All Forum Posts by: Dan Shelhamer

@Robert Tolnai

I'm in a similar situation. I'm currently doing a flip in central Phoenix in a good area. When we started, ARV was $850K. Now realistically it's probably $700K which is still higher than our all-in number.

I'm most likely going to keep it as a STR, as I have 3 others in North Phoenix that perform well and we have a huge winter/spring coming up with Super Bowl.

I have HML right now at great terms (7.99%) and have that until July 2023. My payments only $2,800 and if I refinance into a 30 year, it would go to around $5,000. Like you, I'm also wondering if I wait until my HML ends to refinance and cash flow $2,200/month higher but also run the risk that interest rates are higher in 8-9 months than they are today.

Your best bet is to get a vacation home loan with 10% down and your rate will be similar to that of a primary home loan except you will also have PMI.

The main drawback to this from what I've seen is that when rates drop, if you want to refi, you would need to have 75% LTV (25% equity in the home).

You'd want to make sure you have reserves to account for this. With my STR's in Phoenix I make sure every property has at least $10K in reserves to get through the summer months when the rates drop.

@Shannon Smith

On my 3 STR's, my setup cost all ended up exceeding what I originally budgeted. If done properly, STR's can generate a lot of income but I have found the first year to be high on expenses. You also don't know what you'll uncover and have to fix after the inspection. Just based on the numbers you provided, I wouldn't do it. You need to have reserves and not depend on this property for income until it's stabilized.

@Erik Applegate

We do $75/day or $350/week.

@Chris Bird

I have 3 STR's in North Phoenix and personally wouldn't buy one without a pool. If you're going to have a pool, it must be a heated pool since the peak season here is when the water temp is cold.

However, most houses you’re buying here won’t have a pool heater so that is an additional cost ($7-10K depending on electrical work needed). You will also have to hire weekly pool maintenance (sometimes 2x a week if you’re getting larger crowds). You will deal with complaints when the heater isn’t working properly and also with monsoon season people don’t understand the water will be murky at times. Your utilities will be much higher as well but I charge a daily/weekly rate if they want the pool heated.

@Christopher Call

With mine, I have gotten conventional financing and then quit claim deed them after you close on it into your LLC. Also, talk to your CPA about getting your wife "real estate professional" tax status since she will be managing this full time. It allows you to use more of the depreciation to help offset your W2 income.

@Javier Emilio Tirado

Typically the bank won't appraise it for more but you may find a buyer willing to pay much more than other comps if you can show good revenue numbers. Especially in areas that aren't issuing anymore STR permits.

For me, it was house hacking my 1st home.  You get to build the equity, appreciation, and have someone else pay for your mortgage.  This allowed me to accelerate my finances quickly.

@Ellie Ryan like others have said, in today’s market it’s very hard to find a 2% property unless you want to buy in a war zone. I bought a handful of properties that were 2%+ about 4 years ago. Now when selling them, they’re selling closer to the 1% range for the new buyer. It was a good way to screen out properties right away that don’t make sense but still make sure you’re running all your numbers on the property before buying.