a good cash on cash return is for STR in todays market. If anyone could provide some insight on that or suggest some resources I could use I would greatly appreciate it.
Looks like you are in Phoenix. I'm in Scottsdale/Phoenix/Mesa so I have a pretty good idea of what's going on in your local market.
Well, you start with the numbers.
Add up your monthly costs - mortgage payment, insurance, property taxes, power, water, internet, pool maintenance, landscaping, HOA, STR fees, etc. That gives you a monthly nut to crack. It takes time to ready an STR, so factor in holding costs of a couple of months. And your time and effort.
Then combine1. rehab/updating costs to the out of pocket amount to
2. furnish a house that people would want to stay at.
Those are more expensive than it seems at first.
Now you have three numbers. The amount you'd need to get started, the monthly costs and the cost to furnish. For most STRs right now (it's summer and 111 degrees) bookings are on the light side. According to AirDNA and AllThe Rooms you can generally expect about 60% to 65% occupancy after you have a few positive reviews. Getting those reviews can take a few months.
So now, you go to AirDNA and look at how much people are getting for their properties, take a look at the pictures so you can see what people are paying for and calculate the return.I can run the specific numbers for you over coffee and explain them to you to see if that is the direction you want to go. Most people, when we sit down and go over actual numbers decide that simply joint venturing with me for a greater return and less hassle better suits their goals. But, I'm always happy to sit down with anyone, as I do with folks from SoCal and locally, and go over their investing options, especially if they want to make 401(k)s and IRAs work for them, even if they insist on STRs. It just takes a little specialized information to succeed.
When are you going to sit down and learn from me?
Your Comment: "When are you going to sit down and learn from me?"
HA! Best laugh of the day! You've got some of the worst, ill infomed, most dangerous answers and anybody that takes you seriously is headed for legal trouble. Or, do you want to know how I really feel? ;-) I'm trying to be nice here. - Investor · Philadelphia, PA · Member since 2022 · 106 posts · 56 votes3y
Quote from @Sarah Kensinger:
Nothing less than 20% for sure! Tony Robinson has an analyzer you can download and of course a how-to video on how to use it.
hey Sarah, can you link where to find this analyzer? Curious to check it out.
- 3ySarah KensingerPro MemberReal Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
Quote from @Jim Rivell:
Quote from @Sarah Kensinger:
Nothing less than 20% for sure! Tony Robinson has an analyzer you can download and of course a how-to video on how to use it.
hey Sarah, can you link where to find this analyzer? Curious to check it out.
Here you go....STR Deal Analyzer and the how-to video....STR Deal Analyzer How-To.
If you need any help let me know!
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3yEasy bait. I hope you're not this emotional when you invest.
Quote from @Account Closed:
Quote from @Eliott Elias:
Quote from @Account Closed:
Quote from @John Ferguson:
Hey everyone, I'm a super rookie in real estate investing. I've been house hacking my first property for the past 3 years and I'm finally in the process of fully renting that out. Now I have my eyes set on short term rentals and I'm trying to figure out how best to approach it. Right now I mainly want to learn the underwriting process and what a good cash on cash return is for STR in todays market. If anyone could provide some insight on that or suggest some resources I could use I would greatly appreciate it.
Looks like you are in Phoenix. I'm in Scottsdale/Phoenix/Mesa so I have a pretty good idea of what's going on in your local market.
Well, you start with the numbers.
Add up your monthly costs - mortgage payment, insurance, property taxes, power, water, internet, pool maintenance, landscaping, HOA, STR fees, etc. That gives you a monthly nut to crack. It takes time to ready an STR, so factor in holding costs of a couple of months. And your time and effort.
Then combine1. rehab/updating costs to the out of pocket amount to
2. furnish a house that people would want to stay at.
Those are more expensive than it seems at first.
Now you have three numbers. The amount you'd need to get started, the monthly costs and the cost to furnish. For most STRs right now (it's summer and 111 degrees) bookings are on the light side. According to AirDNA and AllThe Rooms you can generally expect about 60% to 65% occupancy after you have a few positive reviews. Getting those reviews can take a few months.
So now, you go to AirDNA and look at how much people are getting for their properties, take a look at the pictures so you can see what people are paying for and calculate the return.I can run the specific numbers for you over coffee and explain them to you to see if that is the direction you want to go. Most people, when we sit down and go over actual numbers decide that simply joint venturing with me for a greater return and less hassle better suits their goals. But, I'm always happy to sit down with anyone, as I do with folks from SoCal and locally, and go over their investing options, especially if they want to make 401(k)s and IRAs work for them, even if they insist on STRs. It just takes a little specialized information to succeed.
When are you going to sit down and learn from me?
Your Comment: "When are you going to sit down and learn from me?"
HA! Best laugh of the day! You've got some of the worst, ill infomed, most dangerous answers and anybody that takes you seriously is headed for legal trouble. Or, do you want to know how I really feel? ;-) I'm trying to be nice here.
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