All Forum Posts by: Mike Cossette

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $189,000
Cash invested: $200,000

STR INVESTMENT IN CENTRAL FL - Invested in this 2bd/1bth property as a short-term rental and family vacation home, in Yankeetown FL, Across the street from Marina, with direct access to Withlacoochee river.
Currently It cashflows enough to cover all of its own expenses and throughs off a 5% cash on cash return (before repairs). Has appreciated by about 20 to 25%, doubles as a vaca spot which we use 4 weeks out of the year.
STR online listing here - https://evolve.com/vacation-rentals/453678

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

Was already looking to do an out of state STR Vaca investment on or near the coast, (Backstory) Recently partnered in the purchase of an island off the gulf coast of central FL in Aug 2020 to develop and rent out to campers/fishermen etc.. but the logistics were so difficult to get out there it was almost impossible and to work on it. So we needed a cheap place to stay while we were there in order to effectively use, and develop the island. FSBO opportunity kind of fell in our lap during a visit

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

When visiting the Island we found this FSBO (For Sale by Owner)directly across the street from the marina we used to access our island. Being a FSBO there was less competition than on-market deals, we negotiated directly with the owner paying a 1% commission to a local agent to write up the deal. included 90% of the furnishings, kayaks, fishing equipment ect. for an additional $6,000. 30 day close, $1,500 in EM no option/due diligence period. Had it inspected owner did not negotiate on repairs.

How did you finance this deal?

Why did we pay cash for this property? As we were was needing to buy it through my recently created TX-based LLC, out of state vacation home purchase, and on the coast of Florida, the insurance requirements and massively inflated, loan costs, and high-interest rates, IT just didn't make any sense at all to borrow from a traditional lender, and we were looking to deploy the cash fairly quickly.

How did you add value to the deal?

Phase 1 Winter 2021- Added a New Septic, a complete bathroom remodel, termite eradication, added HVAC window units to each bedroom, and mold removal, throughout.
Phase 2 PLANNED Late Spring 2023: Add a master suite onto the property turning it from a 2bd/1bth that sleeps 6 to a 3bd/2bth that sleeps 10. Hopefully doubling the return.

What was the outcome?

FUTURE PLANNED OUT COME (Fall 2023): Once we stabilize the new return as a 3bd/2bth and we build enough history at the new revenue rates, (2023) we plan to refinance out of it on a DSCR type (Loan based on property income) and re-deploy that initial investment.

Lessons learned? Challenges?

1) Central Florida is a tough place to find folks to trust when out of state.
2)Always be present for an inspection if you have never used or don't have trust in the inspector, especially in central Florida.
3) Make sure you have a system in place to see or track the coming and going of everyone, including your team.

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

- Nancy Little lewis for hosting, cleaning, and property management
- David Strickland for repairs and contracting services

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $189,000
Cash invested: $200,000

STR INVESTMENT IN CENTRAL FL - Invested in this 2bd/1bth property as a short-term rental and family vacation home, in Yankeetown FL, Across the street from Marina, with direct access to Withlacoochee river.

Currently It cashflows enough to cover all of its own expenses and throughs off a 5% cash on cash return (before repairs). Has appreciated by about 20 to 25%, doubles as a vaca spot which we use 4 weeks out of the year.

STR online listing here - https://evolve.com/vacation-rentals/453678

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

Was already looking to do an out of state STR Vaca investment on or near the coast, (Backstory) Recently partnered in the purchase of an island off the gulf coast of central FL in Aug 2020 to develop and rent out to campers/fishermen etc.. but the logistics were so difficult to get out there it was almost impossible and to work on it. So we needed a cheap place to stay while we were there in order to effectively use, and develop the island. FSBO opportunity kind of fell in our lap during a visit

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

When visiting the Island we found this FSBO (For Sale by Owner)directly across the street from the marina we used to access our island. Being a FSBO there was less competition than on-market deals, we negotiated directly with the owner paying a 1% commission to a local agent to write up the deal. included 90% of the furnishings, kayaks, fishing equipment ect. for an additional $6,000. 30 day close, $1,500 in EM no option/due diligence period. Had it inspected owner did not negotiate on repairs.

