Looking to jump into to STR in Florida, considering paying all cash

[Ben Kelleher]

Recently, we did quite well on a business deal and found ourselves with quite a bit of cash to invest, particularly in real estate. We have chosen to target 5-6 bedroom homes in Kissimmee, FL due to the excellent short term rental market. Our plan is to buy the first home in cash, likely $550k-$650k, operate it under management for 3-6 months, then refi to pull out what we feel the property can support for a mortgage so we do not end up upside down. Then we will put the cash from the refi towards another property with even less capital investment than the first property, etc. Are there any major flaws with this plan, other than tying up a significant amount of capital on the first property? I see a tremendous advantage to getting deals by buying with cash now since we have it, as well as making sure we do not end up underwater on a mortgage due to unforseen expenses as we are new to the STR game. Please take a minute and shoot some holes in this plan, if there are any. I'd like to go into this as educated as possible. Thanks!

[Ben Kelleher]

Thank you for the input, @Travis Timmons & @Jonathan Greene. I greatly appreciate it. As Travis mentioned, there is motivation by the location, as we frequent the area for personal use and vacation, but that is not the only motivation. The saturation does give me concern, as it will be hard to make sure the property stands out from others when it is so far away from home without significant time and effort to keep up on theming, not to mention that you are at the mercy of your management company for some of the placement.

With respect to rates, I have no delusions that the rates will come down, the refi is more a protectionary measure to make sure that we do not end up upside down on a mortgage if we just pick an arbitrary number and say, put 40% down on the property at 8%. It also allows me to get a realistic idea of vacancy rate as well as other anticipated expenses. Again, thank you both for taking the time to work with me to understand the challenges, your responses are invaluable to me.