Investors in these type deals look for say 12 - 14% annualized return.  

Then you need to account for soft expenses like Vacancy/turnover, maintenance, and capital expenses.

Transferring a property title later could be deemed a taxable gift if it exceeds the annual exclusion ($17,000 for 2024).

Becoming a LandlordYour house appreciating at 5% annually = $25K/year.Your parents' larger house = $30K/year.Financing the PlanTake out a mortgage on your house to buy your parents' house.If their mortgage rate is lower than today’s rates (6.75%), keep their mortgage and assume it.Why It WorksYour tenants pay the mortgage—not you.Each monthly payment includes ~$300 toward the principal.

As for the 5 year annualized, that’s a number we get from the bigger pockets rental analyzer.

Bought it as a safe bet thinking it would do roughly $35k annually in short term rents.

You get a Capitalization Rate (CAP Rate), which equals your annualized return by dividing the Net Operating Income (you had gross in your narrative) by the purchase price.

Gross rent multiplier (GRM) A method that divides the purchase price by the gross annual rents when the property is 100% occupied.

How much did you buy it for and what's your annual tax bill?

What if you're a cardiologist with no debt and making $250,000 annually?