All Forum Posts by: Kyle Seidel

@Daniel Gutierrez If I could find a bank or any type of lender that would use long term rental estimates without having to see a signed lease/sec. deposit that would be great!

@John Oden Thanks and I agree! I'm leaning towards Turnkey Property Management (18% commissions) but I would love to have a back-up option if they don't work out for me so keep me posted on your STR management company.

@Sam Shueh Thanks for your reply- I wish my mortgage guy told me that up front instead of saying everything will pass his underwriter easily.

@Patricia Steiner I'm not familiar with non-bank commercial lenders at all to be honest... Would something like a credit union work? Do you have any non-bank commercial lenders that you know of in Florida or Nashville that could do this that you could point me to?

@Jon Crosby Putting more than 25% down isn't an option but unless I can get some type of lender to pass this through it is starting to look like I may need to do a 1 year lease to start.

Hey @Daniel Gutierrez, thanks for the reply. That was the 1 alternative that this lender mentioned but it would need to be for 1 yr with a signed lease and security deposit/rent/etc all before close. I guess if every single lender classifies short term rental income as $0 this would be how I’d have to do it... But I’d hate to wait for a year before I could stay at my place. I guess another option would be to get a 1 year lease but get someone who wants to move out before and make the penalty for moving out before a year be a slap on the wrist. I’d rather just find a lender that accepts short term rental income as income though. 

Hey @John Oden, thanks for the reply. I’ve been very diligent about that side of it as I’ve done a ton of research and also have a realtor and Turnkey property management to make sure about all the permits and what not. There’s only a handful of existing hoa’s that allow for short term rentals which is why so many condo developments are coming to Nashville soon to accommodate for short term vaca rentals. 

Just curious if you know anything about the financing side of it or can tag someone who does? 

I want to get a short term vaca rental in Nashville but I just ran into a roadblock. My lender said that they can't qualify short term rental income as income since it's not guaranteed. It seems silly to me that they assume the property will get $0 income in their Debt to Income (DTI) ratio. This pushes my DTI into the 50's- well above their 45% cutoff. Is this just this lender or is that gov regulations?

Does anyone know of any lenders in Nashville who accept short term rental income as income? Even taking 75% of a very conservative number would be helpful to meet their DTI requirement. Additionally, if you know of any ways to get around this somehow I'd be very grateful if you'd let me know, thanks!

Hey @Pat Marin-Finn, have you gotten a short term vaca rental in Nashville yet? Fyi Turnkey seems to be the best property management company for this- their commissions are 18%. 

I want to do this but ran into a roadblock. The mortgage guy I’m working with said that short term rental income classifies as $0 income for Debt to Income ratio which doesn’t make any sense to me... Does anyone know of any lenders who’ll take say 75% of a conservative number and use that to classify as income?

@Lauren Hogan Can't help on Hvac because my hvac guy lives 3 hours away but for plumbing I've gone through Vern Kummers Plumbing. They're definitely more on the top end for plumbing pricing but they've always been able to come out quickly and get the job done quickly and well. Every contractor I've dealt with has been great with them. A lot of guys in trades like that are generally drunks who slop stuff together so I think they're worth paying a little extra for.

Hey @Lauren Hogan, I wish I could be of more help but I'm not sure if any property managers would take that on since you're selling it soon and since there's no rental income. Maybe they'd look into it for a set fee each month and then you pay them for their time? Also if you'd be open to keeping that property and getting a tenant in there there'll definitely be companies who'd take that on. I'm still holding off on property managers but a few of the ones I've heard good things from are Principal Property Services, GNP, and Vantage Point. 

Hey @Mark L.,

Thanks for sharing your perspective! I agree that real estate is better as long as you have access to chunks of money and nothing crazy happens with tenants. After some more research to keep things simple I'm going to assume that real estate appreciation/equity  roughly equal what I can make in stocks. Therefore, to make it worth my time/hassle/etc. I want 10% cash on cash returns within the first few years of owning the property. Since part of the expenses are fixed (P and I) you should keep getting a higher and higher cash on cash return each year. Once you want to be done managing the property yourself you can then hire a PM to do it which cuts into cash flow but then not only are you still returning an amount similar to stocks via appreciation/equity... You're also getting extra cash flow on top of that and w/ a PM you are making it basically a passive investment. I love it!

Hey @Mark L.,

Looks like me and you have very similar questions and I'm curious if you've found out anything further? Basically what I'm trying to determine is if the extra returns I can get from real estate are worth the extra time/hassle/liability/etc. vs. sitting on my butt collecting 8-10% compounded stock returns.

This is going to be very broad generalizations that have dozens of factors that could sway the outcomes big time... But in general it seems like the appreciation/equity end up roughly equaling out to what I could get for stocks. Assuming that that's the case, it all comes down to how much cash flow you can make. Is the cash flow I'll make year 1, 5, 15, and even 30 going to be enough to cover all of my extra time/hassle/liability/etc.?

Ex 1 (Basing ROI off of initial investment): Say you need $65k down and after 30 years you end up w/ over $400k in equity and say $350k in profit... That's about $11-12k in profit per year which ends up being say a 18% return each year off of the original $65k

Ex 2 (Calculating compound returns): $65k * 1.0635 ^ 30 gives a number in the low $400k range so the compounded return of 6.35% is slightly lower than stocks at 8-10%

I'm having trouble determining which method to use in evaluating deals and evaluating real estate vs. stocks since real estate has so many other factors like liability/your time/hassle/needing big chunks of money when stuff goes wrong/tax benefits/etc. whereas stocks are an easy 8-10% compounded returns w/ no work and no liability or anything...

Any perspectives on any of this are much appreciated!

Hey @Greg Neuman I haven't hired a property management company yet and it could still be awhile before I do. I wanted 1 place for real estate investors around Green Bay to go to share their experiences with whomever their property management company was. When I get 1 I will definitely be laying out here exactly how it all works. Thanks!