I am looking for advice on how to structure two investments while preserving my cash
Tucson AZ · Member since 2024 · 4 posts · 2 votes
I am looking for advice on how to structure two investments while preserving my cash
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Masoud ArouniPro Member
Investor · Pleasanton, CA · Member since 2026 · 127 posts · 54 votes@Mellissa Palmer-Beard, Joe covered the financing side well. Let me take a crack at the cash flow framework you asked about since that part got skipped.
For the lakefront cabin as an STR, here's a simple framework to start with:
Gross Revenue: Start with an occupancy estimate. With no direct comps, look at AirDNA for the nearest comparable lake market and discount it like 10-15% to be conservative. Multiply nightly rate by projected occupied nights.
Then subtract these:
- Platform fees (Airbnb/VRBO): roughly 3% host fee
- Property management if you go that route: 20-25% of gross
- Utilities (STRs run higher than LTR): budget $200-350/month
- Supplies/restocking/cleaning: $75-150 per turnover
- Insurance (STR-specific policy, not standard homeowners): get a quote early, lakefront adds cost
- Maintenance reserve: 1% of property value annually minimum
- Property taxes
What's left is your net operating income. Then subtract any debt service if you finance the rehab.
On projecting income with no comps nearby, the honest answer is you're making an educated guess until you have 6 months of actual data. That's fine as long as you underwrite conservatively. I'd run three scenarios: 40% occupancy, 55%, and 70%. If the deal only works at 70% then it's too fragile. If it works at 40% you have real margin.
The $45K purchase plus $15-20K rehab puts you all in around $60-65K on a lakefront cabin. That's a low enough basis that even modest STR performance should produce solid cash-on-cash if you finance it right.
What state is the cabin in AZ? That changes the STR regulatory picture a lot.
18 Replies
- Lender · Mesa, AZ · Member since 2026 · 9 posts · 3 votes5mo
Hey Melissa — two separate situations so I'll take them one at a time.
On your mother's home — the 2.98% first mortgage doesn't need to be touched. Her home has significant equity and a HELOC as a second lien solves your liquidity problem cleanly. Ideal path is your mother takes it out in her own name now. The alternative is adding yourself to her title and waiting 6-12 months for lender seasoning requirements — but good deals don't wait 6-12 months, so if the cabin is the right move, get your mother on board with option one.
On projecting STR income with no local comps — two tools worth knowing: AirDNA for market-level booking data, and GemHaus (gemhaus.com) which runs a full STR vs LTR side-by-side analysis with comps and 30-year projections. That second one is especially useful when you're underwriting a deal with no obvious comparables nearby.
I'm a lender and local Arizona investor — happy to help with any other questions you run into along the way.
- Tucson AZ · Member since 2024 · 4 posts · 2 votes5mo
Thank you Joe! Great advise I will dig in ont the apps now!!!
- Lender · Mesa, AZ · Member since 2026 · 9 posts · 3 votes5moAbsolutely! Feel free to send me a DM if you have any lending questions or need a connection to a local realtor
- Tucson AZ · Member since 2024 · 4 posts · 2 votes5mo
Thank you! I actually am a Realtor I work primarily in Green Valley and Sauharita.
- 5moMasoud ArouniPro MemberInvestor · Pleasanton, CA · Member since 2026 · 127 posts · 54 votes
@Mellissa Palmer-Beard, Joe covered the financing side well. Let me take a crack at the cash flow framework you asked about since that part got skipped.
For the lakefront cabin as an STR, here's a simple framework to start with:
Gross Revenue: Start with an occupancy estimate. With no direct comps, look at AirDNA for the nearest comparable lake market and discount it like 10-15% to be conservative. Multiply nightly rate by projected occupied nights.
Then subtract these:
- Platform fees (Airbnb/VRBO): roughly 3% host fee
- Property management if you go that route: 20-25% of gross
- Utilities (STRs run higher than LTR): budget $200-350/month
- Supplies/restocking/cleaning: $75-150 per turnover
- Insurance (STR-specific policy, not standard homeowners): get a quote early, lakefront adds cost
- Maintenance reserve: 1% of property value annually minimum
- Property taxes
What's left is your net operating income. Then subtract any debt service if you finance the rehab.
On projecting income with no comps nearby, the honest answer is you're making an educated guess until you have 6 months of actual data. That's fine as long as you underwrite conservatively. I'd run three scenarios: 40% occupancy, 55%, and 70%. If the deal only works at 70% then it's too fragile. If it works at 40% you have real margin.
The $45K purchase plus $15-20K rehab puts you all in around $60-65K on a lakefront cabin. That's a low enough basis that even modest STR performance should produce solid cash-on-cash if you finance it right.
