All Forum Posts by: Marcello Di Gerlando

@Mark Futalan

I have a large STR that sleeps 16. We've had bottle neck issues doing laundry on-site. But since covid we've stopped doing same day turn overs which helps. However the cleaners still have extra time hanging around for the towels to dry which translates to expensive cleaners. The bottle neck has always been the drying capacity for towels not so much the washer. In order to install a second dryer we will need to add an additional 20 amp circuit.

To be honest I cant remember all the details and we never went through with the build or loan as things changed. What I remember about the discussion with the loan officer and what surprised me is that they didn't need the collateral I was willing to put up and they only required 10% down. I believe the loan starts out as an interest only deal and then is converted to a traditional thirty year mortgage when complete. Origination costs are a little higher because of the extra work the appraiser does projecting future valuations. We never had plans and everything we were doing was preliminary but two separate institutions gave me similar terms to consider.

sorry I'm not sure what forum we are in. But you should try asking the same question in the new construction forum the regular guys on there will definitely have answers for you.

Probably one of the most asked questions on BP. Do a forum search for older posts to find more refined answers than mine. Information one needs before answering this question.

1) How old is the property?

2) how big is the property?

3) property type? multi family single family etc?

2) How will the house be used? Long term rental/ vacation rental?

4) Will you be rehabbing it? have any improvements been made? what and when?

If you have a newer well kept property and your occupancy is great then maintenance can be low single digits as a percentage of revenue. However, Capital improvements which are a much bigger ticket and done less frequently can easily be much higher. A lot of variables to consider.

You can estimate roof replacement, heating and air conditioning replacement etc. over time and then average it out.

With a new purchase I game out sensible estimates figuring age and usage and yearly revisits to my proforma to narrow it all down.

maintenance and capex tip: I never buy properties built before 1990...I think I got that from @j-scott

Hunt around for a construction construction loan from a local/state bank. The loan terms will be based on many factors including the future valuation of your new build. 

I was approved for a construction loan in Colorado last year with suprisinglng generous terms.

Investing your own capitol always requires some risk. Period full stop.

Have you tried writing a risk assessment? One way is to use a risk matrix. Do a google search and you will see what I mean.

This will not make sense in text so do the google search if you are not familiar. You will need to start by clearly defining what exactly you want to accomplish.

On one axis you have a severity scale - minor impact to our life, to catastrophic destruction. ( how bad can this thing really get?)

On the other axis you have a probability/frequency scale ( how likely is this thing to occur? )

The key is to stay out of the red danger zone - you never want to be in the intersection of the matrix where something is "almost certain to happen" and the consequences are " Catastrophic"

The great thing about using a matrix to solve risk problems is that you can add incremental mitigating factors to lower frequency and or severity and move your target into the area of the matrix where risk is tolerable.

Risk tolerance varies. If one is super risk averse REI is not a great space to be in. For some a government job with a pension plan and benefits is an option.

However one path will offer the opportunity to earn bags and bags of green freedom to do as you will and the other might get you a retirement party with sally from the office a lovely supermarket bought cake in 30years and vacations to other side of the sate.

Fact: The one thing that all financially successful people have in common is their willingness to take well understood risks.

Hope this helps.

Good luck

Check with your local building department.  state by state building codes can vary. There is something called the IBC/ International Building Code you may want to check. If it doesn't meet IBC standards I cant imagine your local ordinance will allow it either. 

The bank has little impact here. if your local authorities recognize it as a bedroom then the bank will also.

Do the existing county records include the bedrooms in the basement? The appraiser will be looking at the records.

If you don't have egress windows or an emergency exit door in the basement then the basement doesn't have bedrooms that meet IBC standards.

I use Proper insurance, unwritten by Lloyds of London, for my STR - covers the extra issues you would expect from an STR like vandalism, alcohol liabilities, business interruption up $10k, hot-tub cooties etc. It's a commercial policy so I pay a little extra but vey much worth the expense. I made a fair size claim last year and it paid off pretty painlessly except for the 90 day lag. highly recommend them.

If I had used a regular home owners policy with and STR addendum I'm pretty sure it would not have covered my particular issue.

You sound like you are in a good position. As I'm sure you are aware low skilled head working reliable employees seem to be total unicorns especially now and more critically in the new era of closed borders and post Covid.

What about buying into a franchise or taking over an existing business? (not starting a new one) Junk King comes to mind or a restoration and cleaning company. These, to me, would seem to translate well for what you currently do as a moving company and also play well in the real estate space.

100k investment with an SBA backed loan gives you more or less $1million dollars in buying power for an existing business. You have the man power and the experience of owing a small business already. A little capitol and some excellent leadership you could be well on your way to the top of the food chain.

Good luck!

Where is your buy side real estate agent? can they help?

Need more info...

what type of deal? buy and hold? Flip? short term rental? loans?

BP has calculators under the tool tabs. But in order to understand what the calculator is telling you, you need to understand deal specific metrics that meet your goal. 

You can also look for the BP 'File Place' which has spread sheet calculators and other goodies posted by members

My favorite REI calculators are those from the aventuresincre website.

Search the BP forums for the same answers you have questions for. I'm sure many people have asked and the answer is out there already.

Get familiar with the 2% RULE for buy and holds, and the 70% RULE for flips and other helpful rules of thumb. do a forum search for the 2% rule and you will find hundreds of threads.

If you have a specific 'numbers' question. post it here, lots of folks will chime in. but please include a lot of details.