All Forum Posts by: Brandon Guite

Good Evening Everyone! Hope everyone is killing it in 2019. I wanted to get some recommendations on what smart lock (key pad entry) systems you have experience with in your rentals. I recently purchased a home that I am converting the basement into an AirBnB apartment and would like to utilize a keypad lock system with changeable codes. What have you all used that has worked well? I've been considering have a Vivint Security System for the entire house that would include the keypad dead bolts as well, but the system itself is pricier than other options I have found. Any suggestions are greatly appreciated! Thanks everyone and keep making '19 your best year yet! 

Hey @Crystal Wilson, great start on your investment portfolio and great work looking into hacking a duplex or 4-plex. As others have said here, definitely read the fine print on the HELOC. As for the buy and hold long term, I think Bill S. and Jay Hinrichs hit the nail on the head in terms of the fixed rate knowing that rates are forecast to increase in the near future.

As for the Hack on the 4-plex, I looked to do the same thing recently. I ended up settling for a single family home in Littleton that had a walk out basement that I will be able to AirBnB, I just could not seem to make the numbers work for the prices I was seeing. I did look in the springs a bit and the numbers penciled out better than they were here in the Denver Metro. That being said, that is based on my investment strategy and goals. I want to know that when I am ready to move out of the 4-plex/duplex it can stand on its own as a rental and cash flow. You should also consider that if your intent is to refi out of the FHA after a year that rates are likely to have risen and should be considered in your numbers. Best of luck and great work on taking action!

@James Carlson

No worries at all, vacations are for enjoying time away for the day to day and disconnecting a bit, glad to hear you're able to do that on your trip! 

Thank you for keeping up with the discussion, your input is incredibly valuable and appreciated. I am going through with the purchase and close next Friday. I went in and sat down with the city planner to discuss the zoning, current city ordinances, future plans and my plans for the property. He assured me that what I am planning to do is well within current city regulations and he felt that it will be some time before it is brought to vote again, which was comforting but I'm not going to bank on that. I will definitely connect on the alliance facebook page, thank you for the suggestion! 

Thanks again for all the insight and help, enjoy the rest of your trip!

@Bill S. and @Jeff White, Thank you both for the reccomendations of James and Erin, greatly appreciated. 

Jeff,
Thank you for the insight on your experience with the AirBnB, very nice work with the 4plex as well. That would definitely be the ideal House Hack situation. What part of town was it in? I also love the idea of the gift baskets and things like that to set yourself apart a bit and attract more/better tenants. 

@James Carlson
Thank you very much for the insight on the proposed code changes restricting STR's, definitely very valuable information. From your experience, does this seem to be a common theme in the communities surrounding the Denver Metro area? From reading through the proposal it seems as though if the home is a primary residence, you would just need to follow the proper channels of obtaining a licence, getting the proper insurance, etc. For my situation, I plan to own and reside in the home for quite a while and just would like to use the basement to offset my living expenses occasionally. That being said, the requirement to allow neighbors to petition against the issuance of the licence does have me concerned. I am under contract on the home at the moment and just wrapped up inspection. I was planning to visit the property this weekend and try to meet the neighbors and get a feeling for their comfort level of me using the property as a STR.

The portion of this that does have me most concerned is the clarification that a basement unit would not be able to be rented out at all unless rezoned as separate units. Am I understanding this correctly that in this case, the property could only be rented out as the entire home or room by room? This one could definitely be a deal breaker for me as it would very much inhibit the goals I have for the property. 

Mike G. Beat me to the punch... Much better explanation, I didn't mention the park owned homes vs. tenant owned homes. Great explanation @Mike G.

MHP's are typically priced based on income the same way a multifamily building would be. The Basic Formula is Value=NOI/CAP, or Net Operating Income divided by the market capitalization rate for the area. The net operating income is the Gross Potential Income minus expenses (utilities, vacancy, maintenance, property management, taxes, insurance, etc.) . If the property has been well managed as you said, there should be good record of the last 12 months financials for you to get a good picture of what the expenses have been. A good rule of thumb for multifamily complexes a 40-50% of income should go to expenses, but I'm not certain how that translates to MHPs so definitely do your research.

