Here are a few terms/metrics, definitions, and formulas that every short term rental investor should know. Might be helpful to those just starting out.
1. Hold period - the duration of time between the acquisition of an asset and its sale.
2. Cash-on-Cash Return - rate of return ratio that calculates the total pre-tax cash flow earned on the total cash invested. Here's the formula:
(Cash Flow After Debt Service / Total Cash Investment)
If I invested $100k and CF $10k in year 1, my CoC is 10%.
Dec 26, 2021 • 21 tweets • 4 min read
In most STR markets, a 1BR requires as much as work as a 5BR but makes around a 3rd of the income. Lots of markets are undersupplied by larger homes. The biggest barrier to entry is purchase price.
Here's how to buy a large STR without a ton of up front cash and make a killing:
Find a secondary or tertiary market (that isn't specifically a vacation rental market) with STR occupancy greater than 65%. I'm talking markets like Austin (68%) Orlando (67%) Portland (83%) Salt Lake City (77%) or Charleston (76%). Identify the general target area for STRs.