Cash Flow in STR vs MTR

[Nikita Smirnov]

Hi community! I'm just starting out the RE investing journey. I'm looking at properties in the North Carolina market. Just read a "short-term rental long-term wealth" book and currently reading a book on MTRs, the "30-day stay". 

First I heard in podcasts that finding cash flow is becoming more and more difficult and the prices of homes went quite high. I want to build cash flow so that I can put at least one down payment for a house per year. From the cash flow point of view, the STR and MTRs are the most profitable ones.

From hearing podcasts I remember that 10-12% is a good ROI for LTRs, but that the MTRs are getting around 2X of the LTRs. The STRs are generating around 30-40% ROI.

In my experience, I can’t make any LTR deal cash flow positively with the 7% interest and current prices. The MTRs that I found can bearly cover mortgage payments. 

In those books, it says that you always analyze deals from the LTR perspective so that you can have an exit strategy if your STR doesn't work.

Does that mean that if I find an MTR that can cash flow 12% being an MTR and the LTR would cashflow negatively - is ok to buy? 

From what I have been looking at and using calculators for rent estimates there are close to nothing deals that can cashflow with the LTR strategy.

Please shine some light on me. If there is anyone who can share a few words and mentor me I would really appreciate it.

Thank you,

Nikita

[Mohammad Parwez]

I would not rely on the returns that some Gurus propose on STR and MTR

For me real estate investing should be more passive than active.For mostly STR/MTR it is mostly active work unless you have a partner that shares profit.

While buying properties I would always see if that property makes a positive cash flow from day 1 then only I would move forward. Also other factors makes a difference like neighborhood, popluation/job growth and property condition.

My suggestion for Greensboro and surrounding area market would be to look for a decent property built after 1980+ with 3+ bedroom under 160k. I know it's almost difficult to get but sometimes these kind of properties come in the market and if you put an additional 10-20 k you can increase the value and can earn higher rental 1600-2000 most likely.

Let me know if you are interested to see these kind of deals in the area. 

I always use my excel calculator to immdiately see if any deal is profitable.