Need Opinions: STR Deal: Go or No Go: What would you do?

[Chad Acerboni]

Hi All, 

My business partner and I own small multi-family properties (2-4) and are currently under contract for an STR in Orlando. This is our first one, hence the outreach. The quick snapshot below is for context but I'm looking for some feedback as we are unfamiliar with this space. Curious as to whether you would GO or NO-GO on this opportunity. 

Keep in mind we are both W2'd in the Tech Sector and our goal is to build up our cash flow. This investment will be handled by a PM company so, yes, aware that is cutting greatly into our returns but right now we are looking to be hands-off. 

Asset: SFH (9 bedrooms and 7 baths)

City: Orlando, FL (Kissimmee) 

Purchase Price: $925K --> A similar house in the neighborhood just sold this week for $1M and has one bed/one bath less and fewer house amenities. 

Projected Returns based on multiple different data points, not just AirDna, etc from PM companies: 

Low-End Gross Revenue - $132K 

High-End Gross Revenue - $151K 

Overall Expenses (Prop tax/insurance/utilities/HOA fees/Management fee @25% /mortgage/CapEx @ 5%):

Low-End Expenses - $126K

High-End Expenses - $132K 

Financing and Cash to Close @ 20%: 

$215,000

ROI: 

Annual Cash Flow Between $5800 - $19,000

Annual COC Return Between: 2.79% and 8.8%

My notes/thoughts: 

PM fees are killing our returns but do not have the time right now to manage the property. 

Financing terms are also hurting us. 7.5% and different buy-down options. Have looked at Conventional and DSCR options.

What would you do? Transparent feedback is greatly appreciated. TIA!