All Forum Posts by: Alex S.

Thank you, @Brad S.

I want to put in an offer on two separate 4-plex buildings that are adjacent to each and owned by the same person, but on separate parcels.

Will the appraiser value it on the income approach or the comp-based approach?

I want the income approach, because that will be much higher in my area!

I have all smaller units/houses as STRs.  The average booking lead time is 22 days.

So, I use moderate cancellation to incentivize booking (full refund up to 5 days prior).  About 3 times per year I get hosed by someone canceling a 2 week stay at 5 days and 1 hour from check-in.  It messes up my schedule.

I'll always be pet friendly if I can!

It definitely increases your pool of guests in my market.  Some units just don't make sense for it...upstairs apartment, no yard, microfiber fabric couch, etc.

Schlage Encode is awesome, reliable, and integrates with Hospitable.com.

Hospitable sends my guest an automated message before check-in and it automatically sets the lock code to the last four digits of the guest's phone number (or a random combo if you prefer).  The code won't work prior to check-in time and it deletes the code when they leave.

I don't do anything.

The bad side...you can't find a Schlage Encode anywhere right now.  I need to buy two more, but they are sold out and unavailable everywhere.

@Trevor Praetsch What did the city end up saying?

I have a 4-plex that is an easy conversion to a 5-plex.  Granted, mine is in Illinois, but I thought your experience might be informative.

I can't imagine that your residential financing would be affected at all...as long as you are making the payments.  Obviously, when you sell it, the buyer will require commercial financing, but I viewed that as a positive thing.  Commercial financing is based on cap rates and the income produced, not comps.  That adds a lot of equity for me right off the bat! 

You'll definitely need some comps to know if you could really get $1,000/night and then also what the occupancy rate would be in that area.  Check AirDNA and Rabbu as a starting point, but clicking around on AirBnB website is often the most helpful to find your competition.

@Johnathon Sesi

😂

Don't get all conspiracy on me!

2nd home loans are getting more expensive, but that doesn't mean they're obsolete for every deal.

"This week, the Federal Housing Finance Agency announced it’s increasing the upfront fees for second-home loans sold to Fannie Mae and Freddie Mac by as much as about 3.9% starting in April.

Redfin estimates that’ll cost a typical buyer an extra $13,500 on a $400,000 home. Fairweather said regulators may be trying to get a handle on what could be an emerging bubble in the housing market."

@Ava Yuergens let's reframe this question.

Is it possible that STRs in the Smokys will experience a pull-back in demand and see demand/revenue return to ~2018 levels?  Yes.  A guarantee?  No.

Put a dollar value on that risk and price it into your calculations of ROI.

Overall, I'm pessimistic about some of the deals people are buying in vacation markets right now. AirBnB has grown radically over the past few years and these emotional bidding wars for cabins by people with zero REI experience are appreciating the prices vastly higher than the admittedly high inflation rate. It feels very bubbly.

If you are in a long line of "people with $100K cash" bidding up a property...you should probably be asking yourself: What niche investment strategy am I pursuing?  Why am I different than all these people?  It isn't a sound investment strategy to bet everything on market appreciation.  This isn't just free money.  Guac is always extra.