All Forum Posts by: Chris Rich

Depends on your approach - cash flow or appreciation. It's definitely nice to have a paid off rental. Or your can buy multiple properties with small mortgages. Two houses appreciating long term is likely a better ROI than the cash flow from the one property would be. But you are also doubling the number of tenants, chance of expenses, etc.

I agreed. Give the cost of money these days is around 7%, it would definitely be nice to have a paid off rental.

Like Tim said, the 7% is largely irrelevant because your tenants are paying it with the exception of vacancy periods.

But it's all about the numbers. What are you going to do with the cash flow and is the ROI going to be better than the appreciation on a 2nd house as opposed to just 1? It's hard to say for sure without knowing your market numbers, but I would bet you if you looked at a 10 year projection, you will probably have a better ROI with the equity in 2 houses as opposed to the equity and cash flow with one.

3 Votes

Dayton, Ohio

2 Votes

Dayton, Ohio

Quote from @Gabi NA:

Hi, I am a 20 year old college student looking to buy properties with the goal of either turning them into Airbnb short-term rentals or long-term rental properties. I'm pretty new to the game and would love to get some advice from more experienced investors here!

A few things I'm trying to figure out:

First-Year Living Requirement: I've heard some places require you to live in the property for the first year before renting it out. Is this something I need to worry about? I'm not sure if this is a local thing or if it's common in all markets. How do I know if this applies to the areas I'm looking at?
Airbnb vs. Long-Term Rentals: What do you think is a better strategy for someone just starting out—focusing on Airbnb (short-term rentals) or traditional long-term rentals?
Rental Arbitrage: Is rental arbitrage still a viable strategy in today's market, or has it become oversaturated? I’ve heard mixed things about it, and I’m wondering if it’s worth considering as a young investor without a lot of capital to start with. Has anyone had success with rental arbitrage recently?

I’m open to any advice, personal experiences, or recommendations for someone at the beginning of their real estate journey! Thanks so much in advance!

Hi, I am currently living in south Florida and was wondering what are some good areas to look for condos or townhomes to rent or do Airbnb.

If I was you I would house hack. Buy a 3/2 (if possible), live in the master, rent out the other 2 rooms to friends. Renting an individual room is all but guaranteed to be cheaper than them renting a 1/1 apartment alone. This will lower your monthly living expenses while your tenants help pay down the mortgage and the house appreciates. Then in a few years you can find a 3rd tenant for the master, pull out equity, buy a new house, rinse and repeat. A friend from college did that starting in 2008. With a little help from the market and appreciation, his portfolio got up to 12 SFRs. Last year he sold most of the SFRs and bought a multi-family. He's retired at 35 and all he does his run his units.

0 Votes

Fort Lauderdale, Florida

Quote from @Nathan Gesner:

https://www.zillow.com/research/october-2024-rent-report-345...

It's normal for the market to slow down in winter, especially right around Thanksgiving and Christmas. This year feels different, and I'm hearing many landlords complain they can't find renters. My market is humming right along, except for the higher-priced single-family homes.

The linked article provides some good information.

What are you seeing? Has it slowed? Reversed? Stayed the same?

Yes, it was a slower summer than normal. Rental inventory is up and rates declined in a lot of areas of Orlando / Central Florida. With that said, the properties that were prepped and in good condition still rented quickly and on the higher end of the market range. Conversely, those who just wanted to relist without any repairs, or continued to try to increase rent despite the market shift are struggling to find tenants. With that said, we have seen an uptick this month of applications and our DOM has fallen 8 days in November.

1 Vote

Casper, Wyoming

If it's just the one property I think the answer is lower than it would be if it was a largely portfolio. Generally speaking, I usually recommend at least 3 months of mortgages with at least $3-5,000. That amount should cover most unit turns. But if you have larger expenses coming, it's a good idea to save more to lessen the burden of those high ticket repairs.

0 Votes

Oakland, California

Quote from @Michelle Glover:

Hello everyone!