What state is the cabin in AZ? That changes the STR regulatory picture a lot.
- Tucson AZ · Member since 2024 · 4 posts · 2 votes5mo
@Masoud Arouni Thank you for that information. It is in Mississippi. I havent found much information on expenses like permits or str regulations yet. It is on a well and septic so no cost there assuming inspections go well so utility should be electric only. I was figuring cash would be the simplest way to aquire and rehab this project but if there is a finance option I would really consider it...
if paying cash is there a .... formula? How long it takes to recoup your cash or just be happy with the income?
- 5moMasoud ArouniPro MemberInvestor · Pleasanton, CA · Member since 2026 · 127 posts · 54 votes
@Mellissa Palmer-Beard, Mississippi is actually a pretty friendly STR state at the state level — no blanket statewide restrictions. The risk is always at the county or municipality level, so the first call you make should be to the county where the cabin sits and just ask directly whether short-term rentals require a permit or business license.
Well and septics are actually a plus for a rural STR, no monthly utility bills on water/sewer, and guests never see the difference. Just make sure the septic gets inspected for capacity since STR usage runs heavier than a typical residence and needs to budgeted into your rehab estimate.
On the cash purchase question, yes there's a formula and it's called Cash-on-Cash return, or the simpler version is just payback period:
Payback Period = Total Cash Invested/Annual Net Cash Flow
So if you're all-in at $65K and the cabin nets $12k/year after all expenses, your payback is about 5.5 years. After that every dollar is pure return on a fully owned asset.
Cash-on-cash is the same math expressed as a percentage: $12k/$65k = 18.5% CoC. For a lakefront STR at that basis that would be a strong number.
The case for financing even when you have cash is that at $60-65K all-in you could potentially pull a DSCR loan after stabilization, get most of your cash back out, and redeploy it into the next deal. But given this is your first STR and Mississippi rural lending can be thin, cash to close and stabilize first is the cleaner path. Get 6 months of actual revenue data, then refinance from a position of strength.
What lake is it on? That'll help narrow down whether there's any comp data nearby.
- 5moHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
OP recommend you do the following steps:
1. Go to a retirement home and have them explain costs and assets. Let’s use $10,000 cost per month. Your mother’s investment in her house will get used up very quickly.
2. Your state will go back 5 years on her financial records and retrieve any gifts, or other asset transfers if possible.3. You might see if she could sell to you at a higher price. She could use the 2 out of 5 years $250,000 capital gain deduction. That way you get a stepped up basis. Make it at a low interest only rate. Debt to be forgiven upon death. Check with the retirement person and a tax person.
4. I would not put your name in the deed until you talk with a tax person. See if it resets the 2/5 years.
- Real Estate Consultant · Scottsdale Arizona · Member since 2026 · 8 posts · 3 votes5mo
A big anchor with a STR is how many people are visiting the area and for what reason. You can have minimum or no comps but if folks are vacationing around the area for weekend getaways or coming in for something specific then that is a strong foundation. Hotels, motels, bed and breakfast etc will have occupancy rates or will at least know when they're busiest and why. Cracking that information is a good start. Is there a season that draws folks there or is it year around locals escaping for a few days? Are there historical attractions that bring in events or maybe a high time for music? Are casinos close by that attract major tournaments? You can plan around these to anchor the properties income potential. For example February-April is the peak season for the portfolio I look after simply because of weather compared to the rest of the country. Pricing the weekends during these months makes or brakes the properties performance for the rest of the year as our summers are so difficult (Arizona). Mississippi's economy seems to lean on tourism heavily seeing that it brings in about $18 billion/yr from it.
These are just things to ponder that might help determine the cashflow side of things. Since it would be a STR, my experience leans heavily on what is bringing folks in, when, and what hotels price their nights at during that time. - Flipper/Rehabber · Sacramento CA · Member since 2021 · 7 posts · 4 votes5mo
A private money individual might be the best way to go- let me know if you’d like an introduction
- Investor · Raleigh, NC · Member since 2026 · 8 posts · 3 votes5mo
At 2.98%, I’d personally preserve liquidity instead of paying off the debt early.
Many investors underestimate rehab costs and overestimate short-term rental revenue.
- 5moAshish AcharyaBusiness MemberCPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
Hey Mellissa! You've got two really interesting situations here and it's smart that youre thinking through how to handle both without stretching yourself too thin on cash.
On your mother's home, adding your name to the deed is worth doing carefully. The due-on-sale clause is something to be aware of since a title transfer can sometimes trigger it. More importantly, how you take title matters from both a tax and estate planning perspective. Whether it comes to you as an inheritance versus a gift or joint ownership has real implications for your cost basis when you eventually sell, so looping in both an estate attorney and a CPA before making that move is really worth it. If you inherit it, you'd likely get a stepped-up basis which could save you significantly on capital gains down the road.
