All Forum Posts by: Cara Lonsdale

 Hi Dee!  Sorry to be so late to the discussion, but I wanted to reach out to you.  

Our Winter visitor season is AWESOME! From late Oct through April, we just see a flood of snow birds and travellers come through. January is big because of the car shows, horse shows, Phx Open, Barret Jackson, etc etc etc. So, the prospect of an AirBNB is there IF you pick the right property in the right location. The other poster in not wrong in that there are some issues to consider like the HOA (more importantly the CC&Rs, which are really what dictate) restrictions on lease duration minimums, and weighing the increase in revenue for a short period of time vs getting less for a more consistant period.

However, in terms of managing the rental itself, AirBNB actually already has a system in place for this.  You can offer the property up for a local "Host" to manage.  Then they handle the posting, the calendar, the screening, the turnover....everything, and you pay them a % of the rental rate.  It's a good deal....especially since the host is rated on AirBNB by the visitors, so they are encouraged to provide exemplary service in order to get the best feedback and boost their scores.  This works to your advantage over a regular property manager who can just take the listing, post in mls and sit on it.

Old Town is a great area for considering as it provides many "walk to" options.  However, it doesn't cater well to the January crowd that will want to be up further North in the action.  So, the old town property may be good for a snow bird renter who will be there consistantly for 6 months.  Then you can offer a short term lease for the off season.

If you are looking for an AirBNB type, you may consider something further North into Scottsdale that would allow for access to some of the events I mentioned, as well as close proximity to shops and dining.  The new Scottsdale Quarter is great as it is an added bonus to the already established Kierland area.  There's golf, shops, dining, and night life all right there.

No matter where the location, it probably will never compare to what you see in your area.  You have the beach!  Nothing beats the beach for booking AirBNB travellers.  Those rentals go so fast, and for so much!  It's crazy.

Anyway....not to go on too long, but I wanted to reach out and share my thoughts.  If you are still looking for some suggestions or help, please don't hesitate to reach out.  I am happy to answer any questions or help you explore options.

 Jack, were you able to make a connection that provided what you were looking for?  If not, I am happy to help.  I can send you properties to consider as well as offer analyzing tools to evaluate different projects you are considering.  Many commercial brokers in AZ don't know how to present numbers.  They deal solely on proforma numbers, and usually short change expenses.  So, it is really important to have a good analyzer to break these deals down to see what you really have.

I can also assist with commercial financing if you need it.  So, I am happy to help, or answer any questions that you may have if you are still in the hunt.

 Kyle, have you found what you were looking for?  I know there were many people here with some good suggestions.  I would second the idea of using AirBNB over a property management company.  AirBNB has a system in place for you to offer your property for a "Host" to be assigned to manage the rentals and turnover for a % of the rental rate.

There are a few things to consider.  I see that supply/demand was already mentioned, and this is important, but more important is the location.  Demand is always high in the Winter months because of the amount of visitors we get annually, so I wouldn't worry so much about a supply overage.  However, your property has to offer visitors something beyond what an average rental would.  For example, what is within the surrounding area?  What can they walk/bike to?  Remember, these people are coming from out of town, so they want to be able to entertain themselves.

Also, if you are looking to purchase a condo/townhouse or house with an HOA, you will need to make sure that the CC&Rs allow for short term rentals. Many do not, and require 12 month lease minimums.

I have some ideas of areas to explore if you are still looking.  Just PM me.

 The first time I ever sailed (was actually at the helm) was on lake Lanier.  Just beautiful for sailing.  I laways wanted to go back.  I love to waterski, and I think it would be a good lake for water skiing.

 Sure thing.  I know it's tempting...Lake Lanier is so beautiful.  

Oh yeah....and don't forget about capital gains as an expense to consider for the flip.

I am not sure you have enough of a spread there to make enough money on a flip to make it worth the flip VS holding as a rental. Start at the $155K and work backwards deduct your cost to purchase, rehab, closing costs, any Realtor fees (everyone thinks they will FSBO, but you have to plan for these as sometimes you need a Realtor to help). You also need to account for any Buyer who wants you to pay for their closing costs. Sometimes that is a standard ask for Buyers. Anyway, after deducting all of these expenses, what do you have left? If it is under $10K, then you have to evaluate whether the rental overage (cash flow) is more valuable at that point.

It sounds like the rental income will be worth more to you than any possible profit from the flip would.  PLUS, you get the added bonus of building equity in your property while you collect the cash flow from the rent.

One note in your numbers..... I don't see insurance.  You will want homeowners insurance, but it won't bump your monthly payment by much.  Also, you may want to consider a home warranty to account for repairs, but that is optional, and it sounds like you are handy, so maybe you would opt out.

You are right on track.  Property management can be a nickel and dime business.  So you first need to evaluate WHAT EXACTLY you need from your PM, and then you have to know the right questions to ask each one you consider.

Lease Up Fees - this can be a % or a flat fee of the gross rent.  This usually includes marketing, showings, screenings and lease signing.

Management Fees - $45-$100 average monthly fee or can be 8-12%.  This usually includes rent collection, fielding tenant calls, managing maintenance and repairs, paying utilities, issuing 3 or 5 day notices (depending on your state req), performing inspections, etc

Maintenance Surcharge Fees - This is where it gets ridiculous.  This is a fee they can charge on top of whatever maintenance and repair expenses cost.

Also be sure to check the fine print for their cancellation fee and policy.  Many PMs want to be paid in full for any lease ups that they have done that still have terms on their leases.  This can equate to big bucks.

So, decide what you need them to do.  If you can place your own tenants, but you want a PM to manage the property from that point, then you may ONLY want that service.  Or if you are not good at placing tenants, but can handle the maintenance, then you may ONLY want the lease up service.  So, it really just depends on what you need.  Then compare, and read the fine print!

Inspector, appraiser, escrow officer, even Realtor....none of them would prevent you from doing your own RE investing, and any of them would compliment your goals as an investor.  Of course if you become a Realtor, you need to make sure you are properly disclosing your licensing status to any potential Sellers or Buyers involved in your personal deals.

Best of luck to you!  If you decide you want to explore the Realtor route, PM me for some good advice. :)

Don't eliminate your wife.  I'm sure she's not all that bad of a debt!  LOL.  As I read that, it made me giggle, until I completed the sentence on the next line that referred to bad debt.  So, thanks for that chuckle.

OK, now onto more serious things.... This is really a choice best made from comparing options side by side.

First, the bad debt can sometimes get in the way of your DTI (Debt to Income) ratios, so is that an issue to consider?

Is the lower payment of not having mortgage insurance (PMI or MIP, depending on the loan type) worth more than the absence of the bad debt? In other words, where is the $XXX better spent? Let's say the mortgage insurance adds $100 to your loan. If you were to pay off the bad debt, would it result in a $100 or more per month savings? If the answer is yes, then there is an argument for paying the bad debt and taking on the mortgage insurance.

And so forth. So, I would have all of the options in front of me, and compare them. Take into account what each one GAINS you (lower payment, increased loan amount approvals, etc), and what each one CHEATS you of (DTI Ratios, paying MI, etc) and make the decision based on your needs.

I hope that helps.