All Forum Posts by: Ade Adesuyi

I have used the RentRedi app for the last 9 months as a property owner, and I love it! Easy payments for my tenant and direct deposit is very efficient 

I think it depends on your risk tolerance.  There is no correct answer.  What do you use for your CapX, Maintenance and Vacancy percentage? Assume 5% each for example.   The capital reserve should reflect that.   Let’s say I had 10 units with a 1M value.  If I’m grossing 100K year  I might hold 15% each year for Cap Ex, Maintenance, and Vacancy.  I’d hold 3-5 years in liquid reserves. Maybe 50-60K. That should me enough to float the properties if you loose a roof and half your tenants for a few months.   If you want more of a safety margin you might want more.  If you have a family member who could bail you out you might feel comfortable with less.  

I’d personally hold the reserve as Cash Value in an properly constructed overfunded Whole Life Insurance Policy rather then the bank.  You’re young so you could build the cash value as you build your real estate portfolio. For the record I’m not an insurance sales person. 

However you store the liquidity, bank, life insurance, investments etc. once you have the sufficient reserves you can take the Cap Ex, Maintenance, and Vacancy as Cashflow until you need to replenish the reserves.  

I think it depends on your risk tolerance.  There is no correct answer.  What do you use for your CapX, Maintenance and Vacancy percentage? Assume 5% each for example.   The capital reserve should reflect that.   Let’s say I had 10 units with a 1M value.  If I’m grossing 100K year  I might hold 15% each year for Cap Ex, Maintenance, and Vacancy.  I’d hold 3-5 years in liquid reserves. Maybe 50-60K. That should me enough to float the properties if you loose a roof and half your tenants for a few months.   If you want more of a safety margin you might want more.  If you have a family member who could bail you out you might feel comfortable with less.  

I’d personally hold the reserve as Cash Value in an properly constructed overfunded Whole Life Insurance Policy rather then the bank.  You’re young so you could build the cash value as you build your real estate portfolio. For the record I’m not an insurance sales person. 

However you store the liquidity, bank, life insurance, investments etc. once you have the sufficient reserves you can take the Cap Ex, Maintenance, and Vacancy as Cashflow until you need to replenish the reserves.  

Hi Chad! Congrats on this decision. Vacation rentals are a lot of fun to own and use. My biggest thing I would tell you is do the right research before you buy. I just taught a workshop on this in Canada last month and I was shocked to see how many people don't even know how to research vacation rentals. I'm going to suggest a website to you, it's called AirDNA.com. They charge a fee but you can get all the data on the average vacation rental incomes per area that you want to invest in. Once you have that data, you'll want to use a spreadsheet and factor that in with the other expenses such as liability insurance, management, cleaning etc. There are about 10 additional expenses associated with owning a vacation rental that you won't see on a traditional rental. I just urge you not to buy the first thing you fall in love with and make sure that it's a good move financially also. Use Airbnb and VRBO to see what rates your potential competition is charging and check their calendars to see how often they're booked.  Most people can be guaranteed at least 12 weeks no matter where they buy because of holidays. Above and beyond that is up to you or the manager you hire. There is definitely a strategy to it. 

Good luck! 

So the HELOC insanity continues. Someone mentioned that Wells Fargo give HELOCs to investors. The one major bank I missed. So I get all the paperwork submitted to underwriting. They tell me they will lend me $100K at 4.125% and I think awesome!

Then they come back two weeks later and say I was denied. It turns out they have a 4 property limit. This is NOT A MORTGAGE LIMIT. It is a property limit. It doesn't matter if you have 5 or 100 house free and clear. They see you as too much of a risk to lend money to. WTF?