All Forum Posts by: Jim Adams

Quote from @Tanner Sherman:

I think you are spot on. In my market, I've seen my competition pull out because their numbers were down (they said easily -40%). I'm at 94% occupancy in the exact same market. The quality of my finishes/furnishings is much higher. My properties stand out because they are beautiful. And I charge a fair price, not gouging. Maybe my competitors charged more and got driven out. I have a minimum at which I would convert to LTR (like my competition did), but I have managed to stay above that. I tried to give myself a raise last Sept when I became a SuperHost on AirBnB, and for a while we rocked it, but this Spring/Summer slowed down and I had to come back to last year's rates, but our occupancy shows that we're charging the right rate.  FWIW, my rentals in this particular market I'm speaking to are MTRs, as were my competitors who switched back to LTR.

I have not really seen a drop. But I have seen a change. The bookings are coming much more last minute than ever before which has triggered a bit of downward pressure on rates. I'm at 94% occupancy (but most bookings have been within a week of check-in and I've had check-outs where I had an open calendar and just struck it lucky with a good booking on the day of a check out). I had raised my rates a little last year, but ended up having to come down a little in recent months. It's hard to anticipate where we'll end the year because it's so last minute, but we're surviving. I've seen Myrtle Beach mentioned as a city whose STR market got clobbered. I have a true vacation rental in MB. We changed management companies in January of this year. Our last mgmt company kept our place very well booked, but charged a high mgmt fee. The new company maybe doesn't get as many bookings (particularly off season), but I can say that our NET payment this June in MB was higher than our GROSS bookings for the same period last year, so that is a very good sign.

Buy, buy, baby.

Take more risks.

10 years is going to go by whether you own real estate or not and in 10 years, you're going to wish you had bought more real estate. If it's a good deal now and makes sense, buy it. And don't sell. Just refi out and keep going.

I'm just marketing to people with vacant land parcels. If I can find an email address or FB or LinkedIn account, I'll reach out that way, or a phone number I usually text. Otherwise I write handwritten letters (but I'm planning some postcards). Sometimes I just say I'm interested in buying X property and would they be interested in selling it. Sometimes I mention the back taxes, especially if it's already scheduled for tax sale.  In that case, I stress the urgency of getting back to me right away while there's enough time to sell it before the tax sale.

It looks like you covered everything, but here's where I would double check:

Are you confident in $2300 in rent for a $100,000 house? Sounds like an awfully good deal. 

Are you confident in the 6% vacancy rate? By my calculation, that's 1 month of vacancy/lost rent for every 16-17 months rented. If it's not in the best neighborhood, you might see more vacancy. When you have vacancy, even if you can fill it quickly, you're often having to clean/paint/fix things and that could cost you a month's rent, even if you don't actually have a month-long vacancy (and if you're paying a mgmt company, they're probably taking a month's rent (or half) every time they re-fill, so that vacancy number can get up there).

I think $5K/yr for CapEx and maintenance could be a good number, but it all depends on the condition of the house. It looks like it could be a fairly sizable house and it looks like an older house. There's a good chance that there's a lot of deferred maintenance. So you may find that 10 years from now 10% for CapEx and maintenance is accurate, but for the next 3-5 years you may end up losing all of your profit to CapEx/maintenance issues. That's not to say it's not a good deal, it looks like a good deal to me, so long as you don't need that cash flow to live on right now.

Sounds like you're off to a good start. If I could rewind time or send a message to my younger self it would be "buy, buy, baby."  I looked at a number of properties in my younger years that I didn't buy and every single one of them would have made me a fortune had I bought them.  Just run your numbers, make sure it makes sense and you can make your payments, and go and do it. I would start w/ house hacking, multi-family if you can. Take on fixed debt while it's cheap and build as many income sources as you can.  

You have access to a free education right here on the forums and in the podcast. I'm listening to every episode of the podcast starting from the beginning and I just remember there's 1 episode in early 2017 where Brandon Turner asks David Meyer what he's watching on Netflix and David says The Americans and I just thought, 1) damn that was a good show but 2) I SOOOO wish I knew about BiggerPockets in 2017 when I was watching the Americans!  

Also, another lesson I would teach myself is take out a HELOC while you still live in your house. Then you can move out and move on and you've already tapped into your equity, so there's no need to sell. My husband and I moved out of our last house in a hurry when we were expecting baby #5 and we didn't get around to pulling the HELOC. The house appreciated like crazy and our tenants moved out 33 months after we did, so we had 3 months to sell to beat out capital gains. We made a killing and had a quarter million dollars in tax free income. But less than 12 months later, the house 4 down (same model house, equal comp) sold for over $100k more. So what we saved in capital gains we would have more than gotten in another year of rent and appreciation. If I had grabbed a HELOC before I left, I would have kept the asset and still been able to take advantage of the equity.

~Jim's wife, Kristina :)

That's an interesting question and probably no right or wrong answer here. Probably just whatever works for the 3 of you.  There could be an argument for an even split if the guy who's not putting in sweat equity is putting in more capital.  I wouldn't discount that partner's capital and access to financing in the equation. I think I would sit down w/ the 3 and see what kind of agreement you can come to. Definitely get the agreement in writing, and maybe even notarized so it's even more official.

I reach out to people with tax liens all the time, but I specifically target vacant land vs. vacant houses. I would try to reach out to the owners directly. Do not pay off their taxes. Put together a Purchase Agreement. I would offer them more than just the back taxes so they could walk away with something, but it all depends on what your numbers are. If you get a signed Purchase Agreement, take that to a title agency you trust to get the deal closed and properly handle the tax liens.

Welcome, Brad! Best of luck to you in your investing journey. Would love to see what you find.

~Jim's wife, Kristina :)

I've used the program in Virginia and West Virginia.  No negatives to the landlord. I have someone applying right now who isn't behind yet, but they haven't completed their application yet, so I'm in that boat w/ you. Maybe there is 1 negative, and that's on the late fees. At least here, they only allow $30 in late fees/month.  Virginia was on top of it. Unsurprisingly, West Virginia has taken MONTHS to process, so the tenant is getting further and further behind w/ only $30/month late fee.  I tried to get around this by applying a check from another charity that didn't stipulate the late fee limit to their late fee. But I haven't really gotten paid since August on this one tenant and I'm getting antsy!