All Forum Posts by: Ben Rodriguez

I don't know how much this can help, but my financial advisor said you can actually take as much money out of your IRA as you want and you won't be charged a penalty if it is all put back within 60 days (Traditional Mutual Fund IRA). This was a recommendation for me during my last house purchase so I could make a downpayment on a new house as I was working to sell a rental property. Now, perhaps I misunderstood and he meant you could put it back in the way of a contribution which has that annual maximum, but he works for Edward Jones and hasn't steered me wrong thus far.

The only thing I think I wish I had thought more about was the Due Diligence period of the home buying process.  It is such a small window when you're working full time and trying to organize all the other aspects of life.  I think my negligence in the whole situation gave me some blissful ignorance however I now know that it could have been far worse.  Before you put down your offer, make sure you have the cash in hand for not only your earnest money, but also for inspections both building, termite, radon, structural whatever you might be worried about for the future, get it done during this period and get it done quick.  Also, be prepared to walk away if the results don't work with your plan.

I think a lot of people jump in on things, especially in "Hot" markets.  They run and they rush and they try to get the deal and they make concessions and sometimes it ends up hurting them in the not so long run.

The other things I can definitely recommend is to be patient. During the shop for my first house, my wife and I found out that the average home buyer only looks at maybe 4-6 houses before they put in an offer. We looked at 14 houses before we landed on one that tripled in value in neighborhood of Nashville that exploded in value over only 5 years.  I say don't settle for what you see first, you never know what you'll come across if you are patient.   

@Austin McAnena I hope my insight can be helpful. I am unfamiliar with the Palm Springs market, however I ran 2 STR in Nashville during our boom. There were a lot of hoops to jump through in order to stay compliant with the developing city policies. After 4 years of that silliness, we sold one property and rented the other one long term. I will say if you can get good tenants, the long term is definitely a great way to go. One of the biggest things to consider is what are the costs of doing STR in your area. In Nashville to run it above board you had to start a business specifically for the STR, you had to collect and remit sales tax as well as Occupancy and Privilege tax which all together ended up being in the 40% range.

That kind of money, on top of all the expenses of operation (laundry, snacks, etc.) can really eat in to potential profits.

However, it can still pay your mortgage and all utilities fairly easily. I never used an STR management company so they could be an easier route for all of that.

Shoot me a line if you have any other questions about STR.

@Adrian Suarez I personally ran 2 Airbnb's in Nashville for 4 years during the peek of its boom a few years back.  I would be happy to help you get whatever information you need to get started.  Keep in mind, it can be a challenge depending on your market.  If you have a good spot in a popular city, I think you'll do just fine, even if you aren't right in the heart of everything.  However if you are in the midst of it all, then I know you can do quite well.  

Hey Christian,

I am new to the investing side of real estate and have only purchased three houses and only one was an investment and it was new construction, so my first hand experience is limited on this sort of situation.  From my perspective, it sounds like you are looking at a long return deal.  If you have decent cash flow you will eventually make all your money back after all the repairs.  If you plan to keep it for a while, and if you put in the upgrades, and make that money back, your added equity will probably give you back a decent chunk you can put towards another deal.   Just sounds like the issue is how long do you want to keep it.  From some other reading I've been doing recently, there may be some extra challenging situations for landlords in the coming years due to Covid and market volatility, so is that something you want to face.

I mean, if you want to get it and ride out the recession, you could probably make a decent return with the repairs in place for whenever you sell.  

I'm not sure I was super helpful there, but sometimes just hearing another perspective, or even just an echo of your own thoughts can help you work through a mental block.  

Best of luck,

I'd love to hear what you decide and how you come to that conclusion.

Investment Info:

Single-family residence other investment.

Purchase price: $307,000
Cash invested: $61,000
Sale price: $375,000

investment property, purchased as a short term rental, then ran as a long term rental for 2 years. Sold just after last Tornado hit Nashville.

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

We were looking to expand our Airbnb business and found this property very close to the metro center and the highway.

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

We found it early on, did a walk through just after construction finished. Price was reasonable and we went in with asking price.

How did you finance this deal?

Conventional mortgage.

How did you add value to the deal?

We added a small fenced in area behind the house for pets to roam.

What was the outcome?

After we learned the challenges of short term rental, we moved to long term rental and was very fortunate to have no issues with tenants. Ended up selling the house when we moved out of town.

Lessons learned? Challenges?

I learned a lot about building a lease agreement that covered us as well as being fair to the tenants. Also found some great online tools to help with background checking applicants.

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

Our same Realtor and Mortgage lender for our primary residence. We will try to work with them as much as possible for future projects.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $255,000
Cash invested: $100,000
Sale price: $601,000

This was my first home purchase in Nashville with my wife. We lived there for approximately 5 years and during that time added a in-law/STRP and garage in the back of the lot, one of the first in the area. We ran an Airbnb out of that loft apartment for 4 years and was able to basically pay all our bills for that whole time.
Sold in 2018 to move out to the country.

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

My wife and I always knew that buying property was a good investment. This definitely paid off.

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

We worked with a realtor who has become a great friend. She knew the contractor who was already planning to build the house, we got in early enough to customize a lot of the details from fixtures, to floors, paint, etc. I think we were able to negotiate down a little from original asking, but the deal was pretty fair for the size.

How did you finance this deal?

Conventional mortgage, 30 year Fixed. We were able to use an IRA distribution for first time homebuyers that allows for up to $10k without penalty. Thanks mom and dad for getting me set up with an IRA early.

How did you add value to the deal?

The best value was adding the garage/apartment for Short term rental, lots of landscaping, and during build we outfitted with a lot of good finishes.

What was the outcome?

Sold the house after 5 and a half years. Ran an Airbnb out of the garage apartment for 4 years and was able to pay our mortgage for most of that time and all other bills with that business.

Lessons learned? Challenges?

Short term rental is a tough job by yourself. We also need to vet contractors better. We used the same guy that built the house, and he was a disaster the second time around. We learned a lot about the process overall, dealing with the city for getting a short term rental going, we learned the price of landscaping (FYI, do as much as you can yourself, it's just manual labor).

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

We worked with Leah Cameron in Nashville, she has been a dream to work with on the purchase of two houses, and the sale of two.
Also worked with Forrest Hewes for setting up our mortgages, super cool guy, easy to work with and knows his work.