All Forum Posts by: Jimmy Klein

I still don't fully understand the opportunity zones. Do you have to do new development or can someone just acquire a property there and hold it? 

I think problem is that people misunderstand that a crash or correction doesnt need to impact the whole market. There are lots of variables that can happen from a growing economy that can negatively impact the RENTAL market.

Right now home affordability is an issue and more people are renting than ever before. So thats why many of you are seeing your units filled. However, we are also seeing maximum employment and employers paying more and more. Its possible that these so called renters will then want to buy. You now have a supply of MF housing that will see a dip in occupancy. Does this mean its a crash? No not at all. But your fundamentals will be poorer and valuations may fall because that particular asset class isn't attractive anymore. This is just an example I made up, but it shows you don't need the whole market to collapse just to impact the rental market.

@Ray Johnson

Exactly. I don't understand why people make it so difficult. They get mad when they want to operate a hotel without regulation. They feel like they are being singled out, but they should ask all the hotels that have been complying with these laws for decades. Don't complain. Its the cost of doing business. 

So I will throw my opinion in here. I am a hotel owner. I honestly have no issue with AirBnb because there are studies that show it is not considered a real competitor to hotels. The guests that stay at our hotels are much different from those that stay at Airbnb. In fact, the hotel industry is hitting record highs. All these talks of a secret hotel lobbying group is ridiculous. I attend many conferences annually and most of the CEOs of large companies like Hilton and Marriott are not worried. Business is booming for the industry and they dont care as much as most people think. In fact, a couple hotel companies are even entering this space. My only issue with Airbnb is that if the owners want to rent short-term and essentially become a hotel, then they need to be regulated like a hotel. For example, I have a hotel in Florida that has fire panels that are electronically monitored by an outside company. I am ADA compliant meaning that every square inch of the property is inspected by both state and local officials to make sure its not a problem. All electrical components have to be NFS approved. Also I have regular check ups from the health department to ensure the hotel is in sanitary condition and able to rent rooms. I honestly think Airbnb should stay, but they need to be treated just like hotels.

Most lenders allow some, but I dont see any traditional bank allowing you to NOT put any money. You have no skin in the game. They may get you to 10% equity, but not much less than that. Private lenders or bridge lenders may, but of course thats very expensive money.

What would you like to know? We own multiple hotels. As @Ronald Rohde said, its higher returns that any asset class out there, but definitely requires much more involvement.

It can be done. My group has done this with hotels. Example, we purchase a $6 million hotel, run it well and then get a $6 million loan assuming the metrics pencil out. It can be done on smaller deals, but you just have to make sure the loan metrics work. The bank has to have it underwrite well.

@Peace Lily

If your lease states a minimum temperature clause, then you should be protected. Assuming the tenant on the 2nd floor did not abide by the temperature settings, then they definitely have recourse.

@Andrew B.

I agree if the lease has a minimum temperature clause then your protected. The OP didn't state this in the original post. If the tenant on the 2nd floor breached the lease agreement, then yes they are clearly liable. Regarding about it not being in the lease, I'm sorry, but I do not see many states siding with your claim if its not in the lease. I think if its not in the lease its a long-shot. Especially if your in a state that does not have a business friendly climate. 

@Peace Lily 

Don't listen to anyone of the comments above. We are all landlords and this is the cost of doing business. These are items you need to prepare for. To the person who said make the 2nd floor tenant pay for it, I respectively say they have no idea what they are talking about. You cannot blame a tenant for turning off their heat, especially if they pay the utilities. If tenants are paying their own utilities, they will turn off the AC if they won't be there. Period. You should require all your tenants to carry insurance and you should have insurance to cover this. Go to your insurance first. You need to provide enough compensation to make the tenant on the first floor whole and not a penny more. The insurance for both parties is supposed to handle these type of claims. The adjuster would come out and make and estimate and submit the claim. Neither you nor the tenant determines the cost of the damage. The insurance adjuster does.

@Tom Conant

Yes my comments came off aggressive, but they are true. I have seen too many good people burnt and lose their entire savings in the industry. I have also seen many do well built incredible net worth as well. I don't sugarcoat it with this asset type. Shoot me a DM and I'd be happy to help in any way.