Airbnb (From Transportation Manager to Real Estate)

[Michael Cassilly]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $245,000
Cash invested: $26,500
Sale price: $300,000

I've been a long time lurker on this forum and never made the time to sit down and post what brought me back into what my family has dealt in since the 40's in Louisville. Needless to say this was the business of buying, selling and flipping homes in the area know as the Highlands and nearby neighborhoods.

What made you interested in investing in this type of deal?

My daughters mother and I wanted to purchase a home to live in. I wanted a Duplex or Multi Family unit property, whereas she wanted a traditional home from Better Homes and Garden. I was brought up on the notion that your first purchase should be an investment vehicle contrary to her upbringing in a doctors family where mom picked out the house. We settled on a home that footed most of our key features

How did you find this deal and how did you negotiate it?

I was working long hours as Transporation Broker for a company based out of Louisville and at the time had a 1 year old and was renting out a flat in the highlands. As stated above we compromised this started out looking at duplexs and homes with unfinished basements in the 200-300K range. We Purchased the property as a single family home to live in and finish out concrete slab basement (with walk-out steps) into income generating Short Term rental to offset the mortgage.

How did you finance this deal?

The home was intially too be financed with a FHA 203K but later we settled on a traditional FHA and paid for the renovations out of pocket.

How did you add value to the deal?

Growing up my family from 6-13 my parents had me do anything from demoing walls, building paver patios, light electrical and digging trenchs for new water/gas line connections. This knowledge saved me money.
Secondarily having turned the unit into an Airbnb it showed me the value of the untapped short term rental market which wildly outperformed the primary rental market and gave us flexibility over tenant selection

What was the outcome?

The home was sold when I left my job in Transportation to fund my real estate endeavors. Its been roughly 4 years from the purchase of that home and it catapulted me into the world of real estate that I spend my time in now.

Lessons learned? Challenges?

A couple points.
1. I would never do another FHA when better products are available (for those who qualify), Navy Federal NO PMI 5% loans or their Homepath 0% product. Every dollar spent on PMI is not something you get back.
2. I would have looked at more homes and found a better deal. Hindsight is a very interesting thing. I could have also got a better price on the home I purchased but I was hot to become a home owner.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

A little about me:
I am a licensed agent in Kentucky and my specialty is residential, commercial, short term rentals, wholesaling and off market deals. I'm an open book so feel free to reach out though I remain very busy.
Since doing that I have flipped quite a few homes in the highlands both with Traditional Construction Loans/Hard Money Loans/Private Money loans. I am currently wrapping up a 5 unit short term rental renovation in the heart of the Highlands that will bring me too 15 units.