How did you finance this deal?

Why did we pay cash for this property? As we were was needing to buy it through my recently created TX-based LLC, out of state vacation home purchase, and on the coast of Florida, the insurance requirements and massively inflated, loan costs, and high-interest rates, IT just didn't make any sense at all to borrow from a traditional lender, and we were looking to deploy the cash fairly quickly.

How did you add value to the deal?

Phase 1 Winter 2021- Added a New Septic, a complete bathroom remodel, termite eradication, added HVAC window units to each bedroom, and mold removal, throughout.
Phase 2 PLANNED Late Spring 2023: Add a master suite onto the property turning it from a 2bd/1bth that sleeps 6 to a 3bd/2bth that sleeps 10. Hopefully doubling the return.

What was the outcome?

FUTURE PLANNED OUT COME (Fall 2023): Once we stabilize the new return as a 3bd/2bth and we build enough history at the new revenue rates, (2023) we plan to refinance out of it on a DSCR type (Loan based on property income) and re-deploy that initial investment.

Lessons learned? Challenges?

1) Central Florida is a tough place to find folks to trust when out of state.
2)Always be present for an inspection if you have never used or don't have trust in the inspector, especially in central Florida.
3) Make sure you have a system in place to see or track the coming and going of everyone, including your team.

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

- Nancy Little lewis for hosting, cleaning, and property management
- David Strickland for repairs and contracting services

Thanks, Conner, it is zoned SF-3 which allows up to 3 units, & 4400sqft is the FAR Max so no zoning changes were needed, it's even possible to add a third 1200sqft unit. 

Investment Info:

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

Purchase price: $800,000
Cash invested: $170,000

I Purchased a 3bd/2bth 1300sf bungalow in DT Austin. In 2018 I took out the carport and built a 3bd/3th 1900sf house in its place. Turning the SFR into a duplex, renting out the old 1,300sf side for $10,000/mo gross as a short-term rental. The rental income potential financed the construction cost of the new unit in which I live. (2022) Net Income $100K/yr, Property Value 2.1M, $8,000/mo positive cash flow.

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

Running a hostel, or an STR for travelers and big groups in Austin that was affordable was a dream for us as experienced travlers. The House hack aspect gave us the ability to stay Downtown, and live in a brand new construction house while running a profitable and fun business. The complexity of finding the right combo of financing, and the planning, permitting, and construction was something I have experience in as a real estate professional.

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

The negotiations came into play with the city permitting department, the lenders, and the builder. The property acquisition itself was pretty standard. After multiple lenders turned down the project a local in-house lender built the financing around the deal he saw as a great investment. The permitting and construction took 22 months. 1 year of going back and forth with the city on plans, exceptions, re-drawings ect.. then 10 months of construction.

How did you finance this deal?

First acquired with a conventional mortgage Fannie/Freddie owner-occupied 30yr fixed. Then refinanced with an In-house" lender on an Interest-only construction loan, using the STR potential income ( that was based on our previous off and on weekend rental rates and history) combined with our DTI. Rolled the cost of the new construction project in with the balance of the original mortgage. Third, we refinanced again once construction was complete into a 30yr Fixed owner-occupied jumbo mortgage.

How did you add value to the deal?

Turned a small 1950s single-family bungalow into a small multi-family short-term rental business by adding a brand new construction unit.

What was the outcome?

A huge success, especially after a few years and a pandemic the STR business income covers PITI, business expenses & a big chunk of our daily living expenses.

Lessons learned? Challenges?

Challenges finding the right lender to finance a deal based on projected AirBnB income in 2017/ &2018 before it was as common as it is now. Challenges with the city of Austin permitting getting them to approve a duplex construction with a brand new construction house attached to a 1950s house in a historic neighborhood. Challenges building a project one side being pier & beam construction other being slab, and both being connected.

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

Recommended in-house lender Southwest Bank for non-conforming deals that make sense logically and realistically but may not fit the conforming box or standard lender requirements. As for an agent, I would shamelessly recommend myself in the central Texas area.