I put an offer on a house for STR and I'm freaking out

[Isan Monfort]

The offer was for $465k 5% down, the counter $475, I think its over priced, I should probably had offer less from the get go. However Airdna says it'll produce $135k year, but with interest rates rising my monthly expenses would be close to $5k/mo, or $60k year.

The house still needs $30-$40k, pretty much all the money I'd have left, for a few renovations if I want to take the nightly rate high enough to compete in the area and have a chance to reach those $135k. 

Also afraid to be all in and launching in the begging of the winter. Apparently the coldest winter in the history of NY is coming. 

Do the numbers sound good enough? 

I'm thinking of getting several new credit cards at 0% the day after closing on the house and max them out so I can do the renos + furnishing. All in baby, but it's scary AF

[Lisa Marie]

Everybody else is focusing on the issue of not having adequate reserve and etc., which is a very real concern.  But in addition to that, does it sound realistic in today's market that you can buy a house for under $500k and generate $135k income?  In most of the vacation markets (whether it's beach house or mountain chalet or ski resort), if a house can generate $135k income, even if it includes cleaning fees, that house will be selling $1M+.  If this house is available for under $500k, then either you have found the bargain of the decade, or it's too good to be true.  

Another way to verify the income estimate is to go ground up: assuming 250 nights rented, in order to generate $135k, the daily rate will need to be $540. Have you checked Airbnb and VRBO to see how much a comparable house is charging? 

Sorry to rain on your parade, but nowadays there just isn't any property in the market that can produce 25% cap rate. Don't get blinded by the glitz of other people's STR success story on Youtube or Tiktok. It's no different if somebody is trying to sell you a stock that is supposedly to yield 15% dividend rate. You really have to ask yourself "what's the catch?"