A Painful Inspection

AIRBNB Analysis Experiment 1.0 Day 2/8

Offer and Negotiations

As I mentioned in my previous post, my comparative market analysis pegged the property value at $770,000 and the list price was $540,000 having recently been dropped and relisted. The BRRRR book emphasizes how important it is to buy equity to make the refinance feasible. My CMA lands the equity purchase at a whopping 30%. Even with my guesswork of $120,000 in improvements, We should still be able to refinance all of our money back out. I requested any current Airbnb income data the sellers had to help support my income estimation. It turns out the sellers were living in the basement while running the main floor and loft as an Airbnb. After going through the numbers that they achieved with their setup, I was a lot more comfortable with my Income estimate of $5,700 a month. On top of the income data, the property was actually booked every weekend through August at $250 a night. On July 29th I decided to offer the list price with standard due diligence subjects, such as financing and inspection. I also threw in the inclusion of furnishings and the sellers happily excepted with 1 minor condition - They wanted to take their bed and a few personal items.

A Painful Inspection

That Saturday of the August long weekend my investing partner Jerry and I went tubing down the Alouette river with some friends. While stepping down from the river bank onto a rock in the water my foot immediately slipped out and I landed with my full weight on my left knee cap. It didn't hurt as bad as you would think at the time and I still tubed down the river. I had booked the Hemlock Inspection for 2 days later on Monday. Once Monday rolled around and I realized my knee was still severely pained and swollen, I was starting to think there might be some significant damage. I found some old crutches and drove up to the inspection and hobbled around as best I could. Shout out to the inspector- Aaron Borsch from Core Property inspection for helping me get around.

It turned out there were a whole bunch of superficial reno's required including the upstairs living room floor, a few old windows, a few closet doors, the kitchen could needed an upgrade and the exterior doors needed some adjusting with some new weather stripping. The more substantial repairs are likely to be the basement which needs to be completely remodeled and the 2 decks that need to be redone with a more reliable material. The deck with the hot tub was extended with some 2x6 jimmy jacked together with a few wood screws. The handy man did at least have the sense to bolt the boards together underneath the hot tub side of the deck, but I can imagine the hot tub being a popular spot in the winter and this place is going to accommodate 12 people. Not a liability risk I'm willing to take. Here is the link to my google drive with the inspection report to anyone that might be interested in the details-  https://drive.google.com/file/...

On Tuesday I finally booked an appointment for Wednesday to see my family doctor. He sent me off for x-rays and the radiologist sent me straight to the hospital. Turns out I broke my knee cap into 3 pieces and I'ts going to take a while to heal...

Subject Removal and Financing

So if you read the first post in this series you might remember that I have a decent load of debt and my credit score has stopped improving due to my own reckless decision to immediately be a full time realtor and not a longshoreman. What I didn't mention is that Jerry just got a job upgrade from an auto-mechanic to a heavy duty mechanic and he has around $400,000 worth of equity in his home. We struggled to make the financing work with our first mortgage broker and unfortunately had to ask for a financing subject extension. The seller agreed to the extension and at the recommendation of the listing agent, we used a new broker that is familiar with Hemlock deals. Our new superstar broker put the deal together within a few days and we removed subjects August 16th. That brings us to today. I have been reviewing my Airbnb hosting book- Get Paid For Your Pad, taking notes and listening to the GPFYP podcast to learn more about other hosts experiences. Right now as I write this up I am panicking about getting the refinance money into Jerry's bank so we can get a bank draft for the subject removal deposit which is due today.

Promises for Tomorrow

Tomorrow I will post the process of preparing the Log Cabin for Airbnb.