All Forum Posts by: Bill B.

I like this better than most flipping “solutions”. You would have to be careful if you invest any money you can’t afford to lose. Imagine the seller convinces you the property is worth $500k. You want to add $100k and sell for $700k. But several problems could come up.  

The seller hey, sounds great but I need to sell within 4, 5, 6 months. So you finish in 3 and the market has softened a little and you can only get $650k. Pay $65k in selling costs, concessions, etc etc. You’ve got $585k net. Seller asks for his $500k if you forgot to conclude selling costs but maybe you get him to pay 1/2 selling costs so he only gets $468k? So you make $17k?

Do you get to do the work and charge whatever you want for labor rehab? Essential buying yourself a job and taking the profit before the sale. Or do you hire an unrelated third party?

What If the rehab isn’t done in 4, 5, 6 months and the house is worth the same $500k more or less in its unfinished condition. (Permits, storm, covid, whatever.) He seller guaranteed their $500k or do they lose $50k?

You’re saving 1/2 the selling commissions and the carrying costs for giving up 1/w the profit. That’s your judgement call. 

The “seller’ is living in a construction zone, giving up on a known closing date, trusting your numbers and work for a possible gain, that’s their judgment call. 

It could certainly workout and I certainly like it better than the wholesale plan of just trying to steal properties from uninformed,  ignorant, old, or trusting owners with equity. (Unlivable/unsellable run down dumps being fixed up are another good use of flippers.)

Check the older BP podcasts with STR one the title or the one where they interview BP book authors about their STR book. At least one of them had links to lists of STR needs per room.

You can also s=find the podcast sponsored by furnished finder, they’ve published at least one list. Good luck. 

Is this in an area you manage? What do you think of the area compared to other local areas? If so what’s your very rough ballpark on nightly rate, yearly income gross/net?  Does it make sense at this price? Or are better deals yet to come?

Tennessee and South Dakota are about the only other states without income taxes I’d probably consider. And I’m not excited about SD weather. How close can you fly in commercial?

-Thanks for the timely updates.  They’re both informative and entertaining. 

It looks very nice, but still seems expensive to someone who doesn't know the market. Are the new Airbnb rules/emulations at least partially to blame for accelerating the collapse? I don't do any STR but the last Kathy retake podcast I listened to talked about a lot of bad changes.

Pay nothing or a small portion to hold the property until 3 days before stay and then cancel without penalty.

Allow credit card charge back months later even with no complaints and Airbnb still gets paid. 

Airbnb can hold your payments for violations they think you committed without telling you what violation, when you’ll get money, or when it will resolved. 

Again no experience with them/this but sounds like they’ve decided they’re the only game in town and screw the hosts, they’re going to make more money. 

If you’re going to do a 1031, pick a QI that can answer these questions for you, with confidence. You can’t use “strangers on the internet” as your defense against the IRS invalidating your exchange. 

Heck. Use @Dave Foster. He literally wrote the book on exchanges and will have all the answers you need. And they are included in the very affordable exchange fee, no extra charge. 

Why are they getting the water bill instead of you?

Is it $1,000 for 9 months or one month? (Did they have 8 opportunities to spot it or zero?)

As mentioned many cities will give you a one time credit if you have it repaired. Though usually that’s a main line leak in my experience. 

Yes you should pay it. But you should get a new PM anyway. 9 M0NTHS without a tenant? 9 weeks is unacceptable. You’re worried about $1,000 when the vacancy probably cost you $20,000?

Without a competitive advantage how are you going to do better in that "foreign" market than the one you know? I assume you aren't close enough to SD border to consider investing there to avoid the state income tax. If you don't have friends/relatives who KNOW real estate, not just live there. Keep scouring your market for a new house hack and rent out your spot in your old house hack after you've lived there a year. Only a STR investor can even consider paying more for a property than a house hacker, competition shouldn't be your issue. Just wait for the good deal, make opportune offers, and get the better deal by being the buyer that doesn't HAVE to buy. Good luck.

If you’re the minority can you sell your share to the majority? Did they make all the bad decisions and you were just along for the ride or were you consulted as it went over budget? Are you sure there’s no deception/theft involved? (From partner(s) or rehab company or in cahoots?)

if these weren’t your decisions or you weren’t consulted as the train left the rails your problem may be your partner as much or more than the property. Would you qualify to buy it as a new primary? Is this possible at a really discounted price. (As your majority partner would/should be taking the lion’s share of the hit. Plus 5-6% off for no realtor, maybe you can make that work?) anyway, good luck. 

I LOVE how the penalty is 5x “mean rents” not the rent the tenant is paying. As if this lawmaker is actually smart enough to know the only people affected will be people paying way under market. Imagine some old landlord is charging $500/mo when they should be charging $1,200. They can’t raise rents to $1,200 and their penalty is 5 x $1,200 not 5 x $500. 

I also LOVE rent increase caps without insurance and property tax caps. So they can literally drive landlords out with non-owner occupant tax increases of w0% per year for 5-10years. 

Assuming that doesn’t happen I assume nobody is planning on an average rent increase every year for the next decade to be 10%. So as long as your charging market rent and increase 10% or market, whichever is higher ever year. You SHOULD be fine. I wonder if that smart lawmaker understands he’s forcing rent increases. Maybe they should make all politicians take an economics class.  

Is the title of your post to be why AREN’T more people investing there or is it truly why are they?

I’ll tell you why I’m not…

Weather

Property taxes

Income taxes

Insurance

I have no competitive advantage 

If you live in a worse market. (Worse weather, with higher taxes and insurance) And you’ve lived there, know someone who lives there, or are willing to move there, then maybe? But you’d still be purposely giving up on better markets you could have chosen instead. 

Forget everyone declaring anything between positive and negative 3% price changes. There is ZERO chance you could tell me within 3% what your house is worth today or 5+% what it was worth a year ago. (You can give comps, or a listing price, not even a guess what the after repairs/concessions best offer net is.)

And if you plan to hold for a few years. Paying 1% higher property taxes, double insurance costs, giving 5-10% to the state in income taxes will affect you more than that price change. Good luck and unless you think prices will be lower in 5 years, get started.