All Forum Posts by: Account Closed

As a lawyer surely you find your work well paid and also exhausting.  I'm curious why you are doing this.  Or are you going to go the safer route for minimal time expenditure like buying a multiplex and renting out 2 out of 3 units? (Not even close to maximizing your revenue but that's what most people do.  Your situation is very different from most.  Others don't have ample income. I realize you're starting out so it may be a while before the lucrative legal projects appear but if you enjoy your field they will because you will get very good at it.  I ask you why you want to get into this because most people get into real estate for the wrong reasons, just the financial angle.  That's a terrible reason to do anything.  Real estate is not something you can do "lightly" and do it well.  If its managed for you they won't care because its not their money.  Not to mention their ludicrous fees.  Most people that have been in school as long a you have develop high standards for themselves and others.  It can be aggravating dealing with complacency!  Another aspect of this is parasitical family members who are suddenly "close to you" and need accommodation because of some unexpected and horrible and unfair emergency.  Good luck trying to evict family.  Never ever rent to family or friends!  Be a good landlord though and you will meet many quality friends.  
I'd be curious how you could use your law background in real estate.  How they could be more intertwined and supplement each other.  At the very least you'll always know where you stand in any given situation, something few investors are secure about.  

Another area where people don't commit themselves is the basement which can be a gold mine though this usually involves a lot of work.  That's OK.  That's what laborers are for!  They just need to be managed well by you.  All you need is enough height.  Then add your egress access, as much as your local zoning will allow.  A private entrance is something people are happy to pay more for.  Its almost always worth the reno costs.  Taking this to the max would involve no stairways (because they waste space) and every room having a private entrance on each level with one kitchen and bathroom per level.

The ultimate house hack maximizes the space.  In my area rents are about $500 for a 100 sq ft room.  The problem is a typical house only has 3 bedrooms and its probably 2000 sq ft.  That's pretty ridiculous....$1500 for something that would probably cost $250,000?  That mortgage is going to take forever to pay off.  So let's visualize the space is used mainly for the bedrooms.  One kitchen that all the bedrooms link to is in the center minimizing hallways.  Say the interior walls are about 6" thick.  So every room takes up 6" in wall space because they share one wall except for the end ones.  Natural light is for the bedrooms, not the kitchen.  The bathroom is beside the kitchen keeping the plumbing together.  Now thinking like this, imagine how many 100 sq ft bedrooms one can now fit in 2000 sq ft.  Also some may have a private entrance to give more flexibility indoors.  Doors waste a lot of space after all.  Maybe 10 bedrooms now?  So the rent went from $1500 to $5000.  Not bad.  

Since most people buying real estate are utterly clueless when it comes to revenue you can't assume you're going to find good space utilization in almost any layout today with their spacious livin, dining and rec rooms, often open concept which is the nail in the coffin when it comes to maximizing space.  You want smallish, well soundproofed rooms so your tenants aren't disturbed by others.  So they feel peaceful and quiet at home, like they should.  So they can talk loudly on the phone without being heard, so they aren't hampered by privacy concerns.  The only way to get this at a reasonable price (nobody sane builds from scratch these days) is to get a damaged property really cheap and use that discount to renovate it to maximize revenue for house hacking.  And this is done quite often actually.  We often don't hear about it because wrecks don't tend to get advertised much.  They are quietly sold and usually to a developer who is going to mindlessly transform it into one more single family occupancy to clutter our landscape even further with wasted space.  What I'm proposing would dramatically increase the number of units available in the area if adapted on a large scale.  It could transform rental challenges today which so many people are complaining about and rightly so.  

What I'd like to find are websites that focus on space utilization in house hacking.  I have never heard anyone discuss it with any amount of depth.  Nothing comes close to this level of revenue and it can be utilized for short term renting which can result in 50-100% more income than monthly rentals if the location cooperates.

Quote from @Tracy Ross:

Quote from @Account Closed:

Quote from @Tracy Ross:

I just did a second home as an investment AirBnB. You can check it out on my profile. I was running number on it forever and getting stuck in analysis paralysis when I just decided to close my eyes and jump. 

Per my numbers I figured it would break even every month but would be a great long term investment and also something I could enjoy when I wanted to go to the coast. That property is cash flowing anywhere between $500-$2000/month! And that is after I pay property management 22%. PM is worth every penny to me though as they take care of every detail and I just cash checks. 

I'm sure the market in Oregon is different from that in the Carolina's but I have thoroughly enjoyed watching this property get full bookings and grow in popularity. I hope you go for it!

