All Forum Posts by: Michael Chizhov

Hey all,

Looking at a duplex in the Westminster area that requires quite a bit of work and was considering a FannieMae HomeStyle loan to pay for the reno. They require that the funded work be done by a licensed GC that bids the job before closing, preferably even before an offer package is put together. 

Does anyone have a recommendation on a GC familiar with the HomeStyle loans (the schedule for payment on these loans is a bit particular)?

Thanks!

Hi Amber, I'm in Flag too and just messaged you regarding some more details, but just at first glance I would assume a very clear operating agreement would need to be in place (regarding how repairs/cap ex is split up when they occur, how does one party leave the LLC if they need to sell their share/equity, how are disagreements handled, etc).

I would also be curious how you are handling the lending aspect, will the initial mortgage be in your name and then transferred into the multi-member LLC? Or are you all pooling cash and buying without financing?

Hey Gary,

At the state level, the government is supportive of AirBnBs, VRBOs, etc. This attitude generally trickles down into city governments and Flagstaff city gov has more or less resigned itself to AirBnBs. After AirBnB started collecting lodging taxes from guests and remitting them to city/state governments on the hosts' behalf, I think this made government outcry a little quieter.

Of course, I'm only talking about city objections here. Local HOAs may have their own issues and limitations, so just need to be very careful to read the applicable CCRs when you're looking at properties. For example, I know many neighborhoods in Sedona are turning anti-AirBnB. I don't know of any openly hostile neighborhoods in Flag for this, but again, just need to do your research, talk to neighbors, etc.

I'll shoot you a private message with some more info.

Hi @Gary Mazzarella,

I'm fairly active in the Flag area. What are your questions? In general broad strokes, the market's doing the same thing as many markets, ultra competitive with very low inventory. Flagstaff used to have an average home on the market for 2-4 months before sale, which signals a pretty hot seller's market, and last I checked this number was now less than 11 days. Folks are waiving inspection contingencies, appraisal contingencies, and offering above asking price.

Pretty nuts.

Thanks @Kathy Henley . After considering Jana Cain's solution to my existing setup and chatting with my accountant, I shifted my books closer to what you described. I have a few businesses and was considering the AirBnB to be it's own business, but in retrospect, as you suggest, it's just another income stream for the real estate investment business. So yes, I have set up different classes to run effective P&L reports, expanded my chart of accounts, and merged the two sets of books. (I do differ from your process in that I have my furniture as an "other asset," but I'll be deducting it all this year under the safe harbor election).

Appreciate your response!

One of my units is a 3 bed/1.5 bath apartment, also close to university and the hospital. At least in my market, when a house goes up fully vacant (even advertised room-by-room), usually a group of friends wants to rent the whole house. Effects of COVID on the market definitely need to be considered, but if it's a thriving university town I wouldn't worry about the fact that some people may be wary of sharing a bathroom turn you away from an otherwise good buy. My other friends that rent by the room in town are filling vacancies fairly quickly, so I'm not sure if it's a universally valid argument that renting by the room won't work in the covid-era. Just need to run the numbers and see if the property is a good buy with wiggle room in case you do need to drop the rents a bit to fill a room. Better to fill a room at a 10% decreased rent than let a property go vacant a month.

 At what point would you recommend this shift? I was under the impression that no-recourse business loans require quite a lot of collateral (several million+).

@Jana Cain It certainly does help! Thanks for taking the time to write out such a detailed answer!

Much appreciated.

Hey all, I set up two sets of books, one for my LTR and one for my AirBnB. The LTR has the mortgage on it, the payments, etc, and the rent from the LTR pays most of the debt on the property. But not all.

I'd like the AirBnB to cover a portion of the mortgage as well.

My question is: how should I approach this in QB? Should I just do periodic Owner Draws from AirBnB books and Owner Contributions to the LTR books? Or do I make one a vendor and the other a customer and use a monthly bill transaction (seems like this would create an expense trail which doesn't really exist...)? Or should I approach it as an intercompany transaction, with liability and asset accounts?

The goal is to keep track of how much the AirBnB is contributing to the overall mortgage per month, and how much it's making above and beyond that. I'd rather not use classes/divisions for this.

Thanks in advance!

@Cameron Lam

Just reread your post this morning, and was curious if you could speak to a few questions:

With the partnerships you developed on Units 9&10, you mention that you give all the profit to your partner, but then you also say that "half is marked the pay him back." I'm curious, half of what? If all the cashflow/profit is going to your partner (I'm assuming this is the return on their investment), what funds are you using to pay back their initial $23k? Or are you paying them back your $23k through the cashflow payments, and they only receive their initial 23k investment back if you sell?

I'm also curious if you could speak to your process for reaching out to BP for partnership. Did you find the deal first and then bring it to this community, or did you establish relationships with potential investors first and then find suitable deals?

Thanks for your time!