All Forum Posts by: Brandon Laughridge

I currently live in a really popular tourist area in Southern California (La Jolla) and know of many people that are having tons of success renting extra rooms, units, or their whole property through AirBnB.

My wife and I are relocating back home to Kansas City and I've wondered about the viability of operating an AirBnB business there. In the trendy areas of KC, the market looks to be pretty active (e.g. properties have lots of reviews and only a small % of folks even leave reviews in the first place so you can tell that their occupancy is solid).

Has anyone tried, or considered, the viability of buying a property solely for AirBnB rentals? Naturally you'd buy based on good fundamentals and the gamble is just on the startup costs of furnishings, vacancy, etc. I like this idea over a condo because the price per unit is lower and there's no 3rd party HOA or owners involved. Even if those folks bless the idea initially, they could easily change their minds down the road.

Some rough math on a property I think could work (a real property that is listed): $150k fourplex in a cool area of KC (attractive for business travelers, corporate rentals, education related travelers, etc). Supposedly the property is selling at a 10 cap and we'll assume that checks out. PITI with 25% down is $880/month. Utilities and other expenses are around $1500/month conservatively (this is accounting for turnover work/time and so on with a big markup to being conservative). Total rentable nights is 120/month (4 units times 30 nights). Let's say 50% occupancy (this would need to be researched with other hosts in the area, but appears reasonable) and an average of $79/night per unit. That's a gross of right about $4600/month after AirBnB's service fees.

Profit equates to about $2200/month, even after debt service.

I'm curious if anyone sees crazy assumptions in that? I think the real gamble is on the work and cash it takes to furnish the place. I know the ongoing management is pretty easy and flexible so very much worth the $2200/mo in profit (have seen this from friends' properties out here in CA).

@Marc Ramsay Another review never hurts, eh? I can vouch for Shomari and his partners as well (blcfirm.com). They have helped me on a few different matters in KC. The pricing was fair (they're small) and the turnaround was quick.

Hey Al Williamson. I just bought a copy of the book and I'm looking forward to digging in as soon as I have a few free hours. Great looking website and marketing, by the way!

Welcome, Ryan McKenzie! I live La Jolla but invest in Kansas City. SD is too nutso for my tastes :).

In addition to BP, you should check out some of the local real estate investing clubs if you haven't yet. They're pretty cheesy at times but I've met some really solid people at SDCIA, North County REI (whatever it's called), and FIBI.

Up front caveat: forgive me if this has been discussed at length already or if I word some things wrong :). I did some searching in the forums and couldn't find anything quite along the lines of this idea.

Right now I borrow money from a few private lenders at pretty favorable terms. We do what amounts to all of acquisition costs plus fixup at a simple 1% a month. No points. No minimums. Interest only. Term of two years. All in all it's a good deal and friendly terms but naturally it's not an exit strategy--more of a tread water strategy.

My idea it to change things up a bit and instead of creating notes under those terms, create a note with more realistic mortgage terms (albeit nothing close to what a bank would offer...has to be attractive to an investor). The goal then would be to resell the notes and slowly grow our portfolio this way and recycle the cash for more purchases.

An example:

We buy a house for $35k in a $75k neighborhood. We put in $15k. We have borrowed a total of $50k to make it cash flow neutral (in terms of the investment, not in terms of monthly cash flow). We lease the house and resell the note. Terms would probably be something like 10-15 years at 8-12%. Loan to an LLC for business purposes so usury laws don't apply (if my understanding is correct).

I understand many active lenders that are on BP would balk at the long tie up of cash...this is aimed at those that aren't as active in their lending and might appreciate the ease.

So, some questions:

Is this logical or am I crazy?

What % of face would something like this sell for considering the fact that it's 67% LTV? Is a discount necessary if the yield is good as-is?

Is a personal guarantee required or is it reasonable to leave that off assuming LTV is good?

Sorry for the marathon post and I appreciate the help in advance!

KC in the house! I grew up in KC and invest there...so I'm a pretty big fanboy :). Thanks for reaching out directly to me and welcome to BP, Eric.

Thanks Cheryl S!

Thanks Joshua Dorkin! Stoked to be here :).

Jake Kucheck Thanks! Good to be here :).

Yeah, college rentals aren't the goal at this point. I'm only a few years removed from being that college tenant and I wouldn't want to rent to myself either.

We actually do live in Bird Rock now and love it. Unfortunately we aren't in a position to buy now but maybe in a few years!

Dang, David Barlow that deal you described is awesome! It's cool to see someone from Chicago that also invests there. Most folks I've talked to tend to head to NW Indiana (not that there's anything wrong with either route...just an observation).