All Forum Posts by: Charles Wade

Greetings and thank you in advance for the assistance and advise

I purchased my first STR using a conventional loan and in my name two years ago. The loan was 90% LTV with PMI. The property is now a STR for a year and it has already been transferred into a land trust owned by my LLC.

What I am looking to do now is to refinance the mortgage and remove the PMI as well as have the loan under the LLC and not me personally

1) Is this possible?
2) How?

3) Who?

Quote from @Andrew Simms:

Quote from @Charles Wade:

Quote from @Andrew Simms:

@Charles Wade I think your gross rent is correct, but the way you wrote it makes people think you are already including vacancy... $150 per night for 30 nights is $4500 less vacancy (40%)... you've got $2700/mo to work with.

I plugged this deal in my calculator and made some assumptions on expenses (property taxes, insurance, maintenance/repairs, supplies, utilities - don't forget water if not on well, gas, electric, cable, trash, lawn care, and if you have an HOA)

Even at 20% down, this deal doesn't seem to make sense to me. 

Thank you Andrew. This is exactly the help I needed. This being my first investment, I don't want to end upside down on the deal. Another question, someone suggested that I should not be running numbers on a 10% deal. Why shouldn't I? If I can get into a property with little cash out of pocket and the numbers make sense wouldn't that be the right thing to do?

You can do 10% if you do a second home loan. But if you're intent is solely for an investment and you do not intend to use it at all, your mortgage broker won't like it and by not like it, that is probably considered mortgage fraud. So that is why you shouldn't base it on a 90% LTV.

 Oh yes I knew that. I do intend to use it as a part-time primary and my broker is aware of my intentions as well. 

Quote from @Andrew Simms:

@Charles Wade I think your gross rent is correct, but the way you wrote it makes people think you are already including vacancy... $150 per night for 30 nights is $4500 less vacancy (40%)... you've got $2700/mo to work with.

I plugged this deal in my calculator and made some assumptions on expenses (property taxes, insurance, maintenance/repairs, supplies, utilities - don't forget water if not on well, gas, electric, cable, trash, lawn care, and if you have an HOA)

Even at 20% down, this deal doesn't seem to make sense to me. 

Thank you Andrew. This is exactly the help I needed. This being my first investment, I don't want to end upside down on the deal. Another question, someone suggested that I should not be running numbers on a 10% deal. Why shouldn't I? If I can get into a property with little cash out of pocket and the numbers make sense wouldn't that be the right thing to do?

Quote from @Dave Skow:

@Charles Wade 1) you will have a challenge finding a loan at 90% ltv for a STR investmenet 2) what interest rate are you using ? 3) get formally pre approved with a lender if you arent already

 Thank you for the feedback. I am already approved with 90% financing

Quote from @Leslie Anne Morris:

I wrote this, it should help!

https://www.biggerpockets.com/...

 Thank you, this is very helpful!!

Quote from @Michael Baum:

Ok @Charles Wade, what does the appraiser say? Not Zillow.

 Greetings

It has not been appraised as of yet. I am not under contract on this property, just considering it and running the numbers ahead of my decision. 

Quote from @Michael Baum:

Hey @Charles Wade. Just a quick question. You said the asking price is well above market? What is the market value of the house.

A STR is just a house. It is worth what the comps say. Past performance is no guarantee of future success.

Also, what is vacancy costing you? 

Zestimate is closer to $370,000. I know that is not always accurate but for comparable sold homes in that area, the asking price is much higher

Quote from @Heidi McBroom:

Hi Charles. Wondering why you are including vacancy expense when your gross rent is calculated off of an occupancy that already includes vacancy? 

Also, make sure your operating expense includes housecleaning for each booking, maintenance, utilities, and if you are not local, someone who can act as a guest contact or at least emergency contact. 

Good luck!!

Thank you for the feedback. I will make the adjust to remove the vacancy calculation but it is included in the DealCheck template. 

Quote from @Luke Carl:

Shouldn’t be running numbers on a 10% loan 

 Thank you but can you explain why? Again...I am new and learning

Hi, newbie here.

For my first real estate investment, I am considering an existing STR that is for sale in Blue Ridge, GA. I have run the numbers using DealCheck and no matter what I do, the property shows a negative cash flow

Here are the potential numbers that I am using:

Purchase price = $380,000 ($19,000 below asking. The asking price is well above the market there)

Loan Amount = $342,000 (10% down)

Gross rent I used $150 per night with 60% occupancy (aggressive I know) = $4563 per month

Vacancy = $1825

Operating Expense = $681

Loan amount = $2050

PMI amount = $143

Cash flow is -$137

What am I doing wrong or is this just a bad deal? I am considering this cabin because it is very nice and is already a popular STR property. Appears to be true turnkey

Any guidance or feedback I consider a gift and would greatly appreciate

Charles