Cash on Cash % for STR in 2022

[Alisa Noll]

Hi! My partner and I are looking to buy an STR in Destin. We found a 2 bedroom condo that would be 13% Cash on Cash with everything included (downpayment, closing fees, monthly insurance, HOA fees etc.). This is with 60% occupancy expectancy (AirDNA says it'd be higher) and $200 avg room rate, which is also conservative.

We read that we should be aiming for closer to 20% Cash on Cash but is that still realistic with these home prices? 
We've plugged in over 50 properties at this point all around the Emerald Coast and nothing is anywhere close to 20%. Are we looking in the wrong market?

It's our first investment and we don't have any friends investing in STRs to ask. Your thoughts are highly appreciated!!

[Matt "Roar" Gardner]

@Alisa Noll - My recommendation is: try to not let the forums dictate what is a good or bad return to you. As an agent and investor in the Destin area, I have plenty of customers that even accept negative CoC ROI, as they are purely appreciation investors. For my typical cash flow investors, their acceptable CoC ROI varies greatly! I have some that have been looking for a 25% ROI home run with very specific criteria for over a year, while others may be happy with anything above a 5% CoC ROI. The latter investors typically plan to use their property as a second home, so they have a lot of personal bias in the type/location/style of the home because they want it to fit their family's needs.

To grossly generalize though, 10-20% is the common band of CoC ROI that we see for most investors. Best of luck to you!!