All Forum Posts by: John Turner

The group I help organize is focused on International investors and lot of us are buying in the US market. If you're interested in learning more, check out my signature. It's free to join and we have a closed FB group to help our members talk and ask questions. 

Best of luck!

Hi Zachary, 

Here are some resources I find helpful for vacation rental advice: 

Book: How to Rent Vacation Properties by Owner by Christine Karpinski 

Blog: Matt Landau's Vacation Rental Blog (he's funny too) http://www.vacationrentalmarketingblog.com/help-do...

Forum: HomeAway.com owner forums have lots of great advice

Sounds as though you are interested in multiple properties. Here is some advice from my own experience: 

- get them close to each other so you can share resources (housekeepers, repair guys, lawn care). If you need to use a property mgr/rental agent, I'd suggest finding a reliable one first and then choosing your area to invest. There is a LOT of detail that goes into weekly rentals, if you are not doing it yourself you need very reliable help. Not easy to find. 

- get them in an area that you can visit regularly, stay in each one yourself every now and again.

- vacation renters expect an immaculate home, new construction or good renovations are necessary. Trying to make $ first and renovate next will build bad reviews which is a killer

- if you are relying on seasonal rentals be sure the numbers make sense, and what is your plan for the off season? Keep in mind you will be paying for all furnishings, utilities, maintenance and yard work year round.

- I own VR properties and also manage the reservations for other peoples VR properties, and can tell you responding to inquiries can be a full time, 7 day a week job. Be available or hire someone who will be dedicated to your properties reservations.

- peruse listings on Flipkey, HomeAway, VRBO, Vacationrentals and Airbnb in the areas you are considering. Pick a couple listings that look similar to what you are thinking of doing, follow their calendars throughout the year and see how booked they get. Read Reviews!

- make sure weekly rentals are legal in the area you are considering - many towns are banning them or putting on a 30 day minimum. 

- get specific vacation rental insurance, otherwise a claim could be denied - try CBIZ 

- we have seasonal lake and mountain rentals (summer is peak). We get fully booked spring through fall which is all we need to make us happy. The icing on the cake is that many winter weekends get booked by lowering rates, having great photos, houses have great views and nice interiors so the "in the house" experience is nice. Good reviews are key to off season rentals also. 

You can see ours here, they are different price points which also helps...if a guest says one is over their budget, we refer them to another: 

Piseco Lake Cabin

http://www.homeaway.com/vacation-rental/p3165887

Lake Algonquin “Trailer Liscious”

http://www.homeaway.com/vacation-rental/p189448

Lake Algonquin Farmhouse

http://www.homeaway.com/vacation-rental/p353641

I borrow 85% of acquisition and 85% of rehab plus six-months interest reserve, 3 pts to the HML and closing costs. We get 15% of the rehab upfront at closing. All this has to be in one loan (important) as some HML will put the acquisition in one loan and the rehab in another loan. Also, the HML must be okay that there is a note and Deed of trust (DOT) subordinated to them.

I borrow the downpayment, closing costs and interest reserves from a private money 2nd at 20% and 5 pts. In our case, we are doing mostly BRRRR so I start the refinance as soon as we are in our 3rd draw (out of 4 draws). So the private money lender gets paid back fast. To make all this work you have to get killer deals, which we do. Every property has 25% to 40% equity after we complete the rehab.

By executing fast, we can recycle the money 4 to 5 times a year. Our private money gets 20% and 5 pts 3 to 5 times a year (which is a 30% to 40% IRR). If a deal blows off, I am not going to ruin 15-years of building my reputation in Seattle. I would substitute the loan for collateral on the numerous rentals we have with lots of equity.

We have our own construction company with 2 construction supervisors and we are training 4 project managers now to manage the estimates, contract documents, w-9, scheduling, Gantt charts, detailed scope of work, contractor verifications and contracts, coordination with designer on material specs, invitation to bid to subs, lien releases, permits, etc. We also have our property management systems dialed in and I have a real estate team that sold 152 houses last year. The key to this idea is having the systems and infrastructure to execute quickly. We are buying 8 SFR a month and now also are adding 5 apartments a year (as we are now using our equity to get the apartments. Next will be hotels.

 That's interesting. In Seattle, I would not be calling this a 100% loan. That's a 85% Loan to Cost loan while also taking equity on the project.

To answer the poster, HML is the way to go. On a JV, you give 50% for the person putting down the cash. If you compare how little you pay the HML compared to 50% equity, it is a great deal to use HML.

You just price it into your analysis and get better deals. If you're making a ton of profit with HML, who cares if you are paying a high interest and points.

On my gap funding (loan on the downpayment in 2nd position), I am always happy to pay 20% and 5 pts. I think that is a win-win loan. I get my project zero down and we rotate our investors money 3 to 5 times a year and get them 30% to 40% returns.

Is there a reason you need it to be a Canadian bank? Lots of US banks will lend to foreign nationals as long as you meet their other criteria. And outside of that there are US based, alt-a lenders that will go up to at least 65% if you have reserves, full doc on income etc, and their rates could be more in the 7% range rather than 12%.

I  I have just begun researching investing in a vacation rental. Can anyone point me in the direction of information regarding operating expenses for vacation rental?   Are there any simple rules of thumb to evaluate deals on vacation rentals similar to the 50% rule or the 2% rule? I am assuming these are not useful for vacation rentals due to the extreme difference in operating costs.

   If it helps, the properties I will be researching our single-family beach. Thanks in advance for any guidance.