All Forum Posts by: Devin Creek

Loads of books!  On BP you are going to get 10 thousand opinions:-)  all in slightly different directions.

Investment Info:

Small multi-family (2-4 units) other investment.

Purchase price: $595,000
Cash invested: $156,250

Contributors:
Eric Bilderback

Duplex. One unit is an AirBnB and one unit is a long term rental. Both will eventually be AirBnB units.

https://www.airbnb.com/rooms/54317427?preview_for_ml=true&source_impression_id=p3_1644451814_ZZndSWokrPjMGiot

What made you interested in investing in this type of deal?

Better cash flow in a higher priced market. One unit was fully remodeled, added furnishings to make it a turn key AirBnB unit.

How did you find this deal and how did you negotiate it?

Mls, conventional negotiation.

How did you finance this deal?

Conventional financing

What was the outcome?

TBD

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Elizabeth Campbell with Lysi Bishop Realty in Boise. Highly recommended.

Investment Info:

Small multi-family (2-4 units) other investment in Boise.

Purchase price: $350,000
Cash invested: $88,000

Single family AirBnB.

https://www.airbnb.com/rooms/53530217?preview_for_ml=true&source_impression_id=p3_1644451229_4WLzot8jeXboclPZ

What made you interested in investing in this type of deal?

Better cash flow in a higher priced market

How did you find this deal and how did you negotiate it?

Mls, conventional negotiation

How did you finance this deal?

Interest only, 7 year term, 30 year am

How did you add value to the deal?

Converted to AirBnB unit

What was the outcome?

TBD

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Elizabeth Campbell with Lysi Bishop Realty in Boise. Highly recommended

Investment Info:

Small multi-family (2-4 units) other investment.

Purchase price: $495,000
Cash invested: $115,000

Two unit AirBnB property.

https://www.airbnb.com/rooms/53510620?preview_for_ml=true

What made you interested in investing in this type of deal?

Better monthly cash flow in a higher priced market.

How did you find this deal and how did you negotiate it?

Mls. Conventional negotiation

How did you finance this deal?

Interest only 7 year term, 30 year am

How did you add value to the deal?

Converting to a short term rental.

What was the outcome?

TBD!!

Lessons learned? Challenges?

AirBnB profiles/listings do not transfer.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Elizabeth Campbell from Lysi Bishop Realty in Boise. Highly recommend.

Hi Melissa,

Thats great on the house under contract.  That area is awesome.  Things to consider and look out for; Houses in that area can still be on wells, Radon is something to test for, Sewer scoping is a good idea, other than that, pretty routine.  City of Boise planners will be a big help for any development needs.

will DM a great home inspector.

@Scott Kane What is your strategy with this property?  Are you self managing, as Ryan mentioned PM would be another 8-10% of gross rents.  The deal is already neutral leverage, most likely is going to negatively cash flow.  Properties typically eat up more cash than initial assumptions.  If this is an investment, your interest rate would be more like 4%.  What market are you in?  Personally, I would pass and keep looking and analyzing.  You will find something that works better than this one.

@Adam Wells Your in a great spot then. Definitely talk to a lender. These days $300-400 in positive cash flow is pretty typical for a SFR. Generally what people are suggesting is do a 30 year cash out refi at 75-80% LTV. This would accomplish a couple goals, lower monthly PI payment, and allow you to pull out a good chunk of cash to go buy another place that should also have 300+ in positive cash flow. Sense you are converting your house into an investment, really no reason to have a lower amortization and higher PI payment because you can take your money and make it work harder for you in another property, while having a conservative amount of equity left in the deal.

@Nick Robinson Well said.  Totally agree.  

@Adam Wells And really what is honestly the most likely scenario is not some crazy economic factor or really even a major life or job change, it is the day to day operations and something going wrong at your rental.  Personal example: Tenant calls about a dryer issue, every time we call our appliance repair people to come out, it seems like no mater what the issue is it is $400-500 bucks.  Well, even at 200 bucks a month in positive cash flow that is two months worth, so to Nick's point if you add that on to a job or live change, it can start to hurt.  stuff happens!

@Justin V. Awesome! :-)

@Justin V.

:-) my apologies, I am not doom and gloom about the current market by any means.  

What I should have said is the market goes in cycles, start researching the 80's and work your way until now.  We are in very great times in the current business and RE cycles, thought the last 30 years alone tells us that won't last forever.  How the market corrects, that is anyone's guess.  As you know, there are plenty of people predicting what's going to happen.  Though, that is way above my pay grade!

My thinking is RE and true wealth building is a long term strategy.  Going into deals at this stage of the RE cycle with max leverage can be risky if the market cools, or price drop even a little.  And on the flip side, it can be incredibly rewarding.  That is a personal preference on your risk tolerance.  Be aware of the upside and the downside.

My thought is be conservative and honest about your initial underwriting and go into a deal with the leverage that will give you wiggle room in your monthly cash flow to handle any unforeseen issues, economically, or normal things that come up in day to day operations.  

For example, to my knowledge going into 2008/2009 if you had at least 15% equity in your deal, you were able to sustain and make it through the worst of that market cycle.

And, I'm sure you know all this.  Fun topic!