In general, if you're showing cash flow from an investment property, it's fine as long as you have reserves in case something goes wrong.

I think that new investors underestimate the capital needed to manage any property, LTR or STR, and so if you're not going to be left with any reserves, that's a very risky position to be in.

**not factoring in PM expense or reserves**Adding leverage can also boost returns and this example above will hold true with financing when comparing apples to apples cost of capital. 

Key principles to look for in an operator, knows the market, buys for Cash Flow, Secure long term debt, and some adequate cash reserves.

Coming out of finance, I banked profits for a reserve for lean times; yet it still doesn't assuage the anxiety that happens from each booking that cancels.

I know it comes with the territory and we do 300-500 reservations per month so the law of averages apply but people demanding a 50% refund because the wifi went out for 2 hours after a Florida summer thunderstorm and then trashing your review because they did not get their unreasonable request granted is the worst. 

The Federal Reserve did increase interest rates in November as well as in December which most likely will keep downward pressure on prices going forward.

If you have a hard lockbox that means all the income that is generated will be held in a reserve account in case of a possible shortfall in the future.

The last thing you want to do is buy a duplex and have no reserves and stretch yourself too thin.

Reserves for repairs and replacement?