All Forum Posts by: Ethan Cooke

@Jordy Clark My family AirBnB's our 4/2 home in San Francisco for $325 a night anytime we leave town for a week or more. Agree with @Jon Ree, it's worth it only for several nights, not just a weekend. We have a 4-night minimum and give a weekly discount. Terrific way to make extra income. This summer we will house-sit/pet-sit for a neighbor for 2 weeks in July and AirBnB our place. Nice way to make the mortgage payment!

Katrina Razavi - I have worked with a great SF architect who knows SF zoning well and works very effectively with the Planning Dept. His name is Kieran Boughan. Feel free to email me and I'll give you his contact info. Kieran did the plans and pulled permits for a major remodel of my primary home and a remodel of an investment home. He does terrific work and his fees are very reasonable.

Katrina Razavi I recommend that you AirBnB it for 6 months and then assess if this seems better for you than a long-term tenant. I AirBnB my 4/2 home in Mission Terrace whenever my family goes on vacation for a week or more. In 3+ years, it has gotten booked every time I have posted availability. Keep in mind that we take vacation during typical vacation times when demand to come to SF is high. My rate was $295/night and is now $350/night with a weekly discount. It has been a great source of extra income. Happy to email or chat further. Good luck!

@Alex Chau - A few people in my neighborhood in San Francisco have done this in their back yards and it seems to be working well for them. Please keep us posted!

 You guys rock!

@Amit M.  Thanks for more great feedback. Glad the financing idea for base return plus upside sounds feasible. I like your idea of using a property as collateral for a private loan especially if I can't find a bank loan after trying several. I'll also be sure to use explicit contracts so that any partner (friend or straight business associate) knows exactly what to expect.

@Johnson H. Thanks, you have a lot of good financing ideas. I will probably hit you up for another phone call once I get into this! My key takeaway after just two years of investing in San Francisco is buy and HOLD. While it would probably be easier to find a financing partner for a flip a deal, my goal is to find a partner for a BRRR deal and pay them back over time through rehab plus appreciation.

@Sean Walton Yes, I agree that AirBnB can be really lucrative. It looks like STR's in SF's Oceanview neighborhood where my place is go for about $75 per night per bedroom, which adds up if you have high occupancy.

How well has it worked for you to do 30+ day San Fran rentals? In which neighborhoods? This might be a good option.

Thanks @Amit M.--you're on! Re: 3-unit option, I will do some research in the coming weeks/months with SF Planning Dept, my architect and contractor and post my findings here. 

Thanks also for your insight about financing options. Two questions for your and others who know about creative financing: 

- A lender told me that to re-finance this investment home with cash out, the max loan is $600K even if the assessed value is $1M+. Is this typical? Or just what that lender is willing to do for me based on my borrower profile?

- Re: financing with partners, what do you think about my setting up a deal like the following?

- I offer a minimum return to family/friends (e.g. 8%)

- claim a small project management fee for overseeing construction (whatever is reasonable)

- offer a percentage of added/assessed value or a % of future rent for a period

Thanks!

@Gabe C. Thanks for your note (I'm just looping back!) To answer your question, the cash flow on my first investment property was just over $1,000/month 1.5 years ago when I started renting it out and is a bit higher now. To put things in perspective, it has appreciated about $200K in 2 years, which is equivalent to another $7K-$8K per month in rent (assuming the market stays solid and I can realize these gains when I eventually sell). 

I'm finishing up a nice rehab on my second San Francisco investment home (another 4BR) and about to rent it out to tenants. This should produce modest cash flow. As with the other property, I'm confident that the rehab has added value close to 2x the cost. And I suspect that long-term appreciation will be strong. The real lesson for me has been to "buy right" in terms of price, home condition, location, market, improvements, etc.

Thanks for sharing this piece from Nolo, it's very helpful to see it again @Sean Walton.

What are your thoughts about feasibility and profitability of option A (3-unit conversion) or option C (2-unit condo conversion)? 

You've captured the essence of my question about option D (AirBnB in-law unit). The house is currently a single family residence so not rent controlled. If I added an in-law, it certainly would not need a full kitchen/stove. I'm curious how well an AirBnB would do in the neighborhood (Oceanview), which is a bit gritty.

@Account Closed Thank you for your thorough response! Two follow-up questions:

- In-law/AirBnB option: If I lived in the main unit, would the 90-day AirBnB limit still apply?

- 3-unit expansion: If I find 1-3 partners to help finance the construction for buy and hold, what are good ways to structure the deal? I would want to give my investor(s) a fair return while keeping the asset long-term. 

I have an awesome SF architect and contractor/partner, so I have the right team for the 3-unit play. Thanks.

Thanks for the follow up @Chris Mason.  Good food for thought. 

Who else can chime in?  I realize this is somewhat unique to San Francisco and would love to hear others' thoughts.  Seems like there's a great investment opportunity in here somewhere. Thanks.