All Forum Posts by: Elton Tate

Hi @Husein Alibhai and @Drew Sygit,

All in all, it worked out well for us. I was concerned at first. I had a bunch of people reaching out to book the place for a day or so to host parties. It didn't help that we created the listing during the July 4th week. When you're listing has no reviews, at lot of people pass over it, no one wants to take the chance. But once we reached 3 reviews, people were booking the place left and right. It also helped that we got a connection from a local bar owner that needed to book musical guests from time to time. Based on the data I was seeing in Airbnb, I can tell that the property was well located because my views and favorites in the Airbnb were significantly higher than the other properties in the areas, especially after the number of reviews increased. I currently have a mid-term tenant in the house until the end of January that pays $2,250. In August, we were close to the estimated cashflow of $2,850. The fall is a slow period for Michigan, so we did great based on the time of the year. Also, we had a number of people migrating to Michigan for short term projects in the area, so that kind of helped. Oh and we had to drop our initial price of $2,650 for mid-term rental to $2,250.

The reason for the drop. A number of people looking for a place in Detroit, are looking for something cheap. Most people are looking to stay in a one bedroom for less than $1,200 a month. Honestly, if I can find a good duplex or fourplex. That would be my next move based on what I'm noticing in the area. A lot of medical students/medical professionals are looking for a cheap place to stay in the area.

@Husein Alibhai, my reason for investing in the Detroit area is due to me being born and raised in the Detroit. I'm super familiar with the area and what to look out for when it comes to properties in the area. I was in the Katy area, but recently moved to North Carolina.

Let me know if y'all have any other questions.

Elton

Hey @Travis Biziorek, 

Correct, I currently have the property listed on Airbnb (STR) and Furnished Finder (MTR). The monthly gross amount is based on AirDNA. The site is love and hated by some. This property will be a good test to see how accurate the information is on AirDNA. I found the site after my first property, and used it to estimate my first property revenue; it was pretty close. Unfortunately, Detroit is complex due to things being driven block by block. Whether or not it can meet the $2850 mark is going to be interesting to find out. The property borders EEV on Cadieux, which is a good location in my opinion. I'm hoping perspective guests feel the same way. The house is also really nice, not perfect, but nice.

Also, I know Zillow also uses the MLS. When I refer to the MLS, I'm referring to the real estate agent generated list. I figured somone was going to call me out on that. Zillow is still different in my opinion.

Note: I tend to add more details than needed to help other people interested in learning more about property investments.

Elton

Hi @Drew Sygit, the property is a single family with 3 beds and 1 bath and 1795 sqft.

Thank you @Andrew Postell!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $149,999
Cash invested: $45,000

The property is located in Cornerstone on the border line of East English Village. The property surrounded by a number of restaurants, and attractions. It's located 15 mins away from downtown Detroit. The expected monthly cashflow is $2,850.

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

My wife and I were interested in investing in this type of deal due to the area the home is located. Currently, East English Village home prices are up, and the neighborhood committee is committed to building up the area. With the home being right outside the EEV border, it's going to be significantly impacted. Also, the home is located near the following: major freeway, hospitals and healthcare facilities, located within 15 mins of downtown, plenty of restaurant options nearby, etc.

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

We found this deal through Zillow. Unfortunately, we had no luck on the MLS. The homes were being snatched up left and right. In order to secure the property, we had to offer 10K over asking with the hope it wouldn't appraise. But lucky or unlucky of us, the home appraised higher, which provided us with more equity to start out with.

How did you finance this deal?

We financed this deal using a conventional loan, and taking portions of my 401K out to make the down payment and stage the house for STR and MTR.

How did you add value to the deal?

N/A

What was the outcome?

The home is now listed on Airbnb and FurnishedFinder. We booked a couple people so far, with one person interested in creating a mid term lease.

Lessons learned? Challenges?

It definitely took more than planned to get started. The home had a number of critical issues that were not found during the inspection. But luckily, our real estate person had a few contacts that were about to assist.

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

Yes, we worked with a real estate agent that specializes in invest properties that was a major help.

Quote from @Lauren Kormylo:

Elton, I reread your original post, and noticed you have the thermostat on learning mode.  Learning mode is for longer term residents.  Your short term guests will all have different habits, and learning mode will be of no use - it takes a few days to learn their schedule, and by then they'll be gone.  And then the next guests will find the thermostat temps changing on them for no reason and be irritated.  

 Hi @Lauren Kormylo, good catch. There were a number of things I had setup that should have been disabled. During my first month, I had ECO mode turned on. For those who don't know, when you leave the home, the temps go to ECO friendly temps which should save you money. It's a good feature, but only for personal use. My 2nd guests from original listing were out for most of the day, and came back to a house hot house (78 degrees) around 2 am. It wasn't a good experience for them, I offered a portion of their money back due to the inconvience and turned off the feature. Then, to your point Lauren, I had the 'Auto-Schedule' enabled that wasn't a problem until now. 

Here's the list of things I disabled for the Nest in my properties for those doing research:

- Home/Away Assist: Off

- Time-to-temp: Ready (Didn't touch)

- Early-On: Off

- Cool to Dry: Off

- Sunblock: On - Ready (Didn't touch)

- Leaf: Ready (Don't remember touching, but could have been enabled during setup)

- Airwave: On - Ready

- Lock: Currently off for one property (debating if I want to lock the thermostat at 68 for cooling and 78 for heating - and taking special requests from quests) 

I agree @Kate Stoermer

Quote from @Kate Stoermer:

Disclosing something like this aligns expectations. Managing guest expectations is how you get 5-stars. I think a lot of people have allowable ranges on their thermostats - large enough to encompass a wide range of comfort levels. 70 is probably not low enough to encompass all.  

This is hospitality, and in order for guests to feel hospitality they don't want to feel constrained in how they are able to enjoy the space they paid for. They absolutely will be less judicious than in their own homes.  We have to allow that a few bucks in added heating or cooling is the cost of 5 star reviews.  

I personally have ranges from 66 to 76 and I welcome folks to contact me if they need a different temp. No one ever has. 

My main concern is guests setting it to low and running it throughout the day. I have personally experienced the AC freezing up in the past, but to be fair, the furnace was a lot older at the time and had a few issues with the fan. Since then, I have updated the furnace before converting it to an Airbnb/Mid-term rental. Maybe I'm being over cautious. I would hate for them to have no AC. Like you said, it's a hospitally business.

Quote from @Russell Brazil:

I'd have personally left a lower review than that,  and probably wouldhave requested a refund. I've never stayed in a hotel or short term rental where I couldn't control the temperature. In fact I probably would have just left after the 1st night and disputed the charges if an owner wouldn't let me control the temperature.

I call CAP. I've stayed in both hotels and Airbnbs where they restricted how low or how high temps would go. Hotels typically do this for cost savings, but they also may do this to prevent guests from setting temps that could impact others on a floor or adajacent room (my assumptions). You probably were unaware because the temps met your conditions. To be clear, the guest can control the thermostat. I just restricted how low and how high it could go. It would be insane if they couldn't adjust the temperature. But I get your point.

Thanks, @JD Martin, disclosing that the thermostat is locked is most likely the best option. Each person experiences something different. I have a guest in there now, and the thermostat learned to go to 68 at some point, and they were freezing. And they actively keep the house at 74, so this is interesting. I'm glad I made the post. It was great to read everyone's perspective on the situation.