No one is building them, they're historically very lucrative, and Utah is extremely heavy on investors so they all want one, and seem to all be counting on rents increasing to make them profitable over the long term.

There are also more favorable loan programs with low-money down, down payment assistance, and no PMI.You can eventually scale into MF stuff but it is the most competitive product and might only be worth it if you are syndicating and have investors who require a lower yield.My townhome units have a way better yield than any multi-family units I have seen.

From there, you can funnel that into a diversified multifamily deal that offers 10% COC paid monthly, or 200k/yr.The key is to vet the operators upfront and let the one(s) you pick do all the heavy lifting.Good luck!

The market has also been very competitive for these types of properties since there are so many first time home buyers looking as well. 

I know the Phoenix market is very competitive right now, however.Best of luck!

Also anything more than 4 units (5plex+) is also out of question, since I won't be able to get competitive rates with 10% downpayment.My strategy to invest each year $100k downpayment to a 3plex/4plex until I can make $3500/mo cashflow positive income.

I realize this is likely very location specific, so I'd look at somewhere like Orlando, FL where the market is hyper-competitive as a "worst case" scenario.As background, I am very new to the idea of STR properties as an investment option and am trying to wrap my head around how best to evaluate properties. 

Typically, those are going to be very tight especially in competitive seller's markets where pricing is very aggressive.

Something like mulch will float away and become a disaster after the first heavy rain.

Many, if not most, markets are very competitive right now, so there is a lot of competition.Depending on they type of property you get under contract, you can be looking at about 30-45 days for residential and 60+ days on commercial properties.