All Forum Posts by: Jean Brune

Does anyone out there have experience as a Padsplit host.  Has dealing with this organization been a good experience?  Does their concept work?  Overall impression?

While the eviction rate is not 0, PadSplit does everything possible to collet on past due members. But, yes evictions do happen and it should considered in your cost of doing business. This does not solve the issue of evictions but many hosts cash flow significantly from the other paying members while they are removing a member through the eviction process. 

Quote from @Brandon Rush:

Hey team,

I'm looking into buying a property in ATL and using it as a Padsplit because I love the potential to make greater returns with their rent-by-the-room model.

The big hesitation for me is that they screen and place tenants, but don't manage evictions. Giving someone control over who gets into my property while maintaining responsibility of kicking people out seems a bit risky. The rep says that evictions only happen 3% of the time. That's low, but not zero!

I haven't heard from an actual owner of a Padsplit (reviews from tenants are hit or miss). So, would love to hear from this investor community!

Jeff: https://www.padsplit.com/host-resources/case-studies/jeff-we...
Fernando: https://www.padsplit.com/stories/hosts/fernando-and-amaris-c...

Quote from @Bob Willis:

I am interested in talking to someone about the process of funding via DSCR the acquisition of a property currently being run as a PadSplit. The plan is to keep operating the property as a PadSplit post-acquisition. What kind of seasoning is generally required as it relates to the rents/revenue as it relates to servicing the note, etc...

I currently own one PadSplit (acquired via Subject-to) that has been up just over a month. And the plan is to convert an existing Airbnb I own (and have run as an Airbnb since 2019) to PadSplit. This conversion will begin at the end of the month.

I am just sharing the above to give context to my level of experience with this type of investment.

I look forward to hearing from you all.

Quote from @Tar-U-Way Bright:

Quote from @Shannon Strickland:

@Tar-U-Way Bright

I too house hack and learned everything I could ahead of time from BiggerPockets (e.g., bootcamp, forum, books). The BP forum is free and some contributors have nothing to gain and want to see others thrive. The rest is learning by doing. I recommend RentRedi as a PMS. There you will be vetted as a landlord, you can set up each bedroom as a “unit,” you can personalize prequalification questionnaires, and you can choose 2 different levels of background check. Once you move forward with someone you have vetted and feel comfortable with co-living, you can use the message templates to inform your tenant, upload your lease for e-signing, and collect a deposit and rent. The Help Desk responds quickly when you message them.

PS is for a particular type of investing, which are probably the PM, and I wonder if you are permitted to live there. I would not house hack while allowing someone else to place my housemates. You will know best by your vetting and gut with whom you could live. So, to answer your question, you are better off completing being your PM if you will house hack?

 Thank you for this. I do agree with you. Since I am House Hacking I much rather choose who I decide to live with! Thank you for taking the time to respond.

Quote from @Becca F.:

I get a lot of DMs from California investors. I just returned from a weekend conference in SoCal. Most of the attendees were from California and Texas (still a popular place to invest, no state income tax if you live there), some from Denver and Seattle. My takeaways (my comments are italicized):

- Thách Nguyễn (well known as Vietnam refugee with low income earning dad to now $100M net worth RE mostly in Seattle): Appreciation is the 8th Wonder of the world. To build long term generational wealth you can do this with 5 solid appreciating SFHs - this is a 15 to 30 year process, not a get rich quick thing, sorry you can't quit your W2 job in 2 to 5 years.

- A 31 year old guy said he has Section 8 rentals in the Midwest. Thach's response: You need to get out of the Midwest and Section 8. 

I agree with this. He may be getting cash flow with Section 8 but what will those properties be worth in 10 to 20 years? 

-  Invest in the suburbs. San Jose might be surpassing San Francisco. Unheard of suburbs: Brentwood and Oakley have skyrocketed in value here. With remote work, people from S.F. fled to the suburbs, Texas, Idaho, Nevada, etc. 

Can't go wrong with a home in a great suburb with excellent schools no matter what state. My Indianapolis suburban home has doubled in value in 10 years, newer home (built in 2005), great tenant, very few repair issues. A Class A suburban home won't cash flow as a long-term rental buying in 2024 unless you do MTR, STR or creative strategy/financing but it will appreciate. 

- Class C is volatile. It can go well or really poorly

I'm in the camp of doing poorly with Class C in Indianapolis, losing $300 to $500 a month for repairs, stolen AC unit, attempted break in, was supposed to cash flow on paper. 

- Oversupply and lots of building can lead to deals. Look for deals in the South. The Austin investor who presented said Texas is seeing price reductions. 

One of the reasons the West Coast (Seattle, S.F. LA, San Diego is expensive) because of land constraints and regulations. These areas will hold their value. With other states that have lots of land to build on they're building lots of SFHs and apartment complexes. I witnessed this in Indy suburb - luxury apartment complexes charging almost CA rents. Is this sustainable? 

- Co-investing. Going in with other investors to buy a SFH or MF. Don't need to be an accredited investor. I talked to reps from Fractional and Cohome

https://www.fractional.app/

https://www.cohome.com/

I'm considering this, haven't vetted these organizations so please do your research if you proceed. 

- Rent by the room. This is one strategy to mitigate negative cash flow, will often get higher rent with a SFH, depending on the market. I briefly talked to the rep from Padsplit. 

https://www.padsplit.com/

Advanced strategies:

- Syndications: don't attempt as a beginner,  need to be an accredited investor. If you don't know how to vet a syndication, say good bye to that $100k or more if it goes under.

- Commercial RE: NNN leases, industrial, self storage

- Private Money Lending: you act as the bank. Four levels of PML were discussed. Riskiest is directly lending to an investor, all transactions done through a title company, but higher returns. Less risky is going through an organization. I talked to the operators of Lend to Live, Beth Pinkley Johnson and her husband.

https://lend2live.com/

I'm also considering this, doing my research. I don't receive any compensation or discounts from any of the organizations I linked to, just sharing who I talked to. 

**You need to network in person and build relationships with people you trust. BP is fine for getting advice but you're getting one dimensional answers and risk getting messaged by people who don't have your best interests in mind and want to make money off you or worse scam you. I learned so much from having conversations with other investors. I'll continue to do local REI meet ups.

Btw, I'm starting a coaching program for cat tree flipping (riding on the coattails of people that couch flip, Ryan Pineda). You can Zelle me the money... just joking. RE investing can be stressful so had to interject some humor LOL 

Quote from @Michele S.:

Hello there,

I believe is my first post so bear with me. I have been lurking on here forever, but just recently became a member so that I can access all the extras.

I am considering investing in a home to Padsplit, but not quite sure what the best structure for financing would be. There will definitely need to be a reno budget to, at the least add bedrooms, and I am looking to stay under 400k. I chatted with a lender about the DSCR loans and he said that Padsplit (room shares) would not technically qualify for DSCR although if it's vacant at the time of closing, it should be fine. I don't want to do anything questionable and want to come out of pocket as little as possible. I have a high credit score but I am also possibly over leveraged. I do potentially have access to private money if needed, and a 401(k). I am new to this idea and in the beginning phases, so I'm not even sure what other questions I should be asking. I do not want to fully apply for anything at this beginning phase since I have more research to do, so hoping I can get some help here.

Thank you in advance for your expertise!

@Michele S.  I guess what I am really asking is that if there are 4 bedroom, 4 bath homes that already have what you need - why not just buy one?  Why over complicate it?