All Forum Posts by: Chris Gottshall

@Andrew Lake Did you go through with this transaction? How did you end up handling the financing and the title for this? I'm curious because I'm looking at a similar opportunity right now.

I am entertaining a possible condo conversion opportunity and I'm curious if anyone out there has experience they could offer as to what to watch out for. I've never done one.

History: Two sister 4-plex buildings (distinct parcels) share a common driveway, parking lot, and trash facility. One person owned both of them in the early 2000s. In 2004-2006, the owner decided to convert all 8 units to condos and intended to put them all in the same HOA. In 2006, he finished the 4 units in the first building and sold them off, forming an HOA. Due to the economic challenges with the former owner, the second building was sold off separately as multifamily housing. I own one of the units in the converted building and the sister building is now coming on the market again. I'm interested in buying it to finish the job of having an 8-unit HOA. Our existing HOA is amenable to this idea.

There are a few factors I know I need to consider:
1. Financing: I am looking at FHA to buy as owner-occupied multi-family to make the initial transaction easier and then figuring out how to navigate the conversion later. The building will be vacant soon, so I won't need to worry about relocating tenants.
2. What are the costs involved with a conversion? While I'd like to believe it can be as simple as filing some paperwork to change the building from 1 parcel to 4 parcels for tax records, I'm guessing there's more to it than that.
3. Renovate and then convert or convert and then renovate? I'm inclined to convert it as is, make them separate residences legally, and then tackle converting them one at a time, keeping at least 2 units tenant-occupied throughout the process. Once a unit is converted, I can sell it off separately or keep it as a rental depending on the market.

What else am I missing in my evaluation of the opportunity?

If anyone has a connection to someone who has done this type of project before, I'd love to connect. Thanks in advance for your input.

I just received an email from SBA this week advertising the availability of additional funds so I decided to check out the requirements. So far, there was one button to click and now it just says it is creating the request. No idea what else will be required, but if I can get some additional working capital, I'll take it. Has anyone else recently gone through this process and can speak to what is required to complete the process?

@Bill B. 100% with you. The fact that the Saint Paul ballot measure fit onto 1 side of a single page of paper just shows how little thought was put into this move. I get why this is attractive to people, but those are the same people who don't understand there is more than one variable in the equation of "what is the right price for rent for this unit?" I've been hit with TWENTY percent YoY tax increases in Saint Paul the past 2 years IN A ROW. Now I allegedly can petition someone (undefined) to approve an exception to the 3% limit, but none of the details of that are laid out. As far as I'm concerned, this measure is unenforceable without that process defined and the agency staffed to handle it.

@Carlos H DeOliveira It is a decent solution. And I have different modes for Guest At Home versus ME At Home so it doesn’t do any of these things for me when I’m there. :-) I like that I can also control the thermostat, arm/disarm the alarm (and clear accidental fire alarms) remotely on my cell phone. If you decide to go that route, I’d be happy to send you a screen shot of my system rules for you to try to replicate. Just HMU in DMs.

I have a thermostat that is connected into the ADT system. The main living area sliding glass door has an open/close sensor that allows me to automate turning the Mode to OFF when it is detected as open and then setting it back to AUTO when the sensor is closed. I also have it set up so that if the temp drops below 69 in cool mode, it sets the temp to 70 and then turns the fan to ON so that the air keeps circulating but it doesn't keep cooling. This system isn't perfect (there's a sliding door in the master BR too, which isn't a factor in all of this) but it was easy to set up when I had ADT installed. I use the ADT disarm and arm alerts as a record of when the guest checks in and checks out, too, and the system won't arm if any of the sliding doors are open.

I tried searching for this topic before posting but didn't find anything on this exact topic. 

Until Airbnb stops permitting cancellations for catching COVID as an extenuating circumstance, I'm wondering... Has anyone experimented with trying to stop dealing with last minute covid cancels? I have a strict cancellation policy for a reason - I'm probably not going to be able to fill these nights less than a week out. I'm thinking of adding some language to the automated message at booking that says something to the effect of acknowledging that they waive their right to the extenuating circumstances policy by completing their booking with us. They obviously still have 48 hours to cancel if they are not comfortable with this. I would guess if they challenged my policy to Airbnb they would still favor guest over host in issuing a full refund, but I'm wondering if I can discourage some people who are neither vaccinated nor practicing precautions from having to cancel last minute and dodging our cancellation policy with this loophole by telling them up front that they need to own their own risk of catching it and plan accordingly if they don't want to forfeit their deposit.

Looking for input on if you have tried any tactics to reduce covid cancels that have worked. Thanks all!

More anecdotal data: Once I see a place doesn’t have at least 1 king bed, I move on. Doesn’t matter how nice everything else is. I WISH they let us filter on that as a feature because I waste a lot of time looking at places with only queen beds.

@Andrew Haney Yes, I did consider that. My high season was booked solid this past year. The most I could expect from him would be more bookings in the low season, maybe. During our conversation, he acknowledged that my annual revenue was already in line with what he’d expect to see for a place like mine. So, I wasn’t going to get enough upside to offset the expense. That being said, you raise a good point for those considering a manager to consider. If you can get 20% more revenue, and pay 15% in fees, it’s probably a good deal because you also get your time back.

I was quoted 15% by someone in my market recently (someone that is managing a few other units in my complex and comes recommended), but at the end of the day, I decided to keep up DIY management for another year because that 15% would be 100% of the margin I get on operating costs. If I had a bunch more money into the deal and had lower costs, I’d probably do it just to get my time back; but not when it’s potentially going to make it a negative cash flow situation. If he was willing to do 7-10% instead of 15%, I would have looked at it more seriously. But he acknowledged that I was already more savvy with using Airbnb’s basic technology than he was; so the upside was only going to be maybe some extra low season bookings via referral from his other properties.