All Forum Posts by: Daniel Rozen

Thank you @Caroline Gerardo, @Sarah Kensinger and @Michael Baum

I am actually not looking to run this as a full time hotel. What attracts me to this property is that its 8 commercially zoned acres on motorized sports allowed lake, only 2.3 hours from NYC. Im looking at it as airbnb type of business, not full pledged hotel endeavor. The biggest question is if my rehab costs will be too much (it looks like some buidlings on property are beyond repair), in which case i would negotiate just the land portion of it, and start putting up tiny A frames for rentals, make nice little community area, build a sauna etc and create ambiance and demand that is not found in regular type of hotel environments in upstate new york. 

Problem is i am a long term renter in Florida and PA and never actually done any short term rentals so not sure what types of expenses can creep up. I can extrapolate from my experience in LTR. I can figure out pretty much advertising costs etc. Maybe you guys can suggest a ball park expense numbers or percentages on annual bases (thanks to @Caroline Gerardo i put in those categories in). I included link to my fully blown excel calc, feel free to use or adjust for your needs. I think looking at it rather than pic makes more sense. Taxes, utilities and insurance are in the ballpark already.

Gut feeling tells me, start small on that property (tiny house at a time) and learn and grow. But maybe not so. 

Again, thank you for your time and contribution

Daniel

STR Calculator

You are correct @Curtis Porter and @Michael Baum, my maintenance costs aren't fully factored in. $75 cleaning cost came over from single property str i was modeling before, which is typically paid by renter. The thought process was that renters in the STR hotel pay the cleaning cost on top of (just like Airbnb charges) so i dont have to account for it separately. Looks like i maybe wrong in assuming hotel costs would be similar to single STR times x factor, even though the dynamics are the same.
Any ideas or resources i can use to estimate the maintenance costs? Are occupancy rates different for this type of short stays and follow different trends vs regular STR?

Any pros and cons getting into this type of business?

thanks again, appreciate your input.

Hello BP community,

i found a potential buy with dilapidated multi-family property which used to be hotel or resort and zoned for commercial use. Its on the lake and got couple of different size buildings which in total count about 20 rooms which can be renovated and rented out as STR for various occasions including corporate parties, weddings etc.

I have a robust excel spreadsheet model (graciously obtained from BP awhile ago) which i modified to fit my needs of evaluating single residence home with various parameters including ARVs, taxes, mgmt fees, financing etc. (see attached picture)

My question to you is how is the process or logic different in analyzing this potential project than what i am  or many of us currently doing for SRH?  Is it just a matter of scaling up by factor of 20 which is the number of rooms which can be rented out?

Some of the assumptions are i applied were: ADR (very conservative for the area), Occupancy rate (below 40% to be conservative), rehab cost is probably too conservative and will be more but still will make sense as we'll build value into project. 

On paper, the deal looks sweet! But i know i am missing something here. What do you advise i take into consideration when evaluating this project?

thanks much for your help.

Daniel

Thank you @Nick Schlabach and @Steve W.

You guys ask good follow up questions :-)

My goal is long term, but in a market where i see appreciation skyrocketing in just one year, one may wonder, how long are these prices sustainable? I do love Sarasota and its a strong market, but in my opinion everything is cooling off. DOMs are getting bigger, mortgage rates are higher, and even though Sarasota (LWR) is mostly blue collar they are largely dependent on Tampa economy as well as remote work. Im not worried not being able to rent and make some money in Sarasota, im just concerned that prices may go down to a pre-pandemic level, and i would not see that level of appreciation for few years to come. Its the Cost of Opportunity we're talking about here.

I dont have any other markets in mind at this point, so issue of 1031 is a tough one if i decided to sell. 

If I decided to cash out refinance at higher balance, I would just need to figure out the level of extra dept i am comfortable with that would cover my expenses by rent and have the extra cash to play around with in other markets potentially.

thank you guys,

Daniel

Dear BP members,

In these tough economic times I would like to get your opinions. What would you do? Here is my situation:

Last year I purchased a new construction SFR in Sarasota FL which appreciated nicely in the past year. Second year leasing with no issues. Few months ago I was forced to pay off my mortgage with the lender using my primary home HELOC (currently fluctuating apr at 5%). Here are some rough stats:

Home values and if SOLD today

Current Home Value       $680,000

Purchased Value             $(480,000)

RE Commissions (5%)    $(34,000)

FL Doc Stamps                $(4,760)

Rough Profit                  $161,240

Yearly P&L

Rent          $43,800

Mtge         $(24,000)

HOA $(1,224)

Taxes       $(7,000)

Ins            $(900)

Maint       $(500)

Total Net Profit $10,176

My question to you:

1. Should I continue renting which will be getting more expensive as my HELOC apr is bound to go up this year as per the FED directive.

     Con: reduced Cash Flows.

Con: used up HELOC which could have been used for other investments.

2. Should I cash out refinance at say 80% home value ($540K), pay off my HELOC ($380K), and be left with $160K available to invest elsewhere in real estate markets.

     Con: drastically reduced Cash Flows on rental since bigger mortgage balance.

     Con: New underwiring process and closing fees.

     Pro: Fixed mortgage vs fluctuating

    Pro: no 1031 exchange issues to deal with and no tax ramification

3. Should I sell while the market is still good in Sarasota and yield myself a nice profit which I can 1031 exchange (buy low, sell high – finally 😊)

   Con: Dealing with 1031 exchange and rushing into identifying new investments within 45 days

   Pro: It would take me 16 years to break even on profit from sale vs renting cash flows.

as always, appreciate the BP forum and all of your input.

Regards,

Daniel

Thank you guys, 

it does look like i will have to pay it off and then maybe sell. I would probably tap into my heloc (not the best way to invest currently, but looks like the best way to avoid further complications). I have plenty of equity there and a good paying tenant. so for now i would just move the balance from a lender over to my heloc and see what happens. Maybe sell and cover the heloc balance later.

thank you all though. Appreciate BP help as always.

Daniel

Hello all,

I'm in need your advice on how to handle the situation i am currently in.

A year ago we purchased a second home in FL and rented it out right away. To be honest, we were thinking of at least partially spending some time in FL during the Covid times but found a great renter for 1 year within a month of closing. It was great as we didn't have to drop everything and move there right away. Today, i received a certified mail notice of default letter from a lawyer's firm which lender retained to represent their interest. Apparently (my bad in reading the loan docs) i was not allowed to rent it out as a second home.  My guess is the lender is stuck with this loan as investment (more risk), while they wanted to sell it as second home (less risk). The letter does not tell me specifically what my actions should be with regards to this. 

Im sure some of you have dealt with situations like that so if you could share or educate me what my actions should be i would greatly appreciate it.

Best regards,

Daniel

ohh wow! So the reason you choose to pay the lienable items yourself and back-bill the tenants so that you can be in control or any other more practical reason i am not aware? Reason im asking is i have two properties in Florida and let the tenants pay on their own. They are good tenants but it just occurred to me that i never even checked if they do, and i would not even know as utility company sends the mail to the renter, not me.

im actually trying to get into the Pittsburgh market myself and as it happens i spoke with a good local RE agent today who recommended a PM company for my team. I did not talk to them yet so cant verify anything, but my agent swears by them and tells me he works with them a lot. Im not sure if i can share this info here in forum but if you DM me i will definitely do so. 

regards,

Daniel

@David Robertson

wow! David this is one fancy spreadsheet. Thanks so much for sharing this info with us. Im sure you've made a lot of investors that much more knowledgeable with this tool