All Forum Posts by: Bonnie Low

Quote from @John Williams:

I recently bought a home that has an attached dwelling unit where Im planning to move in and rent out the main unit. A question I have is, if i rent out the main unit that has 4BD-2B, is it better to get a long term renter with steady rent payments from them or rent out for airbnb?

This is colorado springs area

Thank you. Any suggestions would help please

Colorado Springs has some weird regulations about this depending on which county it's located in so be sure to check in with the planning department in the specific county you're looking at. I had this come up on a house I was submitting an offer on. I was intending to rent out the upstairs 3/2 as an LTR then convert the basement to a unit for myself half the year and rent it out as an MTR (midterm rental) when I wasn't there. El Dorado County prohibited this, though it seems there are "creative" ways to work within their framework. I could have rented out the entire unit as LTR, MTR or STR. Or I could have rented out either the top unit as one of the 3 OR the bottom unit, but not both the top and bottom unit. Didn't make a lot of sense to me, but sometimes regulations don't make much sense. The person I talked to in the Planning department was very helpful and agreed that the regulations are ridiculous, but for the time being, they're still in place. Call and find out exactly what uses your property is eligible for before you do your underwriting because it will make a huge difference.

The "best market" is less about the market per se and more about the deal you're able to find in my opinion. You could be in an expensive market, like LA, but you inherited a property or you got a killer wholesale deal or subject to and the numbers could be very attractive compared to buying off the MLS for full market price in the same market. There are markets that have built in "gotchas" like the rising cost of insurance in coastal FL, regulations in much of the west coast states and property taxes in Texas; however, the deal itself is the most critical factor.

I recommend you reach out to a company like Corporate Direct to get solid advice on this and not try to piecemeal it together from various sources. If you have an LLC in CA, you are going to need to file taxes there for your LLC, period. Income generated from within CA has to be reported in CA. I know this because that is exactly what I have to do. I have a CA LLC (and LLCs in other states as well) and they are all held by a WY holding company. However, I have to file taxes in each state the LLC is in and pay the annual LLC fee in each state. Using LLCs and holding companies is less about tax structure and more about asset protection in the case of law suits.

I have offered it, but am unsure whether they're using it or not. Usually, tenants are receptive to the idea but I also wonder if tenants with a higher credit score care less about this feature than ones with a lower credit score who are actively working to rebuild their credit? I like this feature of Baselane and will be interested in hearing what kind of uptake there is.

There are SO many books and podcasts out there on getting into real estate. Just search the Bookstore here on BP and you'll find many. As for MTR, right now the definitive book on MTR is by Zeona McIntyre and Sarah D. Weaver and is called 30-day stay. That's a great place to start. If your friend is more of a Youtuber, turn him on to Erin Spradlin's MTR channel. Good luck! 

Quote from @Jaskanwal Preet Singh Chhabra:

Hello, I am an investor in Austin, Tx. I am looking at a 4 bed 2.5 bath property in Pfugerville, TX that I am planning to rent out as a co-living space (rent by the room on Padsplit). I will be converting it into a 8 bed 3 bath property. However, in adding the bedrooms, no new sq.ft will be added. I will split a giant master room into two smaller rooms and will convert the living room to get the additional three rooms. I understand I will need to pull a permit to add shower area in the third bathroom but would a permit be required for the three additional rooms, especially given I will not be adding any new sq ft to the property? I am thinking more from the insurance and future liability stand point. If so, what will be the typical time and cost to pull the permit for such a project. Thank you!

 A couple of things to keep in mind: you mentioned PadSplit. If you meant the company specifically and not just the concept of pad splitting, be sure they are available in your area. They actually have pretty limited reach as of now and focus primarily on major metro areas. Second, I'm a rule follower when it comes to permits. It's never worth it to cut corners on permitting because it will cost you far more in the long run. You need to make sure that your property is easily financeable if you decide to sell it in the future and any future buyer can call out non-permitted items and actually report you to the building department or, at a minimum, ask for seller concessions. If you're pulling a permit already for plumbing changes, just get the permit for the room conversions at the same time. They're not going to add much cost to the permit and you want to make sure everything you do is up to code. Just my opinion.

Quote from @Zachary Deal:

One thing to keep in mind if you are doing this is that you are likely to create "functional obsolescence" which could mean you are not able to get a new loan against your property and it can be difficult to resell as well. Basically if there is no "living room" and there are no comparable properties with similar square footage and bed/bath count in your area the property becomes difficult to comp or sell and lenders will not be able to use it as collateral for a loan

 Excellent point. If it's a simple living room to bedroom conversion, it likely won't be that difficult to return to "normal" if that's ever needed but definitely a great thing to keep in mind.

Most of my properties are already MTR, but I'd say I get more inquiries about them than I do my STR or LTR. As the popularity grows and people become more nomadic, I think we're going to see more and more of this. It's one of the reasons I love this MTR niche.

Quote from @Terry N.:

Quote from @Jamie Banks:

Here's a few things I include in my MTR lease

- Utility caps

- Outline of the furniture that is included

- Details regarding which utilities are included

- Outline who is responsible for lawn care / snow removal

- List of fees (admin fee, cleaning fee, etc)

Hi Jamie!  May I ask, what is a 'utility cap'?  And for lawn care/snow removal have you ever put some of that on the tenant? for MTR? Thanks!  T

Hi, Terry - a lot of us use utility caps. This simply means you have language in your lease that states the landlord is responsible for paying utilities up to a certain $ amount (let's say $100 for the sake of argument). The tenant is responsible for reimbursing the landlord for anything above that. Then you state how that will be collected. For example: Landlord will pay for electric, water and sewer charges up to $100 per month. Tenant is responsible for any charges above $100. Additional charges will be added to the next month's rent and due and payable at the same time. That is just example language - you'll need to use wording that is specific to your state - but you get the picture.

I stopped listening to the BP podcast when Brandon & especially David Greene shifted almost entirely into talking about mindset. That's great and all, but it's not the meat of investing. I think the podcast lost its DIY element. It's easy to cheerlead and harder to actually DO the work. I'm not saying that Brandon didn't do the work - he certainly built a substantial portfolio. But I want to know the HOWs and it just lost its way. I know he's recently shifted more towards spirituality, marriage & family content and it just seems he's gravitated away from the hard work of actually buying and selling real estate, which is why (IMO) most of us are here. So when I see an advertisement like this I feel like it would be a waste of my time and money, but perhaps interesting for others.