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All Forum Posts by: Lauren C.

Lauren C. has started 12 posts and replied 33 times.

Post: How to proceed in smokies?

Lauren C.Posted
  • Investor
  • New York, NY
  • Posts 33
  • Votes 19

Hello all,

I'm in contract for my first property in Wears Valley: 4bed/4bath w/indoor pool and media room, 3600 sq ft for 900K. My intention was to go as big as possible right out of the gate for better returns. However, I initially began putting in offers in the 500-600K range because I qualified for a second home (10% DP), thinking that I'd exhaust that option before buying a larger property. (I'm planning to buy a few in a relatively short period of time, if things go well.) I put in bids for 2/2s in desirable areas/resorts that were expected to gross about 65-70K and it was just insane: people coming in with cash, waiving appraisal contingency or providing gap coverage, etc. The only reason I got my deal is because I joked to my agent that I should just give up on this range (since it's clearly too competitive right now) and go for a larger house....she just happened to have this one, which was off-market, price was firm, and I took it. Commercial loan, 20% down, higher rate, but expectations for 150K. 

So, are people "overpaying" for these smaller homes? I am getting double the gross returns (150K +/-)for a house that's only 50% greater, not double, the purchase price. I know I had to put more % down, but there's no way around that at this price point, anyway. 

And then the obvious follow-up: do I take that 10% dp and use it somewhere else (PCB etc.) or just forget it entirely and use that cash towards the next 20% DP on a very similar property to the one I'm getting in the smokies? I'm leaning towards that, but maybe I'm missing something. 

Plus, if I don't take the DTI hit from the second home loan, I'll be able to cash-out refinance my primary residence for a lower rate (home is 60% paid off and has 3.5% interest rate) and put it towards the next deal.

Thanks in advance.

Post: Honest Gatlinburg STR expectations

Lauren C.Posted
  • Investor
  • New York, NY
  • Posts 33
  • Votes 19

@Justin Anderson The point about parties is excellent. I know that many properties on airbnb/vrbo say "no parties" (at least in other markets where I've personally stayed), though the homes are always smaller. Do you specify that you do not allow parties as part of your listing? I fully intend to heed the advise to go big. I'm hoping I can get a 6BR. I understand that there is data to shift through in regards to this, but I'm curious how it's been in your personal experience: as far as demand/occupancy goes, what are you seeing in the larger vs smaller properties you own? 

@Lynnette E. Thank you for this point. Especially since I'd really like find a property with a pool, and that's an extra thing to consider.

Post: Honest Gatlinburg STR expectations

Lauren C.Posted
  • Investor
  • New York, NY
  • Posts 33
  • Votes 19

@Luke Carl And how! With you there!

@Avery Carl I've seen the indoor pool thing on the forums a few times, but I didn't know it was "the thing" (I know hot tubs are big, too). Last question, since I seem to remember you touching on this at least once on here, but just for clarity, for myself and others who probably wonder the same:  is it best to "go big" right away, if possible? In other words, say it was between 2 higher-end, amenity-loaded cabins vs. 3 "decent" properties, perhaps slightly older, no pool. All other things being equal? And yes, will be in touch. :)

Post: Honest Gatlinburg STR expectations

Lauren C.Posted
  • Investor
  • New York, NY
  • Posts 33
  • Votes 19

@Avery Carl My understanding is 4BR is a bit if a sweet spot potentially, yes? If so, I'd be willing to pay more, if the numbers worked out. I'll be looking to contact you this spring when it's time for me to start shopping. :) 

@Luke Carl That's great to hear about having 2 deals closing this month. That gives me confidence about the market, since it's pretty close to my range. My goals? I need these properties to be my "income" for the time being, plus tax stuff. I could "live off of" the income of these STR (husband has W2) and then I can probably make $ from other ventures (potentially flips, as my family is heavily involved in that and new construction in southern CT) to rinse and repeat. As you've said, you wouldn't have 5 of these already in the area if it wasn't working out! But need to manage well, get the right people, and prepare for the worst, naturally. Does that make sense, as far as you can tell from these admittedly vague responses? (Sorry!!)

