STR pros - what is your target annual ROI?

[Don Konipol]

I've been VERY impressed with the knowledge and professionalism of the STR professionals posting in this forum. It appears as if your much more on top of your market and profitability that most more conventional property investors.

When I purchase a real property investment my minimum return on an all cash basis that I’ll consider is 8%. I look at this after all actual cash expenses PLUS management fee and a depreciation allowance. I don’t use the depreciation allowed by law, I use a real number based on my experience. For a property in great condition, I have found that a reserve of 2% per year should be adequate. Of course, if the property is in less than great condition, an increase in reserves is required.

Now, my question is how much money may I be leaving on the table by not investing in STR instead?

I'm not asking if I should convert property I currently own to STR, the answer is probably not because as I have learned from this forum STR only makes sense in vacation destinations where it's accepted and those cities where restrictive legislation or ordinance hasn't been enacted, and competition doesn't degrade rates to the point of no excess returns.

So, if you don't mind sharing, what's your minimum and your target ROI for an STR? And does this include you managing the property or hiring a manager?

Thank you and eagerly await your response.!