You can lower your risk by putting more than, say 30%-40% rather than putting down 5-20% down.Using new builds or turnkeys as rentals would be a good way to get started and lower the risk for cap ex, so this could make sense.

Also unsure if you can build sweat equity in a townhome or if there’s more of a “cap” to what value you can add due to the neighboring units, if that makes sense? 

Its the yield trap that usually in commercial people want the high cap rate properties, but their cap rates are higher because they are riskeri in generally poor quailty areas.I've really only invested around me. 

So maybe assume an exit cap at 8%, or 9%.  

Examples include:- CAP's or limits on the number of vacation rental permits allowed.

But …- $7k vs $99k- much better rent to cost ratio- much lower maintenance/ cap ex.  

However, it's crucial to differentiate between capital improvements, which can affect your tax situation and potential interest deductibility, and mere repairs or maintenance, which do not.Furthermore, the mortgage interest deduction is capped at interest on up to $750,000 of debt, a threshold that encompasses both your primary mortgage and any additional secured loans.

I recently created this one to calculate cap rate and cash on cash return for STRs:http://theshorttermshop.com/cash-flow-calculator/

Totally agree we are headed toward a wild ride... but, I still feel like there's a huge market for people that want furnished long-term rentals, aka midterm rentals, and so I think we have a long ways to go before we hit that cap.

Originally posted by @Joel Ortiz:2200*12/220,000= 12% Why not just use cap rate or cash on cash?