You're both a great help; I'm always very appreciative when I see your inputs on this area on the forums.

Post: Honest Gatlinburg STR expectations

Lauren C.Posted
  • Investor
  • New York, NY
  • Posts 33
  • Votes 19

Like many of you, I've made the decision to purchase a cabin for STR in Gatlinburg, approx. 500K in value. (I can actually afford two, if it works out, and possibly a third if I use a HELOC on my primary residence.) I'm sure my questions will be of interest to a number of people, and I'm looking for straight-shooters here....

Assuming I self-manage (I no longer work my W2 job and these are my first REI purchases), and assuming I have 20% DP (or would it be 25%, realistically?), what am I looking at for cash-on-cash return? I would be doing everything remotely, and these are sight-unseen purchases (and I doubt I'll ever see them because I live in NY). There will be growing pains on the self-management, but, once I work out my systems, what can I expect? I suppose the other way I can ask this: What is the gross/net profit on a 500K home in Gatlinburg, self-managed?

I'm extremely fortunate to be in this position, and I don't take it for granted. I am not someone who does not see this as a "job", or "hard work", or any of those things. This is basically going to be my new job, at least until I have enough cash/equity to take it all and put it in more passive investments down the line (I'm 33.)

Thanks to all. Finding deals there will be tricky, but worth it, it seems.

Post: Delayed Financing Exception

Lauren C.Posted
  • Investor
  • New York, NY
  • Posts 33
  • Votes 19

Hello to all,

I'm looking into Fannie Mae delayed financing since I have the cash reserves to purchase and rehab, but it would be my first property, and it's a little confusing as to the mortgage qualification. I see that the rehab needs to be specified on the closing disclosure (which I believe was called HUD-1). I'm particularly interested in corporate housing (especially nurses/therapists since I am one and could possibly use that to network with the companies placing the medical professionals). Let's say I get someone someone signed for a 3-month lease, which of course is a much higher rent than typical long-term prices. How does the lender look at this income? Because I have mortgage debt I pay monthly, plus maintenance (primary residence is a co-op), but I have no consumer debt. Husband has a W2 job, and I'm going to be doing REI full-time since we have more than enough cash from an inheritance (and I'm super burned out from being in that field). Income will be cut in half, as far as the bank is concerned, though.

I apologize if I'm looking at this all wrong or something. I listened to BP podcast #406; the guest used delayed financing to pull out all her cash by listing the rehab on the HUD-1, and then she used it for AirBNB. She called it a BRRRnB.This is a similar thing, only 90 day stays (and typically very responsible tenets).

I'd like to purchase a condo in a location that frequently hosts these professionals. Single family homes don't seem like a good idea: usually, these are youngish people who live alone and prefer amenities like a gym in the building. Housing stipends are generous. I could easily charge 2,000+ for a 1 bed/bath in many places. HOA fees though, I know.

I remember hearing Brandon say something like "that's interesting, I never used delayed financing in any of the deals I've done" to the guest, so that in itself made me wary. But I know people do this.  

Also, I know that nicer buildings in downtown areas probably don't need much by way of renovation...but if I'm able to purchase for less than the whatever it appraises later on, I'd still only have a small amount of cash left in the deal (yes, I know that's not a good thing, generally).

Sorry to be long-winded. Anyone do this sort of thing?? 

Post: AirBNB Arbitrage Furniture

Lauren C.Posted
  • Investor
  • New York, NY
  • Posts 33
  • Votes 19

Thank you all for your replies. I can see why arbitrage is a bit of a contentious method around here. Home prices are insane in the NYC metro at the moment, so this would be for immediate cash flow, as vacation rentals are doing exceptionally well in Hudson Valley and eastern LI while cost per month of 12-month contract is fairly stable. There are people who can afford vacation rentals at 250+/night but still live here in the city (mass exodus aside). OF COURSE it's about purchasing the properties, ultimately- need to build that equity- but deals are just hard to come by. Long-distance, perhaps, but let's face it- nothing is certain right now politically, economically, etc. for all of us. For us newbies, it's always been: "Just get started!"... I think perhaps this moment in history is a BIT of an exception, and I say that as someone who has cash to spend if the deals were there. May be a good time for some of us to think about getting a RE license, though. 

