All Forum Posts by: Jeremy H.

Good call on the self-management. I think that is the key w/ STRs. Even the STR guru here on BP "Short term rental, long term wealth" - they all but rely on self-managing. Management fees are steep, you're competing w/ bigger operators as well as mom & pop places - it's hard to get the personalized care needed, in my opinion, to be successful.

I'm a little confused on the initial financing...

So you put 75k down on a 230k house - so 32.6%. Why is this? What was the need for a HELOC? Could you not put a lower amount down? Your loan amount would then be 155k - at what 6% or so? What is this, about a monthly payment of $800? What was the cost to furnish? How much was the HELOC for?

It looks to me the cost of management was a key as well. What was Evolve charging you? 20% of gross? 

Reason, why I'm asking - it seems like you have extra cash. I personally don't like a HELOC unless it's for short term costs that will have an easy exit strategy - ie: a BRRRR - use a HELOC for the rehab, then refinance and pay off the HELOC. What is the exit strategy out of the HELOC here? Pay off using monthly cashflow? While being 100% leveraged? I don't like it

I have to be honest - I think part of the reason you're cashflowing is the low interest rate and relatively high downpayment. Now I'm not saying this is a bad thing - but it's something to consider. 

I would also question how the house gained 55k in equity, or ~24% in 2 years when interest rates rose and demand fell. Not saying it didn't, but that is quite the gain. Did you buy at a discount or somehow force equity? Maybe a really good location?

That being said, I'm a fan of the buying distressed, forcing equity and either selling or refinancing. If it was me, I'd just go conventional or use a vacation home type loan w/ a lower downpayment. 

I feel like there is a missing part to this story...

How long did you own the property?

Did it cashflow? Property management problems? CapEx problems? Tenant problems?

I did one house I may end up taking a small loss on, we'll see. Purchased a little too high at the buy (I knew it at the time too), does a little better than breaking even on cashflow, and took too long to rehab. Turned out to be a lesson learned more than anything. 

Glad it's working for you 

I slowed down on RE for about the past year and a half 

S&P 500 is up 27% YTD, NASDAQ 100 up 32% 

Might have to look into this...I'm still over here getting a new card for the $200 off of $500 in the first 3 months and borrowing free money for a year lol 

I've always done cash-back and just make sure I use the card w/ the highest percentage for whatever I'm buying - I think Amazon is 6-7% back (depending how how fast you want it delivered), Wal-mart had a good one (5% back) there but I believe their partnership w/ CapitalOne just ended, Costco has a good one (4% back and I think 7% on gas). 

I've been getting a card or two a year to increase my limit (indirectly lowers utilization as well if you don't charge it up) - it does hurt the overall credit age though 

I'm not planning much in the RE world honestly - S&P is up 26% YTD, Nasdaq up 46%. I don't think RE returns are going to touch that. And it takes zero time and energy to invest in the market. I'm actually planning to sell some of my SFH and move that money to the market. I'll keep the MFH, for now.

Max out 401k, Roth IRA, HSA, kids 529.

I'm closing on a piece of land here in the next few weeks, so I'll get to developing that after we see how the market does. Makes more sense to me to build equity through development and income as opposed to "comps" for SFH and small MFH.

Small RE is is just starting to make less sense to me for the time/effort involved and the revenue generated. I'm likely done with it and will continue transitioning to land and development. The kicker is you have to generate some kind of income when you're holding land (mobile homes, agriculture etc). Just need something simple to hold it over for a few years, then develop/subdivide and sell

 What's his answer say?

Super cool idea I think - win-win for everyone, you make extra $, cleaner makes extra $, guest gets what they want and can have a unique memorable experience.

Opens the door for lots of different "package" types 

What's the downside? A bit more time and management?