The problem with property management is they don't care how much repairs cost.  They won't shop around like you would because its simply not their money.  They don't care.  Well....they certainly don't care nearly as much as you do.  I can see it being useful when people first start and are maybe unfamiliar with things though I'd question anyone investing in an area they are not familiar with.  It seems a lot of people are doing this that really shouldn't be.  They aren't people persons, they don't do any repairs themselves, they don't understand construction, and they don't assemble a low cost, local team they can rely on to help them when needed.  They're doing it like they would buy a mutual fund.  As if real estate is passive.  Well I guess it can be if you're lazy and detached from your investment.  But that is surely a road to ruin.  Investing in what you are interested in is key.  We shouldn't let money sway us too much.  Sure we need a profit but if the area you invest in doesn't interest you it will always grate at you when you need to spend time at it.

 Hi Roger,

I really think this is PM dependent. Our PM is on site at our condo-hotel and they are very involved in keeping the property held at a meticulous standard. There are a lot of small maintenance items (like a door jam, toilet clog, blind malfunctioning, fireplace pilot light out) that I don't have the resources to cover at the moment they occur. They are minimal in cost for me because our PM has onsite maintenance and it would end up costing me a lot more in time and labor to hire a handyman for every small inconvenience. And that's if I can find one in the small town of Lincoln City to come out and do the work. 

I guess it's a cost benefit analysis. My tenants are always happy that things are taken care of quickly and it makes them want to continue returning. All properties are going to have maintenance issues. I would say determine what you want to spend your time on. If you're looking to scale in this world you will pay people to get your time back for more worthy pursuits. 

Tracy, you are running a business without proper preparation.  You need to be prepared with your own people when things go wrong.  What you're describing is the simplest of maintenance.  It also sounds like you are not close to your investment.  Another mistake.  Its great your tenants are returning.  But you're undoubtedly spending way too much on expenses.  It also sounds like you lucked out for a management company.  Most are nowhere near as conscientious!  I just don't want inexperienced people on here making the same mistakes.  Because its really easy to give all your profits to maintenance and reno people.  VERY easy.  

And there are so many scummy slimeballs everywhere selling their "courses" that don't take the real world into account because of their lack of experience or just plain fraudulent morality where they know anything sells if its hyped enough.  95% of the "courses" are rubbish and are just regurgitated material than anyone with a bit of reading or experience knows already.  Now the pro help people really need is usually with their taxes and that is seldom purchased.  A shame because its usually a lot less than repair costs.  

Quote from @John Morgan:

@Jonathan Feliciano

I did this 4 years ago and cost me 8k to convert a 1 car garage into a bedroom and full bathroom. I get an extra $200/month for it in rent. So after about 4 years or less I made up for the cost. I’d say go for it. And I’ve bought 3 properties that had them already converted into an extra bedroom. I’d rather have more bedrooms and the demand is much higher for more rooms obviously.

What were you renting the garage for (for parking a car I assume)?
What are you getting for the renovated room and bathroom?
Because in most cities the difference between the two would be a lot more than $200.  So I'm curious.  

Looks like I can't delete a post on this forum.  

Quote from @Jonathan Feliciano:

@Caleb Brown

Hi Caleb. Thank you for your insight. Where would you go to find info on permitting?

In other words, How would i know if i need a permit?

Where would you go?  Wouldn't people go to the place that issues the permits?  Your municipality?  They MIGHT know since they are the only ones doing it.  What you want to do is very simple.  It will be easy if its a straight forward process.  Remember that the total people allowed to rent on your property my not change with this conversion.  It would be much better if it did.  

Quote from @Nate Sanow:

It depends. Gotta make sure the energy efficiency and feel of the “3rd bedroom “ doesn’t feel like… a garage. Like if it’s still really cold or hot they won’t love paying for your premium rent. In my market it’s punitive in B class on up to not get a garage, but in the C class realm it’s common.

Its a self contained building, isn't it?  Don't people love that?  Its like having your own domain.  I would do it up really nice and you'd get premium dollars for it.  

Quote from @Bob Stevens:

 Just do the math, how long will the extra 100 a month take to pay off the cost of making the 3rd BR. I assume it will be about 5k, right? Heat, electric, flooring, sheetrock etc, So it will take about 5 years to breakeven, Me I would not do it. Not worth it.  

What?  $100 a month?  I don't understand this number.  You can rent a garage in most cities for $50-100 a month for simple parking.  A bedroom brings in easily 5 times that much.  If its plumbed/self contained, probably $750.  Its always worth it!  But the poster didn't mention how big it is.  I would guess its a 2 car garage.  So I would subdivide it into 2, 3 or 4 units, well sound proofed, maybe with a kitchen/bathroom in the center.  

Quote from @Jonathan Feliciano:

Hi BP Community!

Recently, I've been thinking about purchasing a 2/2 SFR with a garage, and converting the garage to a 3rd bedroom.

I think this is a good strategy because you can purchase a home at a cheaper price (compared to a 3/2), and you can increase your cashflow with the additional 3rd bedroom.

What are your thoughts on this strategy?

I am especially eager to hear from those that have implemented the aforementioned strategy. What was your experience like? And would you do it again?

If its legal I don't understand how anyone that cares about revenue would not do it.