Post: AirBNB Arbitrage Furniture

Lauren C.Posted
  • Investor
  • New York, NY
  • Posts 33
  • Votes 19

Hi all,

For those who are involved in Airbnb arbitrage, does anyone rent furniture? Or is it always a good idea to purchase all furnishings? I've seen some conflicting information. 

Thanks to you all.

Post: Purchasing Established (and Furnished) AirBNB Property

Lauren C.Posted
  • Investor
  • New York, NY
  • Posts 33
  • Votes 19

Hello all,

Does anyone purchase properties that are existing STR? Either furnished or unfurnished deals. Does it make any sense at all to look at this type of home, and, if so, does it ever make sense to buy sight-unseen? I live in the NE and I won't be traveling anytime soon to the SE region, where income would be vastly greater from this sort of property (generally).

Finally, if "yes", in which markets have you found success using this method?

Enormous thanks in advance!

Post: Is college worth it ?

Lauren C.Posted
  • Investor
  • New York, NY
  • Posts 33
  • Votes 19

Here's something to keep in mind. Learning at the university level is not always about obtaining information or hard skills, per se. As one's schooling progresses, there is often a focus on the tangibles, but certainly not at first. For example, I have a doctorate in physical therapy, and I had to take general chemistry during my first year of college to get into graduate school four years later. I never used general chemistry to get my professional license or to treat patients. Naturally, I "used" the specific skills I learned in PT school. But, chemistry, along with philosophy, literature, etc., helped me and countless others professionally because they can be vehicles to success in ANY field, including REI, regardless of the strict utilization of concepts on the undergraduate syllabus. For example, we're all subject to various cognitive biases, or the systematic errors of our thinking process, such as confirmation bias, and learning for learning's sake is a great way to promote meta-cognition and think about our thinking. And we can always improve our vocabulary and writing skills. These things could be the difference between minor and major success, or any success at all, in REI or anything we do. One may see "Intro to Music History" and "Philosophical Ethics" as a waste of time- "when will I EVER use this? This is BS." And that is understandable, because it's true, somewhat. But it's not the whole story. If one honestly, truly puts in the effort to learn how to learn and recognize strengths and weaknesses and improving one's thought processes, the benefits will manifest itself in one's personal and professional life. There is absolutely no debate over this- so long as there is openminded-ness. Note that I'm not saying: "Without this life path, you are doomed for failure." I'm saying that there is no doubt as to the benefits of this path, AKA chances of success are increased, though absolutely not guaranteed.

It comes down to this: we don't know what we don't know. It's the "unknown unknown", as it were. The more we are exposed to foreign concepts, the more we avoid the hubris issue. We're less likely to make emotional decisions- which is ESSENTIAL in REI. At a foreclosure auction, it's probably pretty easy to over-bid when you're essentially in a "competition" with someone, for example. Higher education will not, unfortunately, bestow immunity to the deficiencies of the human brain. But even two years at a junior college could be the difference in your business- and, most likely, you'll never even recognize the myriad ways in which this is true.

Having said all that, college these days is mostly a rip-off, in terms of tuition, etc. It's sort of criminal, actually: I did go to a private college, which was insanely expensive, and I know my education didn't justify the cost. I then went to a large, public, in-state university for PT school, and I later worked with folks to went to Columbia, which represented itself as producing therapists that were somehow "superior" to other schools. We all passed the same exam. We had the same salaries. They have enormous debt. I do not. If someone with an Ivy League degree is a better clinician, it's probably not a result of their education- most likely, it's because they were intelligent enough to be admitted in the first place. 

The trick is do figure out how to get the most out of your money, and to understand that it's about personal growth- it's not worth it to just "go through the motions." It's just like any other investment, but in this case, you're simply investing in yourself.