All Forum Posts by: Joseph Cacciapaglia

This is one article that I've found useful, especially the decision tree: https://barneswalker.com/selle...

You should definitely be directing this question to your attorney. Mine has helped me with a few seller finance deals this year, and there seems to be a lot of nuance to these questions. I wouldn't rely on someone that answers in a forum like this. Many states and municipalities have added additional seller finance regulations, so the answers I received in San Antonio, TX may not be useful where you are. Of course the national rules apply to all, but some states are even more stringent.

I am curious if you're planning to subordinate to their construction loan, or are they developing with cash. My borrowers have paid me off prior to starting construction, because they can't get a construction loan while my land loan is on the title.

Are you buying a prefabricated shipping container home or building your own on a foundation? I'm building one in San Antonio, TX, and have worked on some for clients as well. If it's a permanent build on a foundation, I've found a lot of lenders are willing to finance them. It's tougher when they're prefabricated, but a lot of those providers have lenders they recommend.

My first investment property was a duplex house hack with a VA loan. It's still one of the best deals I ever did. It was after I got out though. While I was still in, I lived with an investor that bought a home in each duty station and rented rooms to coworkers. He kept each one when he left. This worked amazingly well for him. I have since helped active duty and retired investors in San Antonio do the same thing.

I find the most successful investors doing this are good at networking on base. They get most of their tenant through word of mouth. When they leave, they usually either have one of their tenants take over some of the maintenance responsibility, or they just convert it to a traditional rentals and use a PM.

One aspect you didn't mention is that the "appreciation" markets tend to have much stronger rent growth in the long run as well. I started off investing purely for cash flow, but over time realized the vast majority of my gains came from appreciation. I also noticed that my properties that started of as neutral cash flow in better areas caught up to my pure cash flow properties in just a few years.

Now I've selected a market that I expect to have strong rent growth and appreciation in the long run. However, I'm also pursuing STRs, rent by the room properties, and private notes to boost my cash flow in the short run. I don't want to support negative cash flow with active income.

I'm a former attorney, but I still hire an attorney to set up my LLCs. The problem with doing things like that yourself, is that you don't know what you don't know. Also, LLC laws vary by state, so I'd be careful about soliciting advice about this online.

I've had a ton of clients in the past few months decide they want to focus on mid term rentals for travel nurses. The first time I heard it, it sounded like an interesting niche, but now so many people are heading that way that I question how much demand there is from nurses. Does anyone know where I can find stats about the number of travel nurses visiting my market (San Antonio)? I found stats on how many nurses are here in town, but can't find anything regarding how many of them are traveling. 

What I'm more curious about, is if nurses actually have significantly different needs than other business travelers. It seems like such a small TAM, and I'm not sure it makes sense to niche down so far. We definitely have demand for mid term rentals in general, but is there a benefit for specifically targeting nurses? I'm also curious about fluctuations in travel nursing needs over time. Has this just been a booming business due to the pandemic, or 

Is this data available somewhere?

I've had several clients run into this same situation. One in particular stands out. She was looking for 2 STRs at about $300K each. We looked at a ton of options, and some of them were OK, but none were terribly exciting from a returns perspective. I came across a $600K home while working with a different client, and decided to run it by her, because it had amazing numbers, even though it was double what she wanted to pay on each. She bought it, and has had an amazing first year. It's become one of the top performers in our mgmt portfolio.

In my market (San Antonio), I find that larger homes tend to have the best short-term rental returns. I also find that you'll spend less furnishing one $600K house than you would two $300K homes. The cost of furnishing has a large impact on your CoC, because it's not typically financed. Running 1 versus 2-3 should also be significantly simpler, if you plan to self manage.

Have you looked at the cost of separating the meters? Also, have you checked to be sure it's a legal 3 units? Here in San Antonio having utilities included in leases is often a signal that the property isn't actually a multifamily property. This varies by location though.

Otherwise, I don't see anything wrong with a small short-term negative cash flow, as long as you're well capitalized and your total return looks good.

I've used http://www.lawofficeofmichaelv... for this and several of my clients have as well.