All Forum Posts by: Jon Crosby

There is a lot more to STRs then most people realize.  Unless you are super passionate about it or if it was a property you wanted to visit yourself from time to time (not sure why you would in this situation), I would probably just make it a regular rental for now and leverage the college as your primary source of rental traffic, but hopefully catering to responsible students (who are not going to party and thrash you home) or professors or other support staff for the college. 

Best of luck.

@Account Closed. Never try to time the market if possible, if it was that easy we would all be millionaires.  You need to buy right which in these times with high prices means finding really good deals (often by working with really good wholesalers).  Obviously you are not going to find anything for $30k down in the Bay Area, but you might still be able to find something in the Mid-west or Southeast regions as you would be looking for something in the $100k range so as not to over-leverage yourself.  

Checkout roofstock.com to start as they have already done a lot of the heavy lifting of finding markets that may have any chance at cash flowing...although you would likely be paying a premium if you purchase through them.  Additionally you can check out Norada Real Estate for turnkey options (roofstock is not necessarily turnkey) as once again, @Marco Santarelli and his crew has already vetted out the markets that would likely still cash flow and they have the added benefit of guiding you through your purchase process and getting you setup and running right away. 

Best of luck to you! 

Originally posted by @Jimmy Lieu:

Originally posted by @Jon Crosby:

Depends on the ARV of the finished project I think. If the ARV has created a ton of equity then you can simply use the HELOC as a revolving line of credit for your next BRRRR project(s), sort of like your personal down payment bank for all your future projects.

In general though I believe the point of the BRRRR strategy is to sort of 'reset' the home on a 30/15 year mortgage schedule so that it pays for itself until finally paid off at the same time pulling out any money you put into the down payment/rehab. If you do a HELOC, then you are not pulling money out and paying yourself back..you are just creating a revolving credit line (more debt) and not putting the money back into you pocket.

Great answer, but what do you mean by the ARV of the finished project? Can you give an example when you would prefer a HELOC versus a cash out refi for a BRRRR project?

I understand both terms very well but i still don't know which one to go with based on what type of scenario.

I guess what I'm saying is that if one of your BRRRR rehabs ends up creating so much equity (either by market timing or buying right) you could potentially create a very large equity gap by which to start a HELOC line of credit. That HELOC line will last for up to 10 years at the same rate (if you can get those terms) by which you have (hopefully) created a property that is both paying for itself and now can be use a lending machine for future projects. You likely haven't paid yourself back in cash but, even if you did, you would still redeploy that cash to the next venture. Instead, you have a revolving line of credit that you can use to pull at will with interest only terms which will work well for the next BRRRR acquisition cycle.

Depends on the ARV of the finished project I think. If the ARV has created a ton of equity then you can simply use the HELOC as a revolving line of credit for your next BRRRR project(s), sort of like your personal down payment bank for all your future projects.

In general though I believe the point of the BRRRR strategy is to sort of 'reset' the home on a 30/15 year mortgage schedule so that it pays for itself until finally paid off at the same time pulling out any money you put into the down payment/rehab. If you do a HELOC, then you are not pulling money out and paying yourself back..you are just creating a revolving credit line (more debt) and not putting the money back into you pocket.

Just my 2 cents here, but generally new construction homes (at least where I'm from) are sold before they even break ground, so if you have completed homes that are not sold yet, then I would imagine they would be willing to discuss pricing options. Builders and Developers are generally depending on quick sales of new constructions homes to fund their next projects currently in progress.

Best of luck! 

Congrats @Chris Bluem!  Here are some quick answers from my perspective/experience, answers will likely vary on these depending on market, business model, available resources, etc.

1. I have created automations for rental agreements for many friends/clients, however I personally have never used one myself and simply rely on the agreements and amendments I have added to the listing sites.  So, it's sort of up to you I think...it adds a layer of complexity to the process but provides additional confirmation that the guests understand your rules.  Whether or not it actually provides more legal recourse then the listings agreements, I don't really know...I doubt it though.

2. Looks pretty standard, below is a outline of a common one I have built in the past, which you can take some or all of those to incorporate depending on your situation.

3. I assume you mean the list of things the cleaners need to do when the clean?  You can have all the lists you want, the cleaners are going to come in and do their thing though unless you have one that is willing to actually check everything off...even if they do, they might just 'check stuff off' and clean how they will.  In the end, it's going to be about how your guests respond to the property when they check in.  No complaints, then they are doing well but if more then a few complaints come in, I would start looking elsewhere.

4. Lots of people do this and I think it has value, I personally never did just because I liked a simple 2 day minimum across the board.  There are other rules though that you might want to prevent a weekend from getting blocked off because of a weekday stay bleeding in.  Once again, more complex than I cared to get into it, but certainly valuable if you have the means to setup.

Best of luck! 

@Vahid Mostafavi  Got it, now I understand better.  I would give him the $100k then as his time is money as well, HOWEVER, for that amount I would expect him to sign some kind of covenant that reduces his equity at certain tiers if he does not complete the project within a certain time frame or hit certain agreed upon milestones.

Are you not putting in $250k?  I assume you are paying for construction costs right?  So an 80/20 would make you 16% return (although you are not included closing costs, holding costs, etc yet so that is even smaller margin). 

If this is your first time working together I might suggest you do 50/50 so you both do your best to 'shine' on the project and then figure out something more equitable on the next deal. 

Best of luck! 

@Tony Zhang  These are probably questions you should have vetted out before you purchased the property.  : )

I'm going to assume you bought out of state so you need to get yourself a good property manager first and foremost.  If you have a good property manager then they should be able to help guide you through most of what you need.

Best of luck to you though and congrats! 

I'm not an attorney, so just my 2 cents here. 

Are you simply trying to avoid the fees and regulations that go with an LLC? You could explore a LP (limited partnership) where you don't have to have all the LLC fees/setup but you also don't have the personal liability protection that comes with the LLC. Or you could look at a LLLP (limited liability limited partnership) if you are in a state that allows that. Kind of depends on the state you are going to work within and figure out what they allow first, then choose from those options. In general though, however, LLC's are used so much simply because they do a good job within most real estate deals.

Best of luck!