All Forum Posts by: Dina Schmid

I went back over the paperwork we signed. Disclosure form lists the address as: Development Name Lot #, Desirable City, Zip of less desirable

Agency Consent and Purchase Agreement list Street Name, Lot #, Desirable City, State + Zip. Purchase agreement also says that we're purchasing 2.11 acres and does not have an adendum to change that. This is the first build in Phase 2 and adjacent lots are open. Do we have a case for being given 2.11 acres? (Not that it's likely to be worth a legal fight I would guess.)

I'd love opinions on what, if anything, can or should be done in this situation. (aka - What Would You Do?)

It's been a very, very bumpy road to be under contract - and past the due dilligence period - on a new build we are purchasing with the intent to use it as a STR (and some personal use). Property was listed in a highly desirable zipcode in a tourist area on 1.02 acres. At showing, we were given a plat showing property was 2.11 acres. Seller/Builder was present at showing and told us the listing was wrong; it was 2.11 acres. He had listing agent change MLS listing to 2.11 acres. Two days later our offer to purchase the property + adjacent empty lot was accepted. Address is listed as Street Name, Lot #, Desirable City, State + Zip

Something about the plat seemed off to me and I discovered a calculation error and that it was actually 1.02 acres. Seller changed listing back to 1.02 acres. We asked for a new survey as we no longer trusted the lot markers we had been shown. Seller refused. Listing agent told him that he needed to put in writing that the lot markers he has in place are correct, but he hasn't done that. (We didn't want to pay for a survey and couldn't get one done during the two week DD period.)

Post-inspection negotiations really tried our patience with seller going back on his word on things and niggling over other things. For example, part of the exterior of the house wasn't stained. He's placing the money owed the painter to complete the staining in esrow since weather won't allow it to be done before closing. The amount is a fraction of what we would have to pay to hire someone. He insisted that a phrase be added that the money is to be released upon completion "and not upon approval by the seller." So he can do a crappy job and still get the funds. What little trust I had in the seller disappeared during this process.

Now, three days after finalizing all that, I get a text from my agent that they have assigned a street address. It is a different street name than we were told and in the neighboring - and less desirable - city and zip. I feel like the builder had to have known this. He's also the developer and this is the first house in Phase II of this development. Phase I of the development was in the more desirable city + Zip. He's listed this cabin on AirBnB as being in the less desirable city. I mistakenly assumed that was an error because the place didn't have an official street address yet. The Property Management website lists it as "approximate location: Street Name on contract." (They have other properties throughout the area listed as "approximate location" and not just this one, but most are listed as "location" with development name, street name or near an attraction.) 

We really like the cabin, but I feel like the value is less than what I made an offer on; I'm overpaying for 1.02 acres in a less desirable zip code. We were not the only offer received, but we were the highest. We went in with what we hoped would be the winning offer because this is the one that checked the most boxes of everything we'd seen in months and we really like it.

Am I even under contract for this property with everything in the address being wrong? As for the info being wrong - I know that filing a complaint against the listing agent for misrepresentation could be an option. We can also walk and lose EM (and the money we've put into inspections and PE consultation.) Would you do either? Any other options I should consider?

I think at least one exterior photo is necessary so the guest can know that they've arrived at the right place. GPS isn't always 100% accurate and trying to open the door of the wrong house can have seriously bad consequences.

@Mike Grudzien Do you need a liquor license to do that? I recently talked to someone locally to me (Ohio) who got in trouble with the LCB for giving away a bottle of wine with his luxury rental as even that was considered selling it.

That's true in most parts of the country, but not the county we're buying in. There is a "hobbit house" that went on the market earlier this year that was built into a hillside. It has one door and two fixed windows on the sides of the door. It is essentially a cave with only that one means of egress. However, one man's death trap is another man's wildly popular STR. I just checked and it has reservations through the summer already and I'm sure its occupancy rate is close to 90%.

