All Forum Posts by: Mackal Smith

I think it depends on where you are in the city. For my units (which are mostly in South City), tenants won't pay much for offstreet parking even in a nice garage. I can usually get $40 to %50 extra per month for a single car, but most would rather just park on the street. If you can rehab the garage for 15 to 20K, even $400/mo would be almost a 25% return... that's hard to beat anywhere...

Thanks @Account Closed,

I just got Buildium set up to use for the 2 duplexes my son is managing for me (including direct deposit into my business account etc). I'm assuming it will probably work for my AirBNB units also. Do you have a dedicated cleaning crew or do you outsource? Any problems with scheduling them between check-in/check-outs?

Thanks so much for you input!

Thanks Chris,

Great info. Where are your units located? Are they local to you? (I forgot to mention mine would be in St Louis and even more narrowly they will be in the South City area of St Louis) in the post. I'm about an hour outside the city and I work full-time so I have 2 different property management companies for my current portfolio. That said, I just brought my son onboard to manage two of my duplexes and I'm thinking about using him to manage the AirBNBs for me. You mentioned 20 to 50% of gross for management companies, would that include the cleaning service, or is there a separate charge for those? I'm trying to figure out how to give my son fair compensation while still keeping costs down.

Do you adjust your rates downward for slow periods or is your area touristy enough to leave them as-is year around?

I've been fairly successful with duplex/triplex/quad acquisitions and rents over the past 2 1/2 years. I've ended up with a little over 25 doors and am happy with returns. My son recently picked up a SFR in the Bevo area and has it up on AirBNB. So far (even in the winter time which I figured would be really slow) he has pulled in about double the returns he had been seeing with his rental properties. Of course this caught my attention...

So... I'm looking at SFRs to do the same thing, but I would sure like to talk with someone who is already in the business just to make sure I'm accounting for everything as I start looking to expand into AirBNB. For instance, I have seen where Chesterfield, and Ellisville (in West County) have basically outlawed AirBNB. I have seen where other townships closer in to the city have done the same. I have also seen that AirBNB properties in the city are going to be charged a special tax, how would you track something like that and insure that those payments are made when they are due?

Some of the other questions I have are:

* Are there property managers for AirBNB properties or do "Moguls" manage the properties themselves?

* What are your thoughts on a multi-family vs single family as an AirBNB property? (Small multi-family ... like a duplex)

* As I'm evaluating properties I'm insuring that they would cash flow even if the city were to outlaw AirBNB so I think I'm being fairly conservative there, but what are some of your experiences with things like that happening?

I've done quite a bit of research (and listened to a ton of podcasts) on AirBNB properties, but like every new venture I would sure like to hear first hand about experiences others have had (especially in the City) with AirBNB properties.

I have a duplex on Virginia about 2 blocks from Marquette park (actually its like 2 doors down from Urban Eats). I get $750/$700 per month. The thing with South City is it truly is block by block. This duplex I have on Virginia has been a cash cow for the last year. 2 bedrooms usually go for between $675 and $800 in this area depending on the shape they're in and whether they have garages or off-street parking. Single bedrooms usually go for $450 to about $550 depending in the same things. All in all that area is relatively safe... You probably still hear a gunshot or 2 from time to time but in terms of cash flow the area works great. Don't bet on appreciation. You are lucky if properties appreciate 2 to 5% over 5 years...

Thanks for the replies @Brie Schmidt & @Ken Jernigan. Ken, the DTI is the thing that has me worried. I'm really lucky right now in that my W2 income is a little over $175K/year. Since it will be 12 years until I can take Social Security. That will more than likely fall to something like $50K/year with the rentals, stock dividends, and bond income when I do retire.

Even though the rentals actually bring in enough to cover all expenses and debt service and still give me around $15K to $20K/year, with depreciation etc (all the good things I love about REI) the taxes actually show very little (if any) income from them.

Rather than bore you all with the details, just suffice to say that I cosigned student loans (both government and private) for my daughter's college. Of course as a cosigner, these show up on my credit as loans as well as hers. All combined they are a little more than $100,000. Some of the private loans have interest rates as high as 9%. She has been doing a decent job of paying the loans (although I have had to step in and help her out fairly regularly) but she doesn't have decent enough credit to be able to refinance on her own to get a better rate. She has been able to defer the government loans up till now, and her monthly payments have been right around $800/mo. The government loan deferrals are about to stop however and her loan payments will increase to $1300/mo. She can't afford that big an increase so I have been thinking about ways to help her out. Please read on and give me your thoughts...

I live in St Louis, and the rental market is good here. I currently own 25 units (spread across duplexes, triplexes, and 4 unit buildings). All provide good positive cash flow. Here is what I'm thinking. I can pretty easily take out $100,000 HELOC on my personal property. If I use that as a down down payment, I should be able to leverage it against about a $500K loan. Prices are still relatively cheap here in St Louis. In fact I have seen a few 15 to 24 unit apartment buildings for sale in the past few months that are situated in the the same area I have my existing rentals (so I know the neighborhoods) and would come in right around that $500 to $600K range.

If I were to pick one of these up, I'm 70% sure I could get plenty of cash flow to pay debt service, taxes, CAPEX costs and still have enough left to pay the $1200/mo in her student loans. If I had her pay my HELOC, I think I could keep her payments around the $600 to $700/mo range.

I guess what I'm looking for is validation that I'm thinking the right way. It seems to me that when it was all said and done, I would have been able to pay off her existing student loans, she would be paying the same or lower rate (since she would be paying of the $100K HELOC at a much lower rate), and I would end up with an apartment building.

What am I missing?

I have done pretty well with my investment portfolio so far. Over the past couple of years I have pulled together 15 units I own by myself in my company name (duplexes, triplex, and 4 plex) and I have another 10 units I own with a partner in another company (duplexes and SFR's).

Here's my question. Of the properties I own myself, one is on a 30 year fixed mortgage (I bought it in my personal name and moved it to my company once I formed it). I'm not really worried about this one during retirement, but the rest are all commercial loans with 20 year amortizations with 5 year balloon payments. I'm in a position to retire early from my W2 job but I'm worried what will happen in a couple of years when the balloon payments come up if I don't have that W2 income to show.

I have a little over 2 million in stocks, bonds, savings, etc but I don't want to have to pull from any of that to pay the properties off. My preference would be to continue with the 20 year amortization and just pick up another 5 year balloon (and keep doing that until they are paid off).

Does anyone have experience with how banks look at a property (or investor) in my situation? Remember, these are all 2 to 4 unit properties so I don't think they will be treated like commercial real estate even though I have commercial loans on them. Will the bank look at the fact that the payments have always been on time and that the properties all have had positive cash flow over the life of the 5 year balloon, or are they going to see that I have no active (W2) income and possibly not give me the next 5 year balloon.

Any summer months are good. September is about the latest you would want to go and definitely avoid Oct, Nov, Dec, and January. What is your thinking with aligning the leases? To me it is best to stagger them. The problem with aligning them is that you have twice the make ready work to get done if they both leave at the same time. Also, if they are not aligned you basically have one paying the mortgage, insurance, etc while you fill the other side...

Believe it or not I have had really great luck with USBank. I have financed 8 different properties in South City with them and terms are as good or better than I can get with local portfolio lenders. I have also financed a couple of properties with Rockwood Bank. 

Mike Sewell does my legal work. He is thorough and really knows real estate...