All Forum Posts by: Mackenzie Grate

Section 8 can be tricky. While legally a landlord cannot discriminate against that type of income when someone applies for a property, note that if you are looking to target that sector directly it's most likely not going to be truly "passive" income. These properties do require a lot more management.

Additionally these properties tend to require a lot more maintenance. Why? Because they tend to already be properties that are usually bought at a lower price point, thus already needing major updates and repairs from the beginning. Pair that with the fact that they tend to have more people living in them per unit, thus more wear and tear. With long term rentals you could find your cash flow being wiped out regularly by maintenance if you do not run the numbers right from the beginning or have a tenant who does significant damage (although any tenant can do signficant damage if not vetted right... not just Section 8 tenants). 

When it comes to refinancing a property, you generally have to increase the value. There are a few ways to do this, but ultimately a multifamily's value is going to be based off the income the property generates. So you will need to force equity. How you do that is by improving the place and raising rents. That isn't always possible in a Section 8 purchase. So unless you get something well below market, and raise it to market, it's unlikely you will be able to get much out if you were to refinance.

So food for thought. There is definitely a need for more Section 8 housing. But know that it tends to be a lot more labor intensive if you are a landlord managing it and it can be a lot harder to increase the value of the property over time.

Hope this helps a little bit. Good luck! I'm excited to hear how your journey goes! :)

I agree with @Shawn Parsh. The missing piece is how are you going to add value to the property in the next year to be able to pull money out? You can't just assume it will appreciate. There needs to be a solid plan in place. Also, make sure you run the scenario of a higher interest rate because there is no guarantee, that if you choose to refi and pull your money out, that you will be able to obtain a 6% interest rate.

So some options are:

Add value and refi

Add value and take out a HELOC

Buy and sell (I don't recommend this)

Or have another clause in place in your agreement with your friend in the event you need an extension because the other options are not possible.

If it comes down to it and it's not a great return, pass and keep looking. It's better to maintain the relationship with your friend and hold out for a win/win deal than to just jump on something that "almost" could work. 

Keep up the awesome work. Looks like you have an exciting year ahead jumping into investing! I'm rooting for you! You got this! :)

A controlling member of the LLC will sign on behalf of the LLC for any agreement the LLC enters into. However, I have my tenants put the utilities in their name while they are residing at the property.

Hope that helps!

While I am not familiar with that area specifically, if it's in the woods you will lose power during storms generally. I have two STR's in Upstate NY that lose power frequently and they aren't even super remote. I highly recommend back up generators, not only for the guests convenience and ratings, but also to protect your property. If it gets super cold and you don't have electricity, pipes will burst. Turnovers for your cleaners without electricity are nearly impossible. Plus, it is an extra feature you can highlight that will increase bookings for you.

If you decide to forego the back up generator, make it super clear in your listing that power outages may occur and that stays won't be refunded if that is the case. The more explicit you are in your listings about the drawbacks of a property, the better.

But overall, in a wooded setting... they are totally worth it in my opinion.

Good luck and congrats on your first one! How exciting! You got this! :)

I'm not in that market so I don't know the specifics, but it sounds like you have to go back to the basics of searching for off market properties. Drive and locate run down properties yourself and then reach out to the owners directly. You can look them up through services like prop stream, etc. Also on those websites you can pull up specific lists (pre foreclosure lists, homes that are owned out right, etc.) and reach out to those owners directly. To get a great deal, you will probably have to do the leg work yourself.

Hope that helps a little bit. Good luck!

Hi James! Go for it.

I never let over saturation scare me off. While I understand the thought behind the concern, I have found that it really comes down to three things which make a successful airbnb: 1) Design 2) Management and 3) Location. And what I mean by location is it doesn't have to be in the most amazing location in the world as long as the property has the elements that a vacation property should have for people looking in that area. So for example, in the Catskills, where I am, people either want it right in town, walking distance to everything or completely isolated in the woods. There is no in between.

However, amazing design, a cute instagrammable home can book like crazy despite short comings. So if you don't have a knack for interior design, hire a designer. They aren't that expensive and it will pay for itself ten fold. Also hire one who understands the quality and finishes vacation renters are looking for.

Lastly, how you manage the property will not only dictate how people treat it (if you let the grass grow and maintenance defer, guests will treat it with less care) but it will also determine your ratings. Ratings are everything when it comes to attracting great guests and not getting kicked off the platforms.

Hope that helps a little bit. But definitely go for it. You will work out the kinks as you manage it over time but it is absolutely worth a go at it!

Good luck! I'm rooting for you! You got this! And message me if you have any other questions. I'm always happy to share my experiences and tough lessons learned lol

I'd just keep it simple. Cash in/ cash out.

How much will this rent for each night? What is a reasonable occupancy rate? That is your estimated income.

Minus the costs to run it: rent, insurance, automated online services, cleaning (although guests usually pay for this) utilities, internet, disposables. 

Once you have that number? How much is the spread? Is it worth it? How many months will that spread take to pay back for your initial deposit and furniture?

If you are comfortable with the returns, go for it. If not, don't.

There is no set return that is "good" or "bad." It's what you think is worth your time managing it.

Hope this helps. Don't overthink it and fall into analysis paralysis. You got this! :) Good luck! I'm rooting for you!

I agree with a lot of what is said before.

The communications can all be automated which is 90% of the work. So can the locks, temperature control, etc.

While you do need people on the ground, you find them over time. When you set up the place initially, meet your neighbors and build a good relationship with them. They are your best resource and they want to see it smoothly run for their own sake. So usually they are more than happy to refer people they use or offer to help in a pinch themselves. Lots of these sub contractors though will become friends as long as you treat them well, pay them quickly and refer them to others. Also, ask them to begin with, if I need extra help for other stuff not necessarily related to your trade, are you available? You'd be surprised how many are more than happy to help because they want cash jobs that can be paid out quick.

Your cleaner is everything so spoil them. They will be the first to tell you if there are any issues.

And lastly, have cameras on the exterior of the house so you can monitor it. 

Many people, including myself, manage remotely. And honestly, this isn't something I would pass off to someone else yet at this point in my investing career because what they say is true: no one will care more about your property than you do.

So good luck! You got this!

I agree that it's all about rates this time of year. But here's how I do it. I lower the rate every other day and require a 2 day minimum stay. That way it helps keep the overall rate a bit higher. I also let all my previous guests know I do discounts for returning guests. I message them when they check out, and on Instagram if they follow my page. That has drum up a couple of leads recently too. Lastly, I'm on multiple sites: Airbnb, VRBO, Bookings.com, etc. The more exposure, the more possibility of bookings!

Good luck! You got this! :)

Hi! Welcome! It's lovely to meet you.

I invest in the Hudson Valley. And while it has it's challenges, I love this area for long term rentals. The rental market demand is still extremely high and there are a lot of value add opportunities, you just have to be willing to put in the work. But I'd love to connect sometime. Feel free to reach out if you have any questions. Welcome to the investing club up here! :)