I think we'll list as a 3BR but be very clear in photos and description that it's 2BR + loft. (And put in a window that can be opened for egress because I do want my STR to be "up to code" even if there aren't codes.)

 Surprisingly it is one of the very few cabins in the area on public sewer and not on septic. We were honestly surprised by that. I never thought about the lofts being a way to overcome the capacity of the septic. Definitely something I should be keeping in mind if we ever look at another property!

We're going to see how much it would be to swap out the window. It would just help me to sleep at night knowing that there's real egress anytime someone in my family was sleeping there.

Where do you draw the line for when a loft just a loft and when is it considered an actual bedroom?

One of my pet peeves in listings (AirBnB/VRBO and MLS) is listing as a 3BR when it's a 2BR + loft. (Second only to "sleeps 8" but photos reveal seats for 4 in LR/DR.) Sometimes the lofts are large enough that you can stand up comfortably, other times they're two mattess on the floor and you have to crawl in from the ladder.

We're under contract to purchase a SFR new build listed on the MLS as having 2BR. It also has a nice loft with ceiling that's high enough that you don't have to hunch over to walk around. It's staged with a daybed + trundle (plus 2 chairs, coffee table and TV; its a good size), but the windows do not open, so egress by stairs only. Previous spec home from the builder with nearly identical floor plan was sold as 2BR, but lists on AirBnB as 3BR. There are only stationary windows in the loft and no codes requiring window egress for a BR.

Would you consider it a 2BR or a 3BR? Would having a window that opens make a difference? 

I personally would have to have one of the windows replaced before I'd feel comfortable renting it, but that's just me and based on personal experience including a traumatic one from childhood in watching the apartment building next to ours burn in the middle of the night. (Damage, but no injuries fortunately.) 

Inside mount is better - unless you need complete blackout (ie in an area like AK where there's nearly 24 hours of sunlight in summer). Outside mount will do beter in blocking light completely.

Like you, we decided to look for a property in the RRG because we like to go there. It's always a tough call on whether to just do a day trip or pay for a rental as the costs of a nice rental can add up quickly.

The TL/DR (which I'll expand on) is that we ended up changing to a strategy of letting others help pay for a cabin that we know we'll love. In other words, we are going with something that won't cash flow positive and we're okay with it.

There are definitely cabins that will cash flow positive, especially if you get something smaller that is likely under $300K. We found some that would definitely cash flow with a 30% (or more) down payment. If you ask nicely and promise not to share, you can usually get good financial information on the properties that are currently operating as a STR.

If you're just starting out looking, you may not be aware of just how many cabins out there are poor quality builds due to the lack of codes. Those cabins that would cash flow - well, we didn't always love them or they had issues. We walked away from a new build last fall because we could already see issues and the sellers ended up getting us a pre-inspection report that said there were serious issues with drainage and foundation. (It ended up selling about 9 months later for less than 2/3 of original asking price.) We've seen crazy stuff. A cabin that in theory would have cash flowed positive almost $1K/month had the kitchen drain go through the crawl space and dump out about 4' away from the house. We were under contract for another place and walked away because of a 2" drop in the house in one corner caused by the foundation not going below grade and the owners not willing to do anything. (Their realtor also begged ours not to send any reports to them. So the house sits on the market and the sellers aren't disclosing the issue - which was one of just many.) 

Eventually we upped the budget to get something we would absolutely love even if it was slightly cash flow negative. We're currently under contract with a builder for a spec home + the lot next to it (so we'll have over 2.5 acres) and have discussed having him make some small changes which will up our costs a little, but definitely bring us joy. In our minds, we come out ahead as we get exatly what we've been looking for. We also get to enjoy our place as often as we like (the slightly lower occupancy rate due to our use is also a factor in being cash flow negative) and the negative cash flow is offset easily by the equity we'd gain, even assuming only a 2% appreciation on the cabin. 

Good luck with your search. Feel free to DM me if you have any questions.