I submitted an offer that must have been competitive because the seller responded via email with a counter on terms, then called my realtor and asked if I had seen it in person.

Great advice, I found that the professional photos and doing the rehab slightly above the competition really seemed to help as I had almost 0 vacancy! 

It is improving, meaning sellers and builders are facing a little more competition, but there is still a shortage of housing units in the region. 3) Rental prices are strong and single family homes and townhouses rent very quickly.

Negotiations focused on highlighting the quick closing capabilities of Partner Driven, securing a competitive price of $605,000 and ensuring the deal’s success despite the highly competitive market.

Ultimately, STRs are like running a business and to be successful you want to distance yourself from the competition.  

Or, I’d have to get an extension of the closing date, which kinda defeats the purpose/competitive edge of a cash offer.

Don't just look at their prices, also look at their services and compare them to the competition. 

More competition > more offers > more bidding wars driving higher prices. 

Milwaukee rents continue to go up, we are now the 3rd most competitive market in the US, ahead of NY and LA..

That said, you should adapt your strategy based on the market conditions.In lower-cost markets or areas with less competition, you might still be able to hit 1%.