All Forum Posts by: David N.

Quote from @John Underwood:

You can absolutely negotiate a better deal on a fixer upper and put some sweat equity into it. That can include hiring out the work and buying the furnishing. 

Location, views and amenities will stand you apart from the competition. 

Buying turn key is convenient and convenience usually cost money.

Thanks John!

Quote from @Eric DeNardo:

@David N.

It's up to you. It also depends on how much cash you have upfront for the rehab, closing costs, and down payment. Is this your first time doing rehab? If so, I recommend finding something turn-key where you can update more cosmetic work like cabinets and flooring. It also depends on the location - where are you looking to buy a STR?

Hi Eric - Thank you. I've done rehab on my own houses, but never on a rental. As far as where, I'm thinking it needs to be within driving distance of my house for the first one and I live outside Philly. Right now, I'm considering Vermont or the Delaware beaches. 

Quote from @Bruce Woodruff:

Either way will work...depends on your budget entirely. I always look for fixers because I am a Contr and can get onto the property cheaper....but it's quicker to buy turnkey, you just will take longer to get your ROI...

 Thanks Bruce!

I'm just getting started. When I'm looking for a deal with an STR, should I be looking for a somewhat distressed property, as if it was something like a BRRRR on an LTR situation? In other words, should I be looking for something I can get at a discount and improve? Or are STRs different and I should be looking for a turnkey property? Or is it entirely up to what I want to handle? thanks for any advice. thanks, David

Quote from @Henry Clark:

Looks like you got interested in real estate and joined bigger pockets back in June 2021 and have not made an investment.  You have probably read and watched lots of material.  

If you had bought back then you would have a great deal.

You need to do a deal and move forward. Looks like you're interested in doing STR so do one. You won't learn anymore reading or asking for advice.
.  
Key thing is to calculate Failure.  So you can move forward.  Have you done deal analysis?  Do at least 5 then start making offers going forward.  Using your deal analysis do some failure or stress tests.

1.  Need a new roof

2.  HVAC goes out

3.  No tenant for 4 months

4.  Rental and occupancy rate is lower than planned.

5.  Tenant trashes property and you didn’t require them to take out insurance.   

Do each of these independently of each other and see if you can handle that failure.  Take away or analyze every reason for you not to do a deal this year.  You will fail.  Just make sure they are small failures.  Part of learning.  .   

Start small and Make Your Big Mistakes Early.  

Thanks Henry. I wasn't serious a few years ago. I am now. I appreciate the good advice. I'm just struggling a bit trying to figure out which path aligns best with my goals and I've only been back at it a couple of weeks. Your suggestion about running stress tests makes a lot of sense. Thank you. 

I'm just getting into this. Everything I read says that I need to align my strategy and my goals, which makes perfect sense. However, I have yet to come across a comprehensive and clear analysis of how different investment vehicles align with different strategies and so I'm looking for someone who can provide that breakdown or knows where I can find it. Here's my analysis and maybe someone can tell me if they agree/disagree. 

Fix and flips and BRRRs and LTRs all seem like vehicles where the bulk of the yield is coming at the point of sale when you capture equity. With fix and flps and BRRRs that day comes sooner relatively to LTRs. BRRRs and LTRs both generate cash flow but it seems like the real value comes down the line. Fix and Flips and BRRRs are more work so obviously if I don't want to invest that time and that money then that wouldn't be the strategy for me.

With STRs, the cash flow potential is reported to be higher from what I read, assuming you buy the right property, and understand the ongoing costs.  It seems like with LTR's I might be making a hundreds of dollars a month, whereas with STRs, I might be making thousands. Obviously, it all depends on doing things well, but that's the best case.

Do I have this right?

Thanks,

David

Has anyone had any experience with Vodyssey? I've reviewed some of their materials and met with them today. I'm interested in accelerating my journey into short-term rental investing and thought I'd check in here to see if people recommend it. It's a much more significant investment than the premium of Bigger Pockets (10x) and wondering if it is worth it.  Thanks, David

And just had another thought based on the advice about leveraging the retirement income for a loan. Assuming I could find a property where I could post enough cash to cover the down payment, I'd love someone's thoughts on this idea....I do the deal myself, but then have my niece move in to one of at least two units in a proposed property. Her rent goes towards a lease to own arrangement. She retains a right to be offered the opportunity to purchase before I sell to anyone else for up to five years. At that point, we could renew the arrangement or not. If she buys, her rent payments are credited towards the purchase like a traditional lease to own. Also, while she is living on the property she helps to manage the other tenants. This way, her rent is not being wasted, but she is assuming little risk. Since what I'm interested in is the long term equity, I'll be happy as long as the mortgage payment is covered.

@Andrew Postell thanks so much for the detailed reply. 

I see your point. She is nervous about getting into a montage right now because of the high interest rates. That's why she would need me. She wants some sense that there is a safety net if it turns out she can't afford it or needs the down payment back. I'm less concerned about this because I see the long term potential. At the same time, I'd like to help her build wealth. Assuming she doesn't decide to back out of the deal in less than 7 years, assuming we sold the property, we could still split the equity returns at some predetermined ration.  However, it sounds like if we were to buy it as a primary residence for her that a partnership won't work though which makes things challenging. 

I will take your advice and do some research into leveraging retirement dollars.

I have a niece who has been thinking about buying a place but is reluctant to pull the trigger. Meanwhile, I'm interested in getting into real estate investing and am low debt, high income, but cash light outside of emergency savings and my retirement portfolio. I'm trying to imagine how I could partner with my niece to reduce her perceived risk and I'm trying to be creative. I'm thinking about a couple options - 1) Lending her the money for the DP on a multi-family unit and then starting a business where have a joint partnership that owns the house. She would live in one unit and rent out the other; 2) having her provide the down payment, and I would co-sign the loan. We could create a partnership and my niece would live on one side while we rent out the other. We would be co-owners, but I could offer a commitment to buy her out at some point certain if she decides she wants her DP back and to walk away. I'd love thoughts on these ideas or any other ideas especially if anyone has done something like this before. Thanks!