All Forum Posts by: J. Martin

@Cassie Kwok, 

**No good deed goes unpunished!**

There are points about not considering them tenants, but not sure if that will fly.. (will they leave voluntarily after having an honest conversation with them? Will you evict them if you have to?  @Robert Marston makes  a good point about tenancy. No written lease means nothing. No rent payment is up to interpretation. And this is Oakland.. But I disagree regarding the Cap-ex pass-through, when you are more likely exempt from rent control.. 

1) Rent Control
As @Account Closed said, it's most likely exempt from rent control if it's a single family home. However, it may not be exempt from Just Cause. So be careful about just giving notice. I agree, check with attorney. 
Here are the exemptions from the City of Oakland Rent Adjustment Program. 

http://rapwp.oaklandnet.com/issues/exemptions/

You should also file for a Certificate of Exemption from rent control with the city of Oakland to confirm. And that will you save you some time if push comes to shove. 

You can download the Property Owner Petition for Certificate of Exemption here:
http://rapwp.oaklandnet.com/petition-forms/

If you are not under rent control, CA law requires 60 days' notice for increases in rent over 10%. After that, is in effect. If the rent is then unpaid, you have just cause for eviction, and can move forward. 

2) Just Cause Eviction
The person may still be protected by "Just Cause Eviction," even if they are not under rent control. 

See legal advice. I am not a lawyer. I don't nuttin about nuttin.. 

3) Don't want do deal with it?

Cassie, if you end up going the long and hard route and don't want to deal with your family in that way, you can also hire a lawyer or service to do the eviction. Or you can sell the property at a discount, and let someone else deal with it. (I'll make you an offer if you want to sell it). I think you can deal with it yourself, but it's really a matter of perseverance and pain endurance - depending on your relationship and feelings towards them.. 

Without a kitchen, you pretty much need to be at a lower price point. But for short stays (and even some longer stays), it's not a big deal. Especially in a small place for one or two people. The bigger the place, with a bigger group, the more likely they may want to cook and save money. 

I'm not doing room rentals. Just entire apartments right now. But am going to test some room rentals and maybe shared bedroom at one of the properties I own. 

We use Guesty to automate most of our guests communications, track leads, and get fast response times. At 3% of revenue for the software only, I think it's worth it to save time and reduce errors. 

Stoked you'll be out to the Summit! Oct 7 & 8. Announcement coming shortly.. ;)

Happy to inspire ;)

Our minimum number of days vary based on property. Some are 30+. Some, we go lower. Depends on situation (geography, if I own it, etc.). Generally, you'll make more money breaking it into the smallest stay possible, with as many beds as possible, but that adds some work.. And haven't done as much of that myself yet. 

Corporate tenants rely heavily upon the concentration of nearby employers that have constant demand for longer-term rentals. Oakland has not produced that for us. I hope you crush it on corporate rentals out there, but I wouldn't call it prime time relative to other SF Bay locations for corporate rentals specifically, in my experience. 

I encourage you to dip your toe into the water and see how it feels, if you're in a position to do it. No risk, no reward. If you can't afford to experiment, then do it later..

We'll be talking about this at the Summit in Oakland this year in October also. But feel free to hit me up with questions ;)

 Jonathan, some of the players are:
Turo, GetAround, Drivy, Wheelz, DriveOn (luxury)

@Matt R., DriveOn is supposed to be the luxury model of peer to peer car renting, but you may have already seen that if you're looking into Porsche and Corvette. 

Of course, if you're not leasing the car, then taking a risk on repairs and the capex replacement, right? To me, leasing the car would be a true "total cost of ownership." But hopefully there's some good numbers in there anyway. Just have to see how the repair and replacement game works out over time.. 

I've considered putting one car at a property where I have 5 furnished rentals, as a sort of on-site zipcar they can rent when they want/need, as an amenity. But wasn't sure if it would be great stand-alone income. 

@Matt R.,

I met an investor in the SF Bay who has almost a dozen smart cars he has bought at auction over time and rents out on the peer to peer rental car platforms. He unlocks remotely, and people pick them up and drop them off all over San Francisco, sorta like a free-for-all zipcar service. 

He's crushing it!

Likewise, I'm doing the furnished rental business.

It is a business. Takes some time. Produces cash flow. 
Doesn't cost hundreds of thousands. 

But of course doesn't produce the big equity returns of the RE holdings. 
I use the cash flow to eat. And the equity to buy more RE :)

Good point!

