All Forum Posts by: Jefferson Brown

Hey @Hans Alverson this is something we do quite a bit of so Id be happy to share what I know.  This post could get very long though so I'll just keep the most important stuff in this thread.  

First and foremost, this is very delicate stuff legally.  Anytime you share ownership of a property you have two options.  

1.) Put each investor on title or

2.) Have an attorney write up a PPM (Private placement memorandum).  

Unfortunately you can't really put more than a couple people on title so you're probably going to have to go with the PPM route if you're going to raise capital from lots of friends and family.  What you're trying to do is technically a "security" by definition of the SEC and they regulate it. Attorney's usually charge anywhere from $20-50K to write up a PPM.  If you try to sell percentages or shares of the property without this you could go to jail.  I know that sounds harsh but securities law is the only kind of law that does not give you grace for naivety.  Meaning if you kill someone by accident your punishment is less severe than if you do it on purpose but that is not the case with securities law.  

I hate to tell people this because its such a buzz kill but I can tell you it IS possible if you do it right.  You just need to think big in order to make the legal costs worth it.  Let me know if you have more questions about this route.

The other option is to do like mentioned above and offer some kind of loan.  That avoids the whole securities issue.

Hey @Matt Moylan we help with coaching if you're interested.

Hey @Account Closed I haven't used Vacasa to manage my properties but I have rented from an owner who used Vacasa and this was my experience:

Me to Vacasa: Is there a second fridge anywhere in the unit?

Vacasa (a day or two later on India time): "This property has only one refridgerator which is located in the kitchen area."

(Upon arrival they actually did have a second fridge in the garage)

Me to Vacasa: What is your internet speed?

Vacasa (a day or two later on India time): "If wifi is a listed amenity of the home you can expect it to carry a strong enough signal for you to use it for your recreational needs. Please be aware that wifi is treated as an amenity and not as a necessity and remember to have a backup plan in place if wifi happens to go out during your stay. This is especially important if you are staying in a remote location or if you are planning to work from the home."

From my assessment Vacasa is the "Walmart" of property managers.  You get what you pay for.

Hey @Timothy Church I love your question and I use the occupancy based pricing in pricelabs as well.  My opinion is that you don't want to fill up any faster than your competition.  If you do, you should have charged more.  In fact, we typically try to fill up a little bit later than the competition so that we can charge a premium for procrastination.  Now, I say that with the caveat that we are in a high demand area where pretty much everything sells out no matter what.   Remember, if you have to choose between $100 in extra nightly rate or $100 in occupancy go with nightly rate.  Nightly rate doesn't increase your expenses but occupancy does.  Hope that helps!

Hey @David Taylor its hard to add much to anything that's been said here but I had a few thoughts for you considering your budget and dreams:

1.) Have you considered tiny homes? Most offer financing of 80% LTV which could potentially put you at $10K for a %50K tiny house. Obviously there are more logistics to consider with this but the beauty of a tiny home is that its portable. If you mess up on your first location you can just move it and learn the ropes of STRs on something small. Get it styled woodsy to fit your cabin resort dream and make this the first step to making your dream a reality.

2.) If you don't own your first home yet I would consider house hacking.  Go get a 3.5% down loan on a home with a basement that you can rent.  My wife and I have been doing this for 8 years and have never paid more than $800/month for our mortgage as a result.  This could put more money in your pocket and help you save faster for something bigger.

Hope that helps, best of luck!

Hey @Sara Frank!  I hate to be a negative nancy but this does raise a lot of red flags.  Even if this isn't fraud this deal is technically illegal.  Unless every person is being put on title you have to raise a Reg D offering with the SEC (this is what we do) in order to syndicate funds.  Hope that helps!

Yeah I wouldn't necessarily say you "Can't" cash flow but certainly not enough to make it worth the investment in my opinion.  But then again they are hoping to use it as their own vacation home so maybe break even is good enough for them if they get a free stay twice a year out of it.

Hey Courtney!  My partner is our designer so we do that in house.  In terms of cash flow bigger is better in every analysis I've ever done in just about any part of the country.  There's just less competition.  Bigger properties have their own issues though like lower lows during the down season and partiers but if you can keep it logical and stick to the numbers its worth it.  We don't own any properties in that community but I think cash flow is realistic if its well designed and they will self manage.  If they a property management company 20% there's nothing left for them.  Hope that helps!

Hey @David Taylor I agree with everything thats been said so far.  Here are my suggestions:

1.) Only buy in areas that have a short term rental permit.  This gives you a legal right to do what you are doing.  The risky areas are small towns that haven't addressed the short term rental issue yet.

2.) Join your voice with others.  The best source I know of for this is VRMB (Vacation Rental Marketing Blog) by Matt Landau.  There are a lot of strong short term rental voices on there and joining your voice with theirs is the best defense in my opinion.

Hey @Kyle Seidel reach out to Tracy at Visio lending. They'll look at short term rental income for your DTI. They will still only lend on a % of the appraised value but the DTI issue is a non-issue with them. Id put his contact info on here but that gets blocked. Feel free to message me if you want his email