Thoughts on Duplex Purchase w/ some Airbnb Activity - Buffalo

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Thoughts on Duplex Purchase w/ some Airbnb Activity - Buffalo

Laura R.
Rental Property Investor · Austin TX · Member since 2019 · 20 posts · 6 votes

I'm hoping to get further in my attempts to purchase a vacant duplex home in City of Buffalo soon without being outbid. 

I'm thinking about renting 1 unit long term and keeping 1 unit open for personal use during late summer/fall. Sort of like a second home house hack. 

My first question is, how feasible would it be to Airbnb the personal unit the other months of the year when we aren't using it? I see there are some City registration requirements/fees and it doesn't look like there are a ton of Airbnbs in the city already. My goal would be for it to be quiet apartment stay and not a party house or nuisance, I would not want to disturb the long term tenants or neighbors. 

Second question, what is the best way to approach this from a mortgage perspective? I'm already pre-approved for a conventional investment loan and my intention was to create an LCC and transfer the deed after closing. I'm not sure if a second home loan would be any benefit in this scenario vs. an investment purchase loan? 

I'm out of state so I'm going to need a property manager. I'm not sure if any property management is doing both long term and Airbnb but I guess could go with two separate companies worst case. I would appreciate any recommendations. 

Thank you! 

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Kevin Castano
Real Estate Agent · Queens, NY · Member since 2018 · 10 posts · 12 votes
4y

Hey Laura,

This sounds like a great idea. If you were to use the second unit for airbnb you would need to set the exception on your airbnb listing that no parties or events are allowed, music cant be loud after 10 pm , etc .. and what your minimum person occupancy would be and plan your calendar accordingly for when you would be using it. 

The 2nd question would be a great question for your mortgage professional and to weigh out the pros and cons and what would make sense for you.

In terms of property management it really depends on if the property management company is familiar with the airbnb process and what you expect them to do for you. 

So from my experience, I am currently a co host/manager for an AirBnb where the landlord is out of state. My position is really boots on the ground. i am in charge of communicating with guest, scheduling the cleaning team and taking the laundry to the cleaners, dealing with issues incase something on the property isn't working, double checking the cleaning teams work to make sure the property is in tip top shape. So it really depends on what you would need your manager to do for you. 

Hope this helps.

Best, 

Kev

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  • Kevin Castano
    Real Estate Agent · Queens, NY · Member since 2018 · 10 posts · 12 votes
    4y

    Hey Laura,

    This sounds like a great idea. If you were to use the second unit for airbnb you would need to set the exception on your airbnb listing that no parties or events are allowed, music cant be loud after 10 pm , etc .. and what your minimum person occupancy would be and plan your calendar accordingly for when you would be using it. 

    The 2nd question would be a great question for your mortgage professional and to weigh out the pros and cons and what would make sense for you.

    In terms of property management it really depends on if the property management company is familiar with the airbnb process and what you expect them to do for you. 

    So from my experience, I am currently a co host/manager for an AirBnb where the landlord is out of state. My position is really boots on the ground. i am in charge of communicating with guest, scheduling the cleaning team and taking the laundry to the cleaners, dealing with issues incase something on the property isn't working, double checking the cleaning teams work to make sure the property is in tip top shape. So it really depends on what you would need your manager to do for you. 

    Hope this helps.

    Best, 

    Kev

    1Reply
  • Tim DelaneyPro Member
    Buffalo, NY · Member since 2018 · 790 posts · 530 votes
    4y

    @Laura R. I believe the city has some registration requirements, although I have not looked into them yet. I would recommend listening to Avery and Luke Carl - they offer advice on how to self manage your STR remotely. If you are paying management fees for the long term and STR your numbers may constrain what you are able to pay for the house.

    As for switching the name on the deed after closing - you’ll want to carefully read your mortgage docs. That is often not allowed and can trigger a due on sale clause. You may be better off with excess insurance if you are worried about liability.

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  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    @Laura R.

    There are some investors that AirBnB one unit and long term lease the other. There are certain pockets of the city that have potential for an AirBnB and some that will not attract much activity.

    Some lenders look the other way on changing the name on the deed. Some even remove the due on sale clause but it’s up to the specific lender. There are local portfolio lenders that will work with you on that, as long as you are personally guaranteeing the loan.

    The management part may be tough. We manage long term leases but we do not do AirBnB. It’s a whole different ball game and requires different business systems. I don’t know of any companies in Buffalo that do both.

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  • Laura R.
    OP
    Rental Property Investor · Austin TX · Member since 2019 · 20 posts · 6 votes
    4y

    Thanks everyone for the advice! The lender is telling me it won't make much difference for an investment vs second home loan. I have heard several people in the area say that they had no issues transferring the loan afterwards. Does anyone have any experience with m&t bank in that situation?  

    I'm looking for an updated/move-in ready duplex in the city, preferably in an up and coming, walkable area. Ideally around or under $250k. Hoping things might cool down a bit with the interest rate increase. That might be at odds with doing Airbnb, I'm assuming most would try to stick to either Elmwood Village or North Buffalo area for Airbnb purposes.

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  • Khaled Morad
    Lender · Tampa, FL · Member since 2018 · 422 posts · 210 votes
    4y

    Hey @Laura R. I am that mortgage professional that can answer this for you :) ! I am licensed and work in Florida, so no sales pressure from this guy! (I do have my NYS MLO extension, but my company does not operate in NY.)

    The answer is too long for this forum, but in short: 1. The second home loan is pretty much gone with the April 1 rate hike. 2. Transferring the title does not regard the mortgage type. 3. Consider this, even if you were to use a second home loan, you cannot use the income from the property to offset your DTI. 4. There's some very reputable Airbnb managers in Buffalo (I don't think they are on BP) that can give you solid information on regulations and potential numbers.

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  • Jaclyn Lignos
    Property Manager · Buffalo, NY · Member since 2016 · 9 posts · 5 votes
    4y

    Hi Laura,

    My husband and I own a duplex in downtown Buffalo and one unit has long term tenants and one is an Airbnb. The Airbnb has performed extremely well and we will likely turn the other unit into and Airbnb as well when the long term unit lease is up. (We have other long term units throughout Buffalo)

    I manage the Airbnb and we never have an issue with the Airbnb guests disrupting our long term tenants. I make it very clear on our Airbnb listing and house manual what the rules are (parking, quiet hours, etc) and I price the unit so we “weed out” guests who potentially won’t respect the rules. We always have great guests. 

    I would be happy to discuss it further if you’d like to reach out!

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