All Forum Posts by: Chris Rich

 I'll DM you the link Brian.

Like others have said, figure out your goal first.

Personally, start with LTR and then if you want to diversify into STR go for it. But I would also say it's highly market specific. I won't get into STR until I have a LTR portfolio large enough to supplement the inconsistencies of STR in my market, if at all. I don't want to be in the hospitality industry.

In a nutshell that's accurate lol.  A few things I'd add though.

Yes, you can self-manage your property/ properties, about 2/3 of rental property owners do.  But many of them break the law doing it.  Florida for example, many landlords I speak to don't understand Security Deposits.  They co-mingle funds or hold the opinion that it's "my money."    No, no it's not. I've had multiple owners spend the tenant's SD during occupancy for repairs the owner was responsible for and then not have the funds available to return to the tenants. They'll keep deposits when they shouldn't.  Those are just a couple examples. 

Most self-managing owners that end up hiring us are because of _____, a situation that became so stressful that they see the value in a PM.  Eviction, massive maintenance issue, etc. I've also found that our inspection reports and leases are FAR more detailed than the average one, which protects the property and the owner.  That level of detail comes from experience. 

Self-managing landlords can absolutely do the job, it's just a matter of to what degree.

Hey John! It wouldn't be a bad idea to review Florida State Statute CH 83, which covers residential tenancies.  It will spell out exactly your obligations and give you definitions so you are using the correct terms.  MANY self-managing landlords violate Florida law and don't even realize it... they just get away with it because the tenants don't know. 

Reason I ask, is, you may be living in your first rental.  My wife and I were in the same situation end of 2022 where we were looking to acquire our first rental but also wanted to upgrade the primary residence.  We debated buying a new build in Ocala or Palm Bay first and then the new primary later.  But with our market and projected rental rates compared to our mortgage (with 2.99%) we decided the purchase price for a new primary would be more costly down the road than another rental.  So we leveraged the $200,000 in equity to buy the new primary and transitioned the primary into a cash-flowing rental. 

Just another option to consider because purchasing investment properties right now can be challenging given the rates and down-payment requirements for investment properties. 

It can be, but depends on your situation and do the numbers make sense (and are your jobs secure lol). When we did the math for our situation, we had just over $200,000 in equity at the time we did it and the house was valued at $405,000. My market analysis indicated we could rent it for $1,000-1,100 over the mortgage. We opened a HELC for $100,000 and used some of those funds for the down payment on the new primary and some renovations. The former primary ended up renting in 4 days $1,000 over the mortgage.

With our HELC teaser rate of 3.75% we were paying about $160 a month in interest on the total we ended up drawing (used HELC for pool resurface and shower remodel).  The rate just went up when the teaser expired to 6.25% and we are paying ~$240 a month in interest. 

Now, we obviously can't assume anything in terms of future appreciation, but the way we looked at is absolutely worst case scenario we would have to sell the rental, and in that situation, would we be able to sell it for enough to cover the outstanding mortgage and the HELC balances.  In our market (Orlando), I would say yes.  Even if you look at the 2008 crash, the absolutely worst value decrease was 20-22% for the worst 2 years.  Assuming that highly unlikely event reoccurring, 22% on $400,000 means we are selling for $350,000 and still covering both loans. But the opposite has happened.  Our rental is now valued (low end)at $425,000. Our new primary appraised at $7,000 over contract price and has increased ~$12,000 over that. 

Much like focusing solely on interest rates, I think if you look at the big picture a LOT of people are in great situations considering a recent report indicates 46% of residential properties are equity rich. So I don't think it is THAT risky to leverage the equity if you are in a strong market with no signs of the normal 3-5% appreciation continuing. 

 Do you currently own your primary residence or are you looking to buy your first property as a rental? 

STR is not my area of expertise, but I can tell you since November last year I've had probably 50 leads / sales calls with STR owners in the Kissimmee area looking to transition to LTR because their STR is not performing as well as expected.

A lot of investors purchased during COVID times when during a time of inflated tourism and it has since returned to normal, but supply remains high.  A lot of those people were sold on ADR and occupancy numbers that were the ceiling and not the norm.  It is a highly competitive market at the moment and the truly well performing STRs seem to be the large, expensive properties that are themed with a lot of amenities. 

My lender just sold his STR 4BR unit in Kissimmee after two years because it wasn't performing well. He sold for $20,000 under asking after 4 months on the market. When all was said and done, he was lucky that he only took a $20,000 loss. This is a common situation for a lot of my agent contacts with owners trying to sell in that area.

There can be returns, but you need to purchase the right property and have the right plan. Otherwise you are in a situation where the STR is saturated and if it doesn't perform well, and you need to sell, it is going to be very challenging there as well given how many people are trying to sell in that area.

I've only done it once, but working out well so far.  The challenge I think you'll run into currently is the rates being prohibitive when it comes to the mortgage payment.  Depending on your market I doubt you'd be able to find a property where the rent would cover the mortgage with the current interest rates. 

What are the specs on the house?  Once of my agent partners was asking me about rentals in St Cloud and we don't have anything currently.