On the lakefront cabin, a $45,000 purchase with $15,000 to $20,000 in rehab for an STR is an interesting play, especially if the lakefront location can command strong nightly rates. Since there are no comparable listings nearby, I'd look at similar lakefront STRs in the broader region on Airbnb and VRBO to build a revenue projection, and stress test it at 50% occupancy to make sure the numbers still work conservatively.
Like a few others have mentioned about the liquidity question, there are a couple options worth exploring. A personal loan, a small HELOC if any equity is available elsewhere, or seller financing on the cabin if the seller is open to it. Hard money is another option for the rehab period though it comes with higher cost.
From a tax perspective the cabin as an STR with material participation could be really powerful depending on your income picture, since the losses could potentially offset other income. That's worth mapping out with a CPA before you close. Happy to connect!
INVESTOR FRIENDLY CPA®4.9242 Reviews - 5moJason MalabuteBusiness MemberAccountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 916 votes
On your mom's home, be careful about adding yourself to the deed because a title transfer can sometimes trigger the due-on-sale clause, and how you take title has real tax and estate planning implications. If you eventually inherit it instead of receiving it as a gift or joint ownership, you'd typically get a stepped-up basis to fair market value, which can save a lot in capital gains down the road, so it's worth bringing in both an estate attorney and a CPA before you make that move. On the lakefront cabin, $45,000 purchase plus $15,000 to $20,000 in rehab is an interesting STR play, especially if the location can pull strong nightly rates. Since there are no nearby comps, look at similar lakefront STRs in the broader region on Airbnb and VRBO to build a revenue projection and stress test it at around 50% occupancy to make sure the numbers still work conservatively. For preserving liquidity, options to think through include a HELOC on other equity if you have any, a personal loan, seller financing on the cabin if the seller is open to it, or hard money for the rehab piece (which comes with a higher cost). From a tax standpoint, if you can hit material participation on the STR, the losses could potentially offset other income, which is worth mapping out with a CPA before you close. The exact answer really depends on your specific facts, so it's worth running through this with your own CPA and attorney before signing anything.
Malabute & Company CPAs527 Reviews - 5moBasit SiddiqiBusiness MemberAccountant · New York, NY · Member since 2015 · 8k+ posts · 4k+ votes
You may want to look into inheriting the property as opposed to a trasfer, this may be helpful when it comes to getting a step up in basis.
If you want the income stream of the property, you may want to look into getting added as the manager of the property and you being paid a management fee for managing the property.
Best of luck!
Basit Siddiqi CPA4.880 Reviews - 5moRobert EllisBusiness MemberDeveloper · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
Quote from @Mellissa Palmer-Beard:
The first situation involves my mother’s home, which has a $68,000 balance at a 2.98% interest rate and a market value of approximately $250,000. I intend to add my name to the deed to secure the property as she ages. While I have the funds to pay off the balance if the lender chooses to accelerate the note, I would prefer to keep those funds liiquid. I plan to use this property as either a long-term rental or my primary residence after she passes as she is currently 82 years old.
The second opportunity is an off-market one bed cabin lakefront property priced at $45,000 requiring an estimated $15,000–$20,000 for rehabilitation. I intend to use this as a short-term rental. Since I cannot afford to fund both projects simultaneously and do not have existing home equity to leverage, I am seeking a strategy to close both deals while maintaining my liquidity.
Additionally, as these would be my first two investments, could you provide a "cheat sheet" or template for analyzing property expenses and cashflow? I am specifically looking for guidance on how to calculate projected rental income for the lakefront property, as there are currently no comparable listings in the immediate area.
I look forward to hearing your recommendations.If I were in your position, I'd separate these into two decisions instead of trying to solve both at once. On your mother's house, I'd be very cautious about making title changes before talking to an estate attorney and CPA. A 2.98% loan is extremely valuable debt, and depending on how ownership is structured, the long-term tax consequences could be far more significant than the remaining mortgage balance. On the cabin, I'd only move forward if the deal works under conservative assumptions, not best-case STR projections.
What matters most here is preserving flexibility. The mistake I see new investors make is focusing on acquiring the next asset before fully understanding the risk profile of the first one. With no direct STR comps, I'd underwrite the cabin using multiple occupancy scenarios and assume higher expenses than expected. If the cabin still produces attractive returns at conservative occupancy levels, that's a much stronger investment than one that only works with optimistic assumptions. The next step becomes determining whether you're buying a cash-flowing asset or simply creating a speculative tourism play.
Before you do that, I'd ask yourself: if the cabin generated 30% less revenue than you currently expect, would you still be excited about owning it five years from now?
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