Money set aside for Investment STR - how to evaluate purchase

[Trent Reeve]

What is the general rule on buying investment STR property if you cant normally absorb the mortgage payment forever? I have enough set aside that i could go a little over a year with no rental income. But is it normal to be able to completely absorb the mortgage payment or do you go into it knowing you need that rental income, at least in the beginning? Changes the dynamics of what I properties i would look for.

for example, i can take on another mortgage payment of say $1k/month no problem with no change to day to day life. But if i look at a property whose total monthly payments is say $2400, but can rent out at double that or more, and I have cash on hand where no rental income for the 1st year isnt a problem. It could be viewed like a business, that I am betting on myself and the property for income, not unlike any normal business starting up. But is that the norm?

[Sergey A. Petrov]

Quote from @Trent Reeve:

Quote from @Michael Baum:

Again, like @John Underwood, I always can make the mortgage if I have to.

I agree that if you bought the house in the right place you should be doing well in short order.

 I wouldnt buy a property that I cant make the mortgage alone for at least a year. I just wondered what people in high-cost areas typically did. Maybe I am being too risky. again, pessimistic projections easily cover the mortgage + $10-20k for the year.

Yes I think you need to adjust you risk tolerances. I would never ever underwrite anything with the assumption that it would not produce a single penny for a year. Not six months either. With an STR depending on how turnkey it is, a 2 months ramp up is reasonable (paint, minor repairs, furnish, get professional pics, get your license, your listing, etc). If 100% turnkey (buying fully furnished prior active STR) the timeline shortens significantly.

The assumption that 100% of your investment properties will be 100% vacant for even a month is unrealistic. On one property, sure. On two, maybe. Beyond that something better be producing some rental income or one needs to reconsider their career choice of being a real estate investor