After 5 years of searching for a STR that had what I considered the components needed for success: vacation/tourist location and seasons, property curb appeal, size and etc. I found one. I purchased it early this year and after a four-month complete rehab/updating it has been available to rent through a property management company specializing in vacation rentals in this area. The property has been rented through Airbnb, VRBO and the manager's website and has obtained about a 60% occupancy from June to Sept. It has been pretty quiet in Oct. and Nov. and I will close it down after Jan. until April. I think that the occupancy has been pretty decent for a first year and maybe the second year will see closer to 100% for the rental season. It does seem that everyone has their hand in "my pie" with all of the rental management fees and taxes on STR's by every jurisdiction which in total amount to over 25% of income.

The returns on investment are pretty weak in my experience. I think that with full occupancy it might achieve a $25K net rental income and from that RE taxes, insurance, utilities and other expenses need to be deducted. These would add up to about $5K for a net of about $20K. My $400 K investment would yield about 5% and the yield on the $600K equity of 3.3%. Luckily, I did well on the purchase and rehab with a pre-tax yield of almost 43%. But to consider purchasing just for the STR investment I wouldn't even consider it a good place to park money unless I was planning to live there for the non-tourist months and move out for the seasonal rental. Otherwise, I will season the property for 24 months to gain capital gains status and use a 1031 Tax Deferred Exchange to a better returning property type like commercial or maybe just more fix and flips. I am not impressed with STR investments as a means to reasonable returns on investment.

Am I missing something here?