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All Forum Posts by: Ben Kelleher

Ben Kelleher has started 2 posts and replied 4 times.

Post: Looking to jump into to STR in Florida, considering paying all cash

Ben Kelleher
Pro Member
Posted
  • Posts 4
  • Votes 2
Quote from @Travis Timmons:

I wouldn't even say that it is about saturation necessarily. There are just some markets that don't require you to be that good. There has been serious supply growth everywhere. The Disney market is mature with a lot of developments of identical houses. You have to stick out. That can get out of hand fast. You're spending that money before you earn a dime of booking revenue.

Another random example closer to home for me is Waco, TX. The price point is lower, but you're competing against top notch design. The traveler expects the house to look like Joanna Gaines did it. 

Compare that to mature vacation rental markets in your home state of Maine (as a random example). They're old, tired properties that only rent at a 7 night minimum from May to October. It's really easy to beat that competition. That market is every bit as mature as others; supply has also increased drastically while margins have compressed, but you don't have to be as good to succeed.

@Travis Timmons -- That context is helpful, as part of our STR investment strategy will also be to invest in our local market, which I agree is an easier market to stand out in without a dramatic investment.

Post: Looking to jump into to STR in Florida, considering paying all cash

Ben Kelleher
Pro Member
Posted
  • Posts 4
  • Votes 2

Thank you for the input, @Travis Timmons & @Jonathan Greene. I greatly appreciate it. As Travis mentioned, there is motivation by the location, as we frequent the area for personal use and vacation, but that is not the only motivation. The saturation does give me concern, as it will be hard to make sure the property stands out from others when it is so far away from home without significant time and effort to keep up on theming, not to mention that you are at the mercy of your management company for some of the placement.

With respect to rates, I have no delusions that the rates will come down, the refi is more a protectionary measure to make sure that we do not end up upside down on a mortgage if we just pick an arbitrary number and say, put 40% down on the property at 8%. It also allows me to get a realistic idea of vacancy rate as well as other anticipated expenses. Again, thank you both for taking the time to work with me to understand the challenges, your responses are invaluable to me. 

Post: Looking to jump into to STR in Florida, considering paying all cash

Ben Kelleher
Pro Member
Posted
  • Posts 4
  • Votes 2

Recently, we did quite well on a business deal and found ourselves with quite a bit of cash to invest, particularly in real estate. We have chosen to target 5-6 bedroom homes in Kissimmee, FL due to the excellent short term rental market. Our plan is to buy the first home in cash, likely $550k-$650k, operate it under management for 3-6 months, then refi to pull out what we feel the property can support for a mortgage so we do not end up upside down. Then we will put the cash from the refi towards another property with even less capital investment than the first property, etc. Are there any major flaws with this plan, other than tying up a significant amount of capital on the first property? I see a tremendous advantage to getting deals by buying with cash now since we have it, as well as making sure we do not end up underwater on a mortgage due to unforseen expenses as we are new to the STR game. Please take a minute and shoot some holes in this plan, if there are any. I'd like to go into this as educated as possible. Thanks!

Post: How to structure and REI Company

Ben Kelleher
Pro Member
Posted
  • Posts 4
  • Votes 2

I'm preparing to enter the REI world, looking to close my first deal before the end of 2023. My goal is a combination of STR and LTR, investing mostly for cashflow. My question is-- What legal structuring do I need to do to make sure that I'm doing this the correct way. In my mind, creating an LLC or S-corp makes the most sense, and I'm guessing that general liability insurance would probably be a good idea to insulate myself from as much liability as possible as a landlord. Anyone else have suggestions or input?