Does this approach seem reasonable, or am I undervaluing the property?

A business partner approached me about it, and I negotiated the deal based on CAP rate.

But if you want to use a conservative approach and use the extra cash flow to pay off debt versus further investing, I think that's a very legitimate way to go about it.

Regular DST only produces 4-5% CoC, but my simple no-hassle realty mogul(and the like) or other REIT can produce 4-5% too by default, the best REIT return is 8%.I'm still thinking if DST is the right approach.

@William Bohan, Yeah, being a CA resident you'll have to do a 1031 exchange or your tax will approach 40%. 

This hands-on approach can provide invaluable insights into the industry and your property's performance.Both self-management and professional management have their advantages, as investors have highlighted.

This approach could keep things straightforward while accommodating their need for housing.

Additional Info —Key Details:Location: Outside Santa Fe, NMProperty Size: 20 acres (valued at $80,000)Project: Two new STR unitsExisting Experience: Family has two fully-occupied LTRs nearby, generating $2,000/monthConstruction Approach: Self-contracted with licensed trades for electrical/plumbingCost Assumption: $80,000 per unit, plus ~20% for inflation (based on 5–8-year-old build costs)Financing: Using land equity as down payment on construction loan (expecting closing costs to be major expense)Request: Looking for feedback, potential pitfalls, and general guidance

What is your current approach to lead generation? 

Let's clarify this real quick,I understand this model wouldn’t work for every property owner, especially those who are looking to sell outright and walk away from the property entirely, and the approach isn’t designed to replace a traditional property sale.