As for determining the Market Cap rate, reach out to any local property management companies, commercial RE brokers, investors, etc, to get an idea. Keep in mind this is a MHP and not a more traditional commercial property so it may be slightly different. 

Quick Example with your income and plug in numbers...

Gross Rent = $4,300 per month or $51,300 per year
Expenses and Vacancy = $25,000 Per Year

NOI = $51,300 - $25,000= $26,600

Lets say the Market CAP Rate for the Area is 8%...

Then you would calculate the Market value for the Property as...

Value=NOI/CAP or $26,600/.08 = $332,500

This is just a rough example but hopefully that rough explanation helps. 

Good evening everyone! 

I am looking at a property with some slab settlement in the basement. The foundation is on piers and not tied to the slab. There are no signs of any structural issues with the foundation, just the slab on one side of the basement. Any of you have any thoughts on the best means of repairing this? I am between mud jacking the floor back level or pulling up the carpet and installing some self leveling concrete. I'm leaning towards mud jacking to ensure that any voids below the slab are filled and stabilized, but wanted to get some advice on the cost effectiveness and experience of each option. Thanks everyone and hope your is off to a great start! 

Good Evening BP Community!

I am in the process of purchasing home in the Littleton Colorado area with the intention of using the basement as a separate AirBnB unit. It is a walkout basement which will be completely separated from the ground level that I will be living in. It's 1 Bedroom, 1 Bath with a good sized living room and kitchenette. This will be my first AirBnB rental and am curious if any other local investors in the Denver area doing the same thing have any insights on their experience. I have a few specific questions below, but any advice or lessons learned is greatly appreciated! Thanks and hope everyone's 2019 is off to a great start! 

- What sorts of occupancy rates are you typically seeing? 
- Any experience with AirDNA and its accuracy/usefulness?
- What amenities have you seen help increase your occupancy and/or nightly rate?
- Experience with neighbors and their reactions to your STR?

Hey @Dalton Toelkes and Welcome to Denver! congrats on getting excited and started in Real Estate. I am fairly new to this whole thing too and am in the Littleton Area myself. I think house hacking is an awesome way to get started and nice work looking at doing it. I have looked myself here in this area and have just struggled to make the numbers work well enough for my current RE Goals.  

A few things come in to mind right away from me, and I want preface by saying that I am pretty conservative when it comes to underwriting on deals. That being said, one of my criteria is that the property would need to be able to stand alone as a rental and cash flow. I personally want to know that if for some reason I needed to leave the property would not be a drain on me. 

I will also say that with the low down option, the first year or two very little of the mortgage goes to principal, and with commissions paid at sale, you wouldn't stand to gain much if your hold time is only for that short time.

BUT that is my conservatism and my thoughts that would be in alignment with my goals. If your goals are to just reduce your expenses each month then It could still be a good play. The last thing I will say is that based on my own conservatism, I want to have cash reserves in the bank just in case, so it may be worth saving up a little while longer or asking the Bank-O-Mom to put in the whole down payment and use some of the rental income to give her a return on her money each month or something like that.

Just my 2 cents. Best of luck my friend!

@Corbin Marcotte Sounds awesome, I will definitely make sure we do. I will keep you posted when i nail down some dates. Look forward to meeting you! In the meantime, from the property manager's perspective, are there any quirks to the Tulsa market that I should be aware of as I am researching the market and doing some initial underwriting? Suggestions of areas of progress? 

@Kyle Critchnau I will absolutely take you up on that, I will keep you updated as I nail down my travel dates as well. Love to hear the progression from wholesaler to syndication, well done and congratulations! Are you currently investing the Tulsa markets at all?