@John Martin,

Main issues you will run into trying to sublease on Airbnb at 4 Seasons or Ritz condos:

1) CC&R's for a high-end hotel-like setup like this will almost certainly now allow short-term rentals, even if they do allow for rentals as @Andrew Johnson. Some older condo buildings hadn't banned STR in the CC&R's because wasn't an issue before, but are passing them now. In the case where a hotel is the operator of the property, you bet your *** they're going to ban short term rentals in the CC&R's!!!

Do you think smart operators like the Ritz or 4 seasons are going to allow investors who are going to cannibalize the revenue on their hotels with swanky units upstairs from them? No way!

2) You won't be able to use lockboxes, so you will have to have someone meet the guest most likely (unless you slip a bellman a $50 for each entry to keep it quiet.) This is an issue because people arrive at all different times. Flights get delayed. Plans change. People miss each other. Phones are dead. Meeting points missed. 

3) Economics. You'd have to look into this more. Nightly rate could be great. Lots of overhead too with mortgage/capital injected + HOA + other costs associated with high-end/luxury units. Especially accommodating the guests. Some people do well on the high-end properties for STRs though..

Not trying to discourage you if you can make it work, but those are likely to be the biggest issues you will encounter...

Best of luck John!

 Calvin, 

Talk to the city about it. I've heard different things through the grapevine regarding what constitutes one unit vs 2, especially regarding having 2 kitchens. However, in the only instance I directly know of dealing with the city in Oakland, having access between both of the spaces (through a door, for example), is adequate for it to be one unit. If you remove the door and put a wall in, and there is no direct access between the two units (like having to walk outside), then they will consider it 2 units, and you'll run into issues. 

Although I have heard about inspectors getting finicky about a second kitchen, as long as its permitted, you shouldn't have an issue. I am not aware of any laws against having 2 kitchens in one dwelling unit (in fact, many very high end houses have a second kitchen for the staff to cook for social events). Again, as long as the original work is permitted... This has been confirmed in at least one case that I have seen in Oakland. If you get an inspector that hassles you, have the printout of prior permits that shows the 2nd kitchen is lawful, and that there is only 1 unit, with continuous access to the entire unit. It looks weird and they might question it, but just remind them what's legal.. 

Airbnb always pulls in the most here in the Bay for me. It seems like Airbnb is the most popular in urban areas and biz travelers. And homeaway/vrbo in more vacation areas, larger homes, and an older crowd that's less tech savvy. I got a subscription for Corporate Housing By Owner (CHBO), but didn't think we've booked anything from them yet.. There are about a million other sites that you can try, but these are the big dogs, and it takes a lot more effort to sync and respond to too many sites that don't produce a lot.. 

Good luck Calvin!

@Calvin Kwan,

#3 is definitely feasible, and sounds like you could still do it in a legal manner, and still maximize your income. Airbnb guests would be fine with renting an apartment with a locked door to another space. You can install 2 doors with locks on each side, just like a conjoined hotel room with the double doors in between. That way, neither tenant can access the other side without both of doing it. (However, it would then not be an egress, so take that into consideration with other egresses..)

Another idea would be to put something over the doors, to make it look more natural. I heard @Arlen Chou is getting into the custom mirror manufacturing business. You should probably shoot him a quick email and ask about his experience. 

@Ori Skloot,

The only thing that sometimes pops up with the split model is if the long-term tenants don't like the idea of the short-term tenants, or try to stir up issues with the city. Depending on the minimum number of days' stay (longer would be less of a problem), things could pop up. But have had many that are fine.. Just my 2 cents/word of caution on splitting it. 

Another difference is that you'll keep the unit churning with STR. If a long-term tenant stays, they're going to be under rent control for who knows how long unless the unlikely case that your building is exempt from rent control.

 Arlen, these are vacation rentals for under 30 days, so there's more margin. If you want to allow that, let me know and let's talk ;) hehe Also, it's a baller 6-bedroom house in downtown. Get me one and let's do it!! :)

Leslie, you are telling the OP to invest in DST's on the forum, and according to your BP profile have written a book on investing in DST's and you currently sell DST's: "..I outline 1031 Exchange and reinvestment for accredited investors into Delaware Statutory Trusts (DSTs)..." [Leslie Pappas BP profile]

And you say you are not pitching? 

Neither @Arlen Chou nor @Account Closed make their living by selling things to others, so don't have a pony in the race. Also I would add that they both have given a lot of great advice on the forums, and their stats reflect it. 

Arlen 429 posts. 626 votes. 

Saj 246 posts. 245 votes. 

Leslie 545 posts. 130 votes. 

It's sad that you attribute this disagreement to you being a woman, as there are MANY MANY fantastic women on Bigger Pockets with great advice, many of which have come out to the Bay to share in non-pitching way, that both myself and Arlen admire.