Quote from @Duane Hensley:
Quote from @Joshua Strickland:
Personally I wouldn't go below 20% CoC for a STR at the moment. Anything over 50% is a home run and still achievable depending on the market and loan strategy. Example: Buy a 3/3 cabin in the smokies for $650k. With a lot it will rent as a 4/3. Put 10% down - $65k. Should gross around $100k which nets you close to $30k - $35k. General numbers but you get it.
Sorry for offering such a late response I just stumbled on this thread, but it seems to me there is only one thing wrong with the scenario you laid out here. You didn't include the closing cost or the amount of money that most people need for the over asking price (Appraisal gap), which in 2021 was very commonplace. If you add the over asking price (appraisal gap) to the down payment, plus the average closing cost of around $10,000 you are easily well above the $65K in your scenario. Many would easily be at $100K of upfront money invested and that doesn't even include the setup costs to get the cabin ready to rent.
Those were just quick calculations and not meant to be a deep dive. A lot has changed since then. For example…You’re not finding a 3/3 for $650k in the Smokies. I also don’t love the 10% vacation home loan. If you’re using as an investment, you should get an investment loan.
With that said there are still 20%+ CoC returns to be found even in this market, there just not as plentiful.
