All Forum Posts by: Leland S.

I have the option to owner-occupy one of 4 townhomes I am building and rent/sell the other 3. I built the 4th unit converting a bedroom to a downstairs kitchenette/bonus and separate entry for the purpose of allowing someone to owner-occupy that unit - more valuable in a sale in that case. 

Should I Short Term Rent the unit with 4 beds/4 baths or use the one with 3 beds, 3 bath, and the bonus area just for the convenience of potentially permanently living in the downstairs and renting the upstairs? I assume having a couch bed would allow the same number of sleeping guests minus the convenience. I don't know that short-term renters would care that much for the kitchenette given the 2nd floor is a large open gathering area and there's a wet-bar at the roof deck entry anyway.  

I'd assume 40k gross income from the extra 2 bedrooms (if I were to ever reside permanently in the downstairs, which is not very likely). So it may be better to keep the 4th unit to sell while allowing myself to maintain short term rental of the 4 bed.

Floor plans below: Right floor plan is the 3 bed with bonus and kitchenette separate suite.

1st floor:

2nd:

3rd: 

Roof:

@Pavan Sandhu - Considering they will be a mix of short-term rentals and long-term rentals, I think it would just devalue the upstairs bedroom a bit because it's awkward. Short-term renters wouldn't care so much because there's a huge roof-top deck. In the end, it just becomes an awkward door vs floor to ceiling glass or lots of windows, which I think would be preferable to double doors with Juliet balconies. 

I'm struggling with this project to get a finalized design. My original design is shown below with nice large walk out balconies, however my GC never prepped the framing to support such balconies. I'm a year into the project now still with no design. My default was to go down to Juliet balconies but for the upstairs I think it will really detract from the space given it's a small room and the doors dropping off into nothing seem odd to me. I have a truss system and therefore there are no LVL's in place to drill into, but blocking can be added across the trusses. It is bricked on the outside.

I found something like this: https://deciron.com/cubist-sty...

Architectural Rendering:

What I got:

@James Carlson - During covid I tried the travel nurse website for a SFH and found it was often just 1-3 nurses looking and wanted to keep things cheap. I never ended up accepting any because the dates were 3-6mo, they wanted the whole house to themselves, but weren't willing to pay enough to even break even. Thankfully STR market kicked back in gear quickly. In this case, furnishing is about 40k and it's a rather large house. I estimate market rents at 4400 which would put me at about a breakeven assuming a typical cost structure.

What websites do you recommend for the corporate housing market?

@James Carlson would love to learn how you manage to get those kinds of returns. Furnishing is costly. 

@Luka Milicevic you know it like anyone

@Devan Mcclish long time no see! That's another good perspective. I'd love to develop a medium-sized apt building. I'd have to 1031 that to avoid getting shafted on tax. I'll give you a call to catch up.

I am nearing completion on 4 townhome builds I was intending to short-term rent in Nashville. However, due to GC incompetence, I will not make the deadline to get the permits for those townhomes anymore. I currently own a SFH as well that I short term rent while I'm away a lot of the year (owner occupied).

I'm looking for advice and how to approach determining what I should do with my portfolio now:

1) Use 1 unit as owner-occupied STR and convert my other SFH STR into a long term furnished rental for corporate or nurses. This is my baseline strategy since this unit will cash flow much greater than my SFH being that it's close to downtown and is a nicer place.

2) Rent or Sell the other 3 townhomes? 

This is my ultimate question. Given the other 3 townhomes will barely break even, if at all, on long-term rent, should I just sell them or keep the low-interest debt for equity growth? 

I'd like to select a strategy that will increase my chances of getting further deals. Obviously cashing out gives me more cash on hand, but kills me on taxes and gives me no tax deductions. I'm also not sure how banks consider income-producing debt against you while calculating your ability to get more debt. Over the next 5 years I think there will be a lot of equity growth in that area as it's being heavily developed.

Thanks for the advice @Nik Moushon @Eric Teran. I do have a lawyer. The contract specifically states any design changes will be provided to me in writing with any costs associated with them and we both sign. None of this occurred. I found the truss mistake upon inspection when the framing was going up and the GC assured me they were just temporary support. Weeks later he realized he was wrong and trusses were there but claimed that was the only way to do the design and it was my fault for not hiring an engineer to make sure the design could work (hence this post). After having an engineer review he finally provided to me that there would be two metal posts coming up and I said that's fine so long as it's symmetric about where the metal retaining wall will be anyway. Nonetheless, we'll see how this goes. 

I'm more interested in just getting this GC off my lot so he stops sabotaging my money and build and get a competent GC in there.

FYI this is the 18k design. 

@Nik Moushon I finally received a bill directly from the metal guy for $18k for the metal work. I forwarded it to the GC and stated this is on them. I don't suspect they will agree and will end up litigating this. Based on this thread, I assume I can get a licensed architect or engineer to agree that the trusses could have been designed per @Eric Teran and that it was not necessary to have implemented the design they chose. I would just need them to show up to court for me but seems like it should be a straightforward case. 

I spent 2 years working on high end townhomes specifically for the purpose to Short Term Rent them in Nashville. Well, now the GC blew 4 months and clearly will not get them done for this year's deadline to get permitting. So I'll be stuck deciding on selling them or long-term renting. The units were valued at 600k last year and based on market prices going up 10%+ I'd only assume they could be 650k+ when completed. I am able to keep one as my second residence and get an owner-occupied short-term permit there, but the other three calculate basically 0 cash flow (with 35% expense margin, $4400/mo rent). Now things could be OK if I can get more rent. 

I hired a financial analyst and after a 10 year period I'm showing (assuming sale after 10 years):

• - Leveraged cash flow as $1.8M, 
• - Unlevered IRR 12%,
• - Levered IRR of 44%,
• - Multiple of 10.3, 
• - NOI of about $1.3M.
• The growth mostly comes in the later years due to increased rents and inflation (assumed at 3% which is much higher now). I am not a financial analyst so I really almost don't know anything more than cash flow.