STRP with cash flow of about 17k/year - worth it?

[Mark Hower]

Hi all,

New to forums. I have around 500k saved and trying to deploy it in real estate. I'm looking at purchasing a new high-end home and using it as a STRP (short term rental property, i.e. listing on Air bnb, etc) This works really well in my area. I'm not as much concerned about discussing the pros/cons of the STRP business, but trying to get a sense of when is the return "worth it?" When is it worth the hassle and potentially tying up around 500k in capital/lending ability to move forward with an investment. I have a few friends that are currently doing this and they think its great, but they're not very analytical as far as tracking their numbers.

I've completed my cash flow analysis below. At what cap rate and what cash-on-cash return does it become worthwhile to move forward with an investment? I know this will vary for the individual and the type of investment, but it seems most are happy if the mortgage is covered and it cash flows some minimal amount.

For an STRP, its not completely passive as I would be hiring someone to handle the listings/cleaning but its much less work than the business I own. So I'm considering this as one potential stream of income. I'm also continuing to research by undervalued SFH to rent as long-term rentals.

Thoughts and feedback?