All Forum Posts by: Ling Lin

I found this really unique property in a small town surrounded by beautiful mountains and access to tons of outdoor activities in a growing area but there are zero STR comps and only one motel in the whole town. Is it too risky to buy and create a STR given the current situation or spot on as it needs STR options? (its 20 mins to a more populated town with loads of STR and 40 mins to a popular lake).

@Ling Lin

More frequently than you think. We buy and sell mortgage notes and we have 4 title claims ongoing right now.

Hi Ling! This can happen frequently that something pops up on a title report, which is why title insurance exists in the first place. If there is an owner's title policy in place and this situation doesn't fall under an exception in the title report, you would need to file a claim with the title company. Title insurance is different from other types of insurance you may be familiar with such as car, or homeowners insurance which has an ongoing monthly payment and covers FUTURE problems. Title insurance for the most part only covers problems that arise related to title before your closing day, not after. So if a mechanic's lien for example pops up after you have closed, the title insurance may not cover that, which is why it is important to read the policy they are offering before you close. Title insurance is also only a one time payment at closing.  I always suggest that owners buying investment property get owner's title because of a problem like this. If there wasn't a clear legal process to exchange title to the property, such as one party doing a quit claim deed to another party, but there is still another owner out there that has an interest in the property, a situation like this can arise.  In addition, there are cases where the county or the city has a backlog of documents to actually record, so this could be the case here as well. If a document such as a lien instrument or a deed were in the process of being recorded when the attorney did the initial search, then it would not show up on a title report at that time.  

I'd suggest getting on Airbnb and VRBO and stalking similar properties. Find a 4 or 5 bedroom and watch their calendar over the next several months - check it once a week for the foreseeable future to see how it performs. If there are not many other comps it either means that demand is really low or supply is really low. You just have to figure out which one is the case. If it's low supply and demand is there, you may have yourself a cash machine of a house as a STR. If it's the opposite, long term is the best bet.

I will say that the logistics of a 3800 sq ft house as a short term rental are tough. It's gonna take a pile of cash ($10-15 per sq ft in my experience to do it well) to furnish it along with the money invested for renovations. You better make damn sure it'll print money before you throw that amount of cash into launching a STR. The day to day for 3800 square feet will present challenges as well; turning that property will take a cleaning company or crew that really knows what they are doing. You're probably going to need 2 washers and dryer, but do you have the electrical capacity to support that? There are a lot of questions like that that you are going to need to answer prior to spending the GDP of Costa Rica at the Boston Home Depot and IKEA to get this thing going.

I would look at airdna, pay for the Boston market or your neighborhood for one month, then actually compare the property you are buying against the comps that airdna gives you. 

I would look at airdna, pay for the Boston market or your neighborhood for one month, then actually compare the property you are buying against the comps that airdna gives you.