We’re currently flipping a home in Maple Heights, OH, where most homes are 3-bedroom, 1-bathroom layouts with unfinished basements. To maximize the living space, we worked closely with the city to create egress window codes, allowing us to add an additional bedroom, a beautifully finished bathroom, and a family room in the basement. Our remodeled home has received multiple offers at or near the asking price.

Unfortunately, we've hit an issue with the appraisal. Despite the Ohio Building Code recognizing the basement bedroom as a legitimate bedroom, the appraiser did not include the basement in the general living area (GLA) and didn’t assign much value, if any, to the additional finished space.

Has anyone dealt with this challenge before? Any advice on how to address this appraisal issue would be greatly appreciated!

Thanks!

Michelle

When I bought my first primary we ran into something similar. The house was a 3/2, 1650 sqft, with 2 car garage. The seller converted one of the garages into a bonus room and it added 300sqft under AC. The appraiser listed it as a 1650sqft, 1 car garage... completely omitting that converted garage space. We had to pay for a 3rd party to review the appraisal and either agree or disagree that it was done correctly. They agreed it was wrong and a new appraisal was ordered and done correctly. I was not in the industry at the time, so I am not exactly sure who that 3rd party was, but I would say there is recourse if the appraisal is fundamentally flawed.

1 Vote

Cleveland, Ohio

Quote from @Lisa Bowles:

Hello,

New to real estate investing. The wife and I decided to go for financial freedom through real estate. We are currently updating our home and plan to turn it into a long term rental. Our plan is to rehab current house and try to find another house to live in while fixing that one up and so on and so on. Basically we want to use the BRRR method. We are looking to start building our team and would love to hear some do's and don'ts from others doing the same thing in our area. We are open to any advise or guidance anyone is willing to offer.

Congrats and welcome to the journey!

My few pieces of advice come from the property management / rental side of things.

1) Do your due diligence - Learn your laws, do property tenant vetting, etc. Don't let anyone sign a lease or move in without first vetting them and collecting certified funds.

2) Have the property reflect the tenants you seek - Depending on the price point and market, you want your house to reflect the rental amount you are seeking. If you have a run down house, you're going to get tenants who don't mind a run down house. Conversely, those higher end tenants want a nicer property and are willing to pay for it, and are typically better tenants. It's not absolute, but it increases the odds.

3) Take care of your tenants - According to Zillow, tenants stay on average 3-5 years in a rental. In my experience, outside of life events, when tenants leave early there's a strong correlation between how the owners approached repairs, spending money, etc, and the duration of tenancy. Remember, if the tenants move out, that is lost revenue from vacancy on top of any unit turn costs. Now, I'm not saying spend money on whatever the tenants want, but if you have a nice house free of maintenance issues, and then address issues promptly when they do arise, you increase your chances of your tenants staying for longer, which means more revenue and a better ROI.

4) Adapt to the market - I'm in Orlando and we saw the market shift and pull back this year, yet many owners still wanted to increase rent. That resulted in less lease renewals because tenants could get the same house for cheaper, or a better house for the same price. I understand owner costs can go up (insurance, taxes, etc) but if the open market rate is lower than your current rental rate, don't increase rent again because there's a good chance they'll move out.

5) Make sure you take detailed pictures before any tenants move in. That is crucial to successfully making claims against the deposit if there is tenant damages.

Best of luck. Feel free to DM me if you have any other PM type questions.

0 Votes

Saint Louis, Missouri

Quote from @Thomas A. Rufo:

Hello Everyone,

This is my first post on the forum. My wife and I currently own two identical condos (3 bedroom/2 bath) in the same community. We were married over a year ago and I moved into her condo and we put the other condo up as a short term rental. It has been doing well renting consistently. We want to travel and invest and are considering converting this short term rental to a long term rental to avoid sales tax, paying utilities and general management of the property. We are considering renting both condos long term and hiring a rental management company to collect rent and manage. We feel this will give us more freedom and consistency financially. We want to travel via RV and potentially house hack in multi-family to have a home to return too as well as potentially take advantage of 5% Fannie Mae loan for purchase of multi-family using least amount of our own money. Does this strategy sound good? Any opinions on short term vs long term rentals? Does plan to house hack on Multi-family make sense? I appreciate the forum's experience and input. We are newbies to the multi-family investing. Thank you!

