All Forum Posts by: Account Closed

Very cool Leigh.  I love the idea of merging the Tiny House trend with Airbnb.  It lets people "try it out"!  I am glad to see you are hitting your occupancy numbers.  

@Chris Seveney is right.  This is happening all over the country.  Here in Boise the State of Idaho is starting to crack down on taxes, including back taxes.

The fact is that it is not just the hotel lobby -- the legislatures want the tax income generated.  Plus, those taxes are going toward various activities (such as expanding our conference center) that will bring more visitors to hotels and to short-term rental properties. 

I highly suggest to everyone we work with to get on the right side of this and understand that most, if not all, markets are going to go this way.

Laura, that is pretty common in my neck of the woods.  You can keep it as a multi-family without a problem but if you want to expand or do any major work, you may have to bring the property "into compliance".  I can see why the bank won't lend on something like this.

I would also make sure the rezoning is actually approved before committing to a multi-family purchase.  Zoning in cities is based on the long term plan for growth, set out by the planning department.  Your deal may or may not be in an area where the city envisions multifamily in the future.

You can always ask for a rezone but many cities will need a better reason than just to fix a non-conforming property.  Check to see what the city "wants" in that area.  If properties around you are zoned for commercial and multi-family then you may be okay.  If it is all single family homes, you'll have a fight on your hands with the neighbors and it will be hard to say this property "should" be multi-family.  Most municipalities will take the easy way out and keep the zone as-is, but tell you that it is no big deal because you can continue to have the use "grandfathered in".  

Thanks Amanda.  As you suggest, I'll just have to run the numbers and see if it can work!

Anl - if they can't improve the property without your permission and want an AC, I'd say they need to deal with you one way or the other.  The question is whether you want to go to court about it....who knows what a judge will say.  I'd open a dialogue and layout the options - they keep in the unit as-is (paying full rent) or they work with you on a time for an AC install or provide you with a game plan for their own install (asking for your permission).  Good luck with it.

First off, let me say that your question very likely needs a lawyer and I am NOT a lawyer (nor am I trying to give you legal advice).  But, I do have 10-years of leasing experience across all product types from commercial to residential to retail.  

In my experience clauses like this need to be pretty explicit in how and when things occur.  I personally would like to see something that says the tenant will "cooperate".  I also don't like any clauses that say if a deadline passes the other person gets to do something (i.e. reduce rent) -- you never know if they want the AC unit or just a discount on rent.

With that said, I don't know what your lease says or what options you have but I would think you should determine whether the rent discount is worth the savings on the AC unit.  Maybe just take the hit on rent and save the cost of a new unit?

My leases always say that the tenant can't change anything without my permission and/or supervision.  So, assume yours says something similar, I'd also let them know that the tenant will need permission for any work done.  If they do rebate rent on their own, I'd give them a short-payment notice to record officially that they underpaid (in the absence of a receipt or proof of payment, you have nothing to verify they did the work).

It sounds like a difficult tenant.  Maybe just give them an option to get out of the lease? 

Thanks @Account Closed  I prefer to sell to build up capital, but I like the fact that my fallback is to hold and generate cash flow.  I doubt I will be able to convert to a quad.  Duplexes are allowed but fourplexes need different zoning.  Would you be able to sell and still make a reasonable profit (enough to make the risk worthwhile).

Thanks @Cindy Szponder.

I'm trying to figure whether this is a long-term or short-term play for me (hence the question -- I'm trying to see how others have approached this).  I need to build up my capital, so I'm leaning heavily toward flip but if these type of deals are more for the buy-and-hold investor, then I may need to refocus elsewhere (such as on house-flips).  

Right now in our market there are a lot of people chasing small multifamily deals and very little supply.  The thought is that instead of chasing deals like everyone else, if I can create product to sell into this demand there is money to be made.  I have the contacts on the construction and sales side.

I live in an area in which it is relatively easy to convert a single family home to a duplex (most residential zones will allow with some caveats).  The question is whether this makes sense financially?  Has anyone else done this successfully and what are the main considerations?

Assuming that you have to buy a relatively beat-up house to make the numbers work, I'm thinking a house flip might be more profitable given the willingness of home buyers to "pay-up".  Any thoughts?

There doesn't seem to be any hard and fast rules out there yet.  Different cities are taking different approaches with some just ignoring the issue.  Your best source is to approach any city directly to find out how they will deal with your particular situation.  The problem is that you will likely get the opinion of the individual that you speak with -- it may not actually be what the City (i.e. City Council) will do and very likely is not a legal answer.  

Ms. Paler's answer above is a case in point.  One home owner complains, the City "reacts" based on their feelings, their biases or just on politics, but it doesn't mean that the answer is really grounded in law.  So, baring a court case or clearly articulated set of policies, you may run into pushback from cities or you may glide through (for now).

Now, to put my City hat on (I do development, advise developers and handle the City's real estate portfolio) the biggest obstacle is zoning laws.  Look at it from a home-owner's perspective.  They buy in a neighborhood where zoning has said "residences".  They didn't buy in the commercial area because they don't want to be around that stuff.  Now, a home-owner goes and turns his house into a "bed and breakfast" or short term rental.  They all of a sudden are living next to a business.  

My thought is that there is a zoning issue here that is in conflict with owner's rights to make use of their property.  I imagine we will see a lot more "minimum stay" regulations to overcome the conflict.