All Forum Posts by: Devin Redmond

Having been associated with Stessa/Roofstock for many years now, I can say that this is spot on. Large general purpose accounting platforms have the resources to work 1:1 with national (and some regional) banks to develop stable proprietary data feeds, but obviously lack the focus and incentive to customize their offerings to serve specialized audiences like rental property owners. Specialized purpose-built platforms generally all rely on the same handful of data aggregators to connect their customers to the 10,000+ unique bank/mortgage institutions in the US. When you bank with a smaller regional or local player, you run the risk that the 3rd party aggregator won't see the value in maintaining a bespoke connection protocol that likely provides very little data compared to the big national banks. I've found this to be true across virtually all finance and accounting platforms serving rental investors.

Just want to jump in here to reiterate what @Michael Smythe posted previously. I've been with Stessa/Roofstock since 2018 in a number of different roles. The Stessa platform is not a full-service PM solution, it's a suite of online tools to track income and expenses, generate financial reports, screen tenants, collect rent, track capital spend, etc. Our customers are a mix of 1) DIY owner/operators and, 2) investors who use one or many full-service PMs to handle day-to-day operations in their local markets.

@Joel Lazar We do keep an eye on the BP forums and I agree we could have provided more context and/or clearer next steps to resolving your issue via our 1:1 convos. The TL;DR here is that there are 10,000+ unique banks and mortgage lenders in the US. Their financial reporting standards, uptime, and reliability vary greatly and we have invested significantly in systems and rules that aim to ease the manual burden that has traditionally been associated with categorizing and tracking this data at scale. It's not 100% bulletproof (as you've discovered) but we do have a workaround for your specific situation, which we'll reach out and communicate to you via our normal 1:1 support channels.

Yeah, encouraging news indeed. Good find! When you pair the new exemption with an assessment appeal, you may now be able to get something that resembles a fair tax valuation in Maui County ;)

@Zeona McIntyre I own a couple of properties upcountry on Maui and have cesspools on both. The larger property actually has two cesspools. Setting aside the ick-factor, it's not necessarily a bad thing. If it drains well and is in good shape, it can result in lower ongoing maintenance cost than a septic system. The risk is if your cesspool fails or the year 2050 arrives, whichever happens sooner. The current regulations per Hawaii DOH are that new cesspools and substantial repairs are prohibited. You can still pump and service your existing cesspool up until 2050, which is currently the year by which all existing cesspools are subject to a mandatory septic upgrade requirement. Who knows if they stick to that timeline...or eventually cave to public pressure and delay it and/or install more public sewer lines.

In the meantime, you are free to buy and sell properties on Maui with cesspools. There are no restrictions or upgrade requirements upon transfer of ownership.

I'm going through the septic upgrade process now for a 5BR house, and it's not fun. There are not enough engineers working on Maui right now, so the design docs alone are running $3,500+ with a 4-6 week timeline. Add another 6 weeks for DOH approval and $20,000 or so for actual system install. That's all assuming you have enough usable and (somewhat) level yard area for a drain field. If you don't have the yard square footage, things get more complicated fairly quickly.

Having been through the process a couple times already, I would recommend having Kekai's Pumping or Akamai Pumping find the cesspool and check it out before closing to assess your risk of near-term failure. The odds that a typical property inspection report will have anything useful to say about the cesspool situation is basically zero.

Hope that helps! DM if you learn anything interesting or want to chat further.

@Mike Neubauer We did sub-3% on a 30-yr fixed for our upcountry place back in September. It's probably even better now, especially if you want to stick with 15 or 20-year term. No points, no tax or insurance escrows.

Call Ryan McNally at American Family Lending. He is on-island, fast and efficient and knows how to get lenders comfortable with funky Hawaii details like ohanas, etc. He's done 3 loans for me in past 2 years.

On the buy side, I seek out real estate agents that will listen to my specific requirements and then stay laser-focused on the assigned task. As an investor who values time above all else, the last thing I want is someone forwarding me every new listing. If I'm working with an agent, I want that person to be on the front lines sifting through deals and opportunities before sending them my way.

On the sell side, I prefer agents who have no qualms about running an auction-like process if interest is high and the market is hot. It's amazing how many agents will push to wrap up the process quickly once the first viable offer is received. That's fine if speed and certainty of close are your top priorities, but sometimes I want to maximize net sale proceeds above all else. That calls for a broker who's not afraid to tell multiple potential buyers, "We're receiving a lot of interest. You're gonna need to raise your offer if you want to be competitive here."

@Anna Mdivani I can second the main points made by @Mike Neubauer.

Minimum contract lease term in Maui County is 6 months unless you have an STR permit, which is only available for a single-family home after you've owned it for 5 years. Even then, your application is subject to tight caps on the number of permits available by neighborhood, higher occupancy taxes, etc. The fines for running an underground STR are astronomical.

Other Hawaii counties have different minimum lease terms. Big Island is only 30 days, for example. Each of the four main Hawaii counties runs its own STR program and the rules differ substantially between counties so detailed research is key before making a purchase. That said, long-term rents remain solid across the state due to restrictive rural/agricultural zoning, a substantial lack of new housing supply, and the added cost of transporting building materials 2,500 miles from the mainland.

Only other thing I will say is that if your plan is to do long-term rentals, expect a lot of tenant churn. A decent number of people seem to move to Maui, Kauai, or the Big Island from the mainland and then find it much harder to make ends meet than expected. Probably less of a factor for Oahu.

Many solid and popular books about rental property investing have already been recommended here, so I'll suggest some less obvious reads...

• Liar's Poker (Michael Lewis) for pure entertainment and a primer on how Wall Street supports liquidity in the housing market.
• Home (Witold Rybczynski) to appreciate the many different ways people want to live inside their homes.
• What Every Real Estate Investor Needs to Know About Cash Flow (Frank Gallinelli) to understand when and how to deploy key financial metrics to make better decisions.
• Handyman In-Your-Pocket (Richard Young & Thomas Glover) to be your own handyman and/or check up on contractors and subs you hire to work on your rentals.

Have fun and don't forget that you'll learn more by doing your first actual deal than you will from all the books in the world.

@Brian G. Good question re depreciating furniture, carpets, appliances, etc. Here's an answer for you: https://www.biggerpockets.com/...

We're not tax advisors but we generally recommend categorizing furniture for an STR as CapEx (with a 5 or 7-year useful life) and then working directly with your CPA to figure out what can be 1) accelerated, or 2) fully expensed in the year incurred under any available safe harbors.

In my experience, when it comes to utilities, you want to focus on two priorities: 1) preserving as much financial incentive as possible for each tenant to conserve water, gas, and electricity, and 2) full transparency in the lease.

When I know tenants will be sharing a meter, I keep the utility bills in my name and then spell out the reimbursement process clearly in the lease. That process is nearly always to split electric and gas according to respective square footages and water according to headcount (all children included). If someone goes on vacation for a few weeks, they don't get a "credit" for their non-use beyond their pro rata natural reduction in the overall bill for that month. They can't argue about that because the lease is clear from the beginning that they're responsible for X percentage of the total bill no matter what. Yes, this approach requires some basic level of trust and reasonableness between tenants, but it has worked well enough for me thus far.

I've found that when you wrap utilities into the monthly rent or tack on some sort of fixed fee, tenants suddenly start taking longer showers and leaving the lights on for days at a time. It's not intentional. It's just basic psychology that behaviors change when incentives change. Then you end up getting into esoteric debates about "reasonable use" and whether the thermostat really needs to be set at 66 all summer. That's no fun.