I am in the long-term property management space, so I may be a little biased, but everyone saying "STR is more profitable" should really be saying "CAN be" more profitable.

Really depends on what you are looking for, your market, and how passive do you want to be. STR is more like hospitality and yes, it can be more profitable. It could also require more time and effort, have more operating costs, and not be worth it.

I had a client last year who was self-managing her LTR but wanted to take her RV and travel. After discussing her goals, she ended up hiring us for the management. Within a few months she was thrilled because hiring a PM freed up her time and allowed her to focus on the traveling, and not managing the property.

Ultimately, I would look at the LTR rental numbers and see if it meets what you need. But keep in mind, even LTRs have expenses. But according to Zillow, tenants stay on average 3-5 years in a rental. In my experience, if you take care of the tenant you will likely see that average to be true.

0 Votes

Quote from @Raj A.:

I'd love to speak with any property managers who run properties in the Villages, Florida. Looking to invest in a few properties over the next 5-10 years and want to get a sense for tenants, common issues, etc.

I work for The Realty Medics, a property management company based in Orlando. We have over 1,600 properties under management and over 400 of them are in the Ocala area. I'd love to connect!

0 Votes

Orlando, Florida

Quote from @John Sigs:

This is privately arranged property management. I am not a property management company. A friend has offered to pay me to manage a house he owns in the Greater Hartford area. I have not see the house yet. Here are the details thus far:

There are 4 bedrooms. He thinks they can rent each room out for $800 for a total of $3200/month

He has offered 10% for me to manage the renting of the rooms to the tenants and to take care of the lawn and snow.

This initially sounds low to me. From my research here on BP, the average is 10% plus one month's rent ($800) every time I would have to find a tenant (does this mean he would pay me $3200 to find the initial tenants?)

Also, most property managers dont actually do the lawn and snow, correct? They coordinate with subcontractors to take care of the lawn and snow, right?

Just trying to figure out what I should be negotiating for. Thanks in advance!

John

As others have stated, depending on market management fees run 8-12% a month, plus a leasing fee o 40-100%. Lawncare is either handled by the tenants or a vendor at the owner's expense.

.... BUT I think you are playing with fire.

My primary job function is outside sales building relationships with realtors. Some realtors will lease the property for their clients and out of my hundreds of agent partners only 2 do even close to as good of a job as a PM company, and both have been doing it for 15+ years. But almost every realtor who does provides a level of service much lower than a PM because they do not:

- Properly document the condition of the property before tenants move in, which hurts the owner on the back end when there are damages.
- Market the property as well as a PM company, which increases vacancy periods and costs the owner money.
- Properly / thoroughly screen the tenants, which increases the likelihood of a bad tenant and damages

Now, it can be done, but if you aren't even sure of what the industry costs are for PM services, I highly doubt you are currently skilled enough in the area to risk doing it. I would be very careful if you move forward and do it because anything that goes wrong is going to fall back on you and if you do not have a management agreement in place you could be opening yourself up to lawsuit if you fail to deliver on the expected services.

0 Votes

Hartford, Connecticut

All Forum Posts by: Chris Rich

Chris Rich has started 0 posts and replied 100 times.

Post: Getting ready to purchase an SFR rental

Post: Getting ready to purchase an SFR rental

Post: Young college student looking to buy their first property for Airbnb or Rental

Post: Are rents dropping in your market? You are not alone.

Post: Reserve Fund Contributions

Post: Lots of offers but appraised low

Post: New To Real Estate Investing

Post: Short Term vs Long Term

Post: Property Managers in The Villages, Florida?

Post: What should I charge for Property Management?