All Forum Posts by: Charles Kennedy

I would say make sure the market supports your slight rent increases. Do you have justification that tenants are a little below rent? Perhaps doing some small cosmetic things would help before bumping it up a little bit (fixing some small broken things or a fresh coat of paint). This will make sure the relationship starts off on the right foot.

To your point on 20-year mortgage vs 30-year mortgage and it's affect on your CoC return. I don't really like how most of BP does not factor in mortgage paydown in their returns. I get it that you don't realize this return until you sell or refinance, but it's still part of your return. It's sort of like a stock investor only counting dividends in their expected return and not appreciation (although were not even factoring in appreciation - just paydown of principal!). So although your CoC return looks lower, if you factored this in, the difference b/w 20 and 30 year mortgage would look very similar.

Also no harm in trying to negotiate unless you think the deal will go for asking and you really want it.

@Jonathan Mueller This is why I love the BP community! Thanks!

@Jonathan Mueller off-topic a bit, but looking at booking an Airbnb for a ski trip in the beginning of March. Is snow still decent then? Thinking about just getting an airbnb right at the base. It appears a little more pricey, but that convenience seems worth it. I would assume renting equipment here though would be much more expensive. Could you give me a quick run down of saving money on this trip/locations you would recommend?

Thanks!

Well almost every property makes more sense as an Airbnb unless you are in a smaller market, but it's much more of an active investment than a long term rental.

Full disclosure: I don't have an Airbnb rental, but can still try to help

90% sure cleaning rate is set by host, and shouldn't very much based on length of stay. You should be having a cleaning person come in after every guest to have the place looking good. Get in contact with a company to see what they would charge, but this is a fully reimbursable expense, so you shouldn't have to worry about this.

Service fee doesn't cut into your amount. If you look to book a rental yourself this is an added fee to a guest.

Vacancy will largely depend on your location. I'd specify where you are this vacation spot is so that if any investors are in that area they can tell you what they are averaging. I'd guess maybe 70% occupancy if it's a strong market? Have no basis for this assumption to be honest. Just remember though that if you're lower than market in terms of pricing you'll have higher occupancy and as you build reviews you should have better occupancy.

Thanks @Nicholas LaGatta I'll make another post later on when I purchase the duplex. It's going to happen!

Hello Atlanta,

I'm seeking a duplex in the metro Atlanta area to house-hack. I'm a young professional seeking to reduce my housing expense by living in one side and renting out the other. I already have an agent, but am reaching out to the BP community to see if I can source any off market deals. If you own a duplex in a good area (please no low-income areas as I will be house-hacking) and are willing to sell, please reach out to me to discuss!

Criteria/guidance:

-Location: Must be in the Atlanta city limits with a preference near west midtown (home park, Berkeley Park, Loring heights) or Lindbergh, collier hills, underwood hills.

- Price: Max $400k

- Condition: Preferably not turn-key, looking to get something at a slight discount and do cosmetics renovations of ~$20k (new floorings, paint, cabinets, bathroom) to bring the units up to date.

- Bedrooms: Preferably minimum 2 bedrooms in each unit. Again, not a must open to all.

Cannot pay all cash, but I do have my financial ducks in a row and will have no problem qualifying for financing.

If you have a duplex with tenants you are tired of, has been sitting vacant, or would just like to free up some capital please reach out to me! Save the 6% brokers commission and sell directly to me!

Thanks,

Charles Kennedy

Think about it from an investor's perspective: would you want to invest your money with someone who has done a deal 50 times before or has never done it before? Clearly you'd want someone who's done it 50 times before (or at least once before!). I'm a believer you should start with your own money on something small before you break into something larger. Not only will you have a hard time getting investors, but even if you do manage to get some from someone (likely friends/family) you could end up losing an investors money and really stopping yourself from getting capital again.

What do you know about developing an RV park? Have you entitled land? Worked for a developer? Do you have a GC who could bring in the water, sewer, drainage? Will you have septic tank on-site instead? Do you know the difference in cost between the two? Can you make a cash flow and IRR projections in excel to present to an investor on what you project returns to be with justification? Are you plannign to lever up to develop this site? If so do you know a lender who will lend to you? Are you sure this land is even zoned to allow you to develop an RV site?

It sounds like you are very early on in your real estate career. That's OK, but I would suggest starting small first, building that knowledge base, before jumping in the deep end.

Once it's in good condition you can get a standard 30-year mortgage. If you plan to keep it for a long time you may as well do this and lock in the current interest rates. You'll be able to pull out 80% of the LTV (nearly $160k if your ARV is accurate) leaving nearly $40k in equity and be able to take that $160k and go do more deals. Sounds like you have a homerun if your #s are accurate. Hard to believe a place that looks decent from the outside is selling for $30k when comps are at $195k, but hey it's happened before.

Since lease is joint and several, why are they paying separately? If you have them all sign one lease, one person pays you the full amount. With this, they have to deal with the problem not you.

Regarding your original question: You'll get both responses from the BP community. I'd guess they will lean towards still charging the late fee. I suppose a good compromise would be asking for proof of account freeze, and it will be waived. If no proof is provided, late fee is enforced.

I just think of this like an equity investment. Think if someone else came in to be a passive investor. They 'd put up their $3MM in and that'd be 3/5 of the equity. They would be entitled to 3/5 of the cash flow, and the developer would likely have their fee and also promote waterfall structure where upon hitting certain returns, their % of return in increases. I think a lot of PPMs (private placement memorandums) are pari passu until capital is returned, then pari passu until certain IRRs are hit, then the developer gets a larger cut. In all, you need to get a lawyer or someone who you will have to pay to guide you through this process. This is a multi-million dollar investment, the advice and guidance will be worth it.

Also a LP structure makes the most sense here, so you get out of the developer's way with no decision making.