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All Forum Posts by: Luis Sosa

Luis Sosa has started 3 posts and replied 11 times.

Post: Single Family vs Triplex

Luis SosaPosted
  • Posts 11
  • Votes 2
Quote from @Taylor Dasch:

You would definitely be putting a lot of money into option A to put a pool in there. Would the return be worth it? 

If I were in your situation, I would be taking option B.

Option B you have the back up plan of using it as a LTR if the STR is not producing how you would want it. The STR restriction would apply to both properties I assume. If thats the case and they ever do enforce it, Option B would be the obvious answer. When I am faced with something like this, I look at the numbers and the risk. Obviously, for option A, if the value increased to a million, that would be a huge return. However appreciation is never guaranteed. If you are cash flowing $1500/month (from option B) you would be able to scale your rental portfolio much quicker.

I think that cash flow is the safest option, but it may not be the best. Weigh your risks and your goals and then decide which one works best for you!

 Thanks @Taylor Dasch, rental restrictions for option A was 7day minimum and revenue is projected following these guidelines of course this is not always guaranteed so bigger risk with bigger investment on my part. Option B is the less risker option but that is a 30day min STR that is currently doing 5days minimums and getting away with it for years already. I guess I could ride it longer till I am told to stop and then the annual pulls in very similar numbers. Why I like the STR option here is that it will be managed vs if I do annual it would be self managed to get similar returns. I can do it but goal is to be passive investor.

Post: Single Family vs Triplex

Luis SosaPosted
  • Posts 11
  • Votes 2

Two deals that I am trying to figure out which is the better investment what's your vote.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

(A)

Single Family 600k with 1% seller concession for closing plus 25k for furnishings to ready it for STR.

The upside is this areas within 1 sq mile has new builds going up for 1.3 - 2mil which will drive up my equity for this single family over time 5-10yrs. Large lot 10k sqft with 2 car garage for potential 4bedroom conversion in future. 

Down side is total out of pocket for two years is 120k down 60k pool 25k furnishings to see 18,774 by year 2 but potential for this property to be 1mil in 5yrs is high.

Currently 3/2 1460sqft no pool single family home total monthly expenses with STR $4,716 with out management fees.

First year strategy is to STR it as is for 7 months to catch the in season rates and break even.

Total Revenue: $55,600

Mgmt Fee (25%) = $13,900

Total 7 month expense: $33,012

Net Profit: $8688

Second year strategy is remove for 4 months at a lose of 9k and add pool for 60k. Put back on STR for in season rates. Potentials with pool is below. Net profit is less 25% management fees.

Gross revenue: $100,488

Gross Expenses: $81,714

Net Profit: $18,774

Annual Mortgage Principal paydown in first 10 years: $7K/yr

Total average annual gain beginning with year 2: $25,774

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

(B)

Triplex 600k with 1% seller concession for closing trying to get it turn key at this offer but if not maybe 5k in furnishings. Currently used as STR revenue at 80-85k but recent renovations might bring another 15%. Numbers also work as Annual rental with 5k monthly revenue with less operating expenses.

The upside is this is just over one block from (A) property but the street divides the 1mil dollar home from the lesser home. Eventually the pricing will creep into this area after some time. Still a good area and visible no different then the (A) property area both have access to a nice popular park. Large double lot 12k sqft but property sits in middle. 

Down side is wood construction. Also STR currently running in county under 30days restrictions. Current property manager says they have not been asked to stop or comply and he himself next door runs another STR with no problems for many years. Fall back would be annual rentals.

Currently (2) 2/1 and (1) 1/1 - 1,903 sqft no pool official triplex home total monthly expenses with management fee 5,710.

As a STR

Investment Summary & Cash flow

Payback period (years) 6.75

Debt Coverage Ratio -0.51

Cap Rate 9.40%

Cash on Cash Return 14.82%

Monthly Cash Flow $1,482

Yearly Cash Flow $17,782

As Annual (self manage)

Annual Gross Operating Income $57,000.00

Annual Gross Operating Expenses $5,950.00

Annual NOI $51,050.00

Annual Loan Payments $35,934.91

Monthly Cash Flow $1,259.59

Annual Cash Flow Before Tax $15,115.09

Principle Reduction In First Year $5,493.58

Appreciation in First Year $12,000.00

Cap Rate 8.51

Cash On Cash Return 12.60

Returns With Principal and Appreciation Added

COC Return W/Principle added 17.17%

COC Return W/Appreciation added 22.60%

COC Return W/Principle + Appreciation 27.17%

Post: Which comes first Investment or Protection

Luis SosaPosted
  • Posts 11
  • Votes 2

@Carlos Ptriawan no one in particular there are many but was looking at Tier1 companies. @Matt Ruttenberg Thanks for the insight well said.

Post: Which comes first Investment or Protection

Luis SosaPosted
  • Posts 11
  • Votes 2

Great article and agree! I think the idea is to do both get just what you need in TERM insurance and also invest in real estate as you can. No need to over insure to potential convert to whole life as a savings vehicle meanwhile missing out on investments because of high premiums. Thanks

Post: Which comes first Investment or Protection

Luis SosaPosted
  • Posts 11
  • Votes 2

Struggling with the idea of protecting first current assets with TERM/WHOLE life insurance vs first generating passive income through real-estate. 

What is the advice first generate as much passive income you can generate to pay for insurance premiums to pay for your future wealth.

Or buy insurance to protect your future wealth based on your working income which adds to expenses in premiums but guarantees your future wealth potential for family. Then as time allows and you have more cash flow invest on passive income.

Just to add some context I am talking about getting TERM insurance that can be converted over time to Whole Life OFLI that can be also passive income with dividends. These insurance products have writers that allow using policy for long term care or terminal illness while living.

Fixed premiums for TERMs for husband and wife can add up to 8k yearly of TERM insurance. Does it make sense to pay 8K annually or take that 8k and use it first to generate passive income in real-estate? Love to hear your experiences and strategies around these topics.

Quote from @Steve W.:

What does being near a "top school" have to do with STR?

Realtor wants to make a comission on the sale and then get recurring revenue afterwards. He takes zero risk while you bear all of it, meanwhile getting mediocre returns even with his inflated revenue projections.

I say no deal on this one.

Realtor is selling future potential. But I like your summary was thinking the same and thanks for validating it. Makes me question the realtors true intentions.
Quote from @Luis Sosa:
Quote from @Brian Oney:

Did Sarasota recently change their STR regulations? Last I checked they are 7 day minimum not 5 day. Doesn't sound like much but can definitely be impactful.


you are correct 7 days.



Quote from @Brian Oney:

Did Sarasota recently change their STR regulations? Last I checked they are 7 day minimum not 5 day. Doesn't sound like much but can definitely be impactful.


I agree with similar thoughts, I guess its a long term play if I do it.

@Michael Baum He presented it to me as an investor because he knows he can get it for 50k less currently listed at 650k. But I can purchase it myself and do my own management. 

@Henry Lazerow year 1 is 8k no pool by year 2 with pool 18k+ he would do the complete management as he knows the market best and has a system with other properties he manages. 

I can do my own thing but really do not have the time to do it right and pull the numbers he is pulling from the gate. I would probably just be another STR getting 4.6 ratings making 50-60k. I think in the future I can run the property myself but right now just want to be a passive investor.