All Forum Posts by: Miguel Del Mazo

I am going to try and answer this question with a fair amount of grace, so please bear with me.

As to the original question, here's a rough idea of my thought process regarding a potential purchase:

The hospital is a Level II trauma center with 390 beds (that's a decent-sized hospital), so it probably needs a fair number of travelers. If you want a general sense of their demand for traveling medical professionals, go to the hospital job recruitment page. If there are a large number of openings, then they are likely filling that need with travelers.

See how much the property will cost a month. Principal, interest, taxes and insurance. 280k with 20% down at 7% = about $1500 a month for PI. Taxes are public record, and are about $125 a month (will go up after purchase a bit). Insurance shouldn't be bad as this is a condo, so a lot of potential risk is covered by the HOA insurance. Add another $20 a month for that.

Add in HOA fees ($300 a month; shown in your link), Gas, electricity, high-speed internet, water, trash and snow removal. A lot of those costs are probably part of the HOA dues, so let's say and average of $175 a month for electricty and another $80 for internet. You have a better idea of those costs as I do not live in IL.

So, costs so far are $2200. Play around with that with your more accurate estimates.

Rentometer estimates that rents in the area for a 2/1.5+ are around $2500. Using a 1.5x estimate for what a MTR rental rate might be gives us $3,750. Then I would compare that estimate with what Furnishedfinder.com has in the area. In the immediate are there are 3 houses on FF that are going for 4000 to 6000 a month, but they are 3 BR to 4BR SFHs. I would then adjust down the original MTR rental estimate based on those findings. Let's say $3200?

$3200- $2200 = $1000 month of profit, right? Not really. Put aside some money for fixing things up around the condo from time to time ("CapEx"; 5% to be conservative), and some for vacancy (maybe 10% of the monthly). That leaves ($3200 x .85) - $2200 = $520 a month in profit. Bear in mind, you will have to tweak these numbers based on what you think are proper estimates. For instance, I suspect vacancy might be a little higher based on the train tracks running directly behind the condo. That might be normal and expected in IL. I don't know.

So for $56,000 dollars down plus (an estimated) $7,500 in closing costs plus another $5000 in furnishings, you get an asset that produces about $500 dollars a month. $68,500 / $500 per month = about 12.4 years to get back the intial investment.  

So why do people bother if it takes 12 years to get back your investment on what looks a pretty good monthly profit?  Well, in that 12 years, your tenants will have paid down about $35,000 in principal (aren't amortization schedules depressing?), and at a 2% average yearly increase in value of the condo, it will be worth about $60,000 more than when it was purchased. These numbers get better if the area is becoming more in demand over time as rents will go up and the condo will appreciate faster than 2%.

*Now we come to the hardest part*: does this property have "potential"?  I have no idea primarily because deals are only "good" or "bad" in the context of what the goals of the owner are. Would I self-manage this deal to earn $500 a month allowing me to own this property in 15, 20 or 30 years? Yes.  Should you?  Again, I have no idea. that's a much more personal decision, and that is probably why Jonathan Greene asked for more information from you about your experience level, especially since you wrote "I am totally out of my league understanding the possibilities of an MTR".

To be successful in the MTR space, I would recommend that any owner or operator strive to provide the best customer experience possible. Potential residents can tell if the owner/operator authentically cares about providing that A+ experience, and they will vote with their wallet regarding where they stay.

So going back to my original sentence, here is where my grace runs out. I have a challenge for the OP.  I took over an hour, on a Sunday,to click a suspicious link in order to look over your property, to learn a little bit more about the West Chicago sub-market, to analyze a deal for a stranger; and to present a rough algorithm for how to analyze the numbers of a deal so that a general process could extrapolated for the next property you consider. All of that was done without thought for any return to me. It was done simply because I enjoy helping in my very limited way.  If at any point in this admittedly large wall of text, you, OP, found yourself getting upset with me, then I would recommend you avoid the MTR space as you will find many similar opportunites to learn that you will not enjoy. LTRs are a great way to approach real estate, and it sounds like you are doing very well in that space. Keep crushing it there.

If you offer an amenity, guests get more upset when the amenity is broken than if it was never there in the first place.  

We've debated adding a printer station to our units because it would be awesome if we were traveling to have the ability to print where we were staying.  However, can you imagine how many service requests would come in for silly stuff related to printers?

Amenities need to serve the needs of both the resident and the tenant, or they don't make it inside.

Congrats on the new MTR operation.

I don't like the idea of putting in what may be a relatively high-cost and low-return piece of equipment in your unit. 

Is there a full-sized gym nearby that would be willing to waive their start-up fees for your residents in exchange for a referral from you?  Your residents would benefit with better gym access on the road, the gym would get a little more revenue each month; and you can advertise the benefit without sacrificing square footage.

Thanks, and best of luck.

I am sorry to hear about the challenges you're having with renting out your townhouse in Kennesaw.

I agree that it's probably past time to look into either selling (and re-investing in a carefully selected investment property), hiring a new property management company, or pivoting your strategy with the townhome. 

If your HOA is ok with leases less than a year in length, you may have a potential medium-term rental given the proximity to Kennesaw State University and to Wellstar Kennestone Hospital. Traveling professors and medical professionals would probably be my target avatars.

I am biased though toward MTR as a strategy, and it's not without risk to spend a couple grand converting an empty LTR into an MTR, so consider all of your options carefully.

Hi Chris, 

I searched for properties near Eatonton that are available Nov 1st for less than $1200 on furnishedfinder.com and found 3 SE of Eatonton and 1 NE that meet that criteria.

I chose $1200 because FF shares some of their data publicly at furnishedfinder.com/stats. One of the bits of info they share is percentages of listings at various price points, and "below $1200" is one of those break points. That makes me think that landlords see that and are influenced to raise rents to that number. I certainly could be wrong about that :). With that said, 3 of the 4 listing's are for $1200 a month.

It's definitely the off season for Lake Oconee and Lake Sinclair, so reaching out to these listings through FF and seeing if they can match your son's budget is worth a try.

Best of luck!

I think one of the challenges of the BP MTR forums is that while all real estate is local, it seems that what is working in the MTR space is hyperlocal. That means, take anything I post with a grain of salt :)

FF for us started off as our bread and butter for lead generation, but as we added more units, we added AirBnB and Vrbo. AirBnB has been a really good source of quality leads. Vrbo has been less productive, and FF remains a staple. All three generate leads from insurance claim residents and traveling professionals (medical and the trades).

One of the advantages of FF has been that it's forced us to have systems in place to create leases, accept security deposits without co-mingling and provide "live" customer service. 

We have not been impressed with Padsplit or Roomster even though we are able to accept rent by the room. We listed without success on Kopa, but they've closed shop.

I've heard good things about Zillow rentals but have no personal experience.

During the Battle of the Bulge in WWII, Gen. Anthony Clement "Nuts" McAuliffe rallied his troops saying, "Men, we are surrounded by the enemy. That means we have the greatest opportunity ever presented to an army. We can attack in any direction.”

One of the challenges in the MTR space is that we are nationally surrounded by so many opportunities, but not all of these are present in each region. That's why one poster can adore FF while another sees only a desert on the platform. The same is true for all of the other ways in which we source residents.

So what does mean practically? Take advantage of the need to get new residents more frequently than an LTR by experimenting right after you've filled a listing: change up the description on your platforms, try a new platform, raise the proposed rents, or practice reaching out to those "bad leads" of FF. When you have a lease for 3 months, you are free to "fail". Use the information you gain to narrow your focus for what is working for your market.

Most importantly, if something is working well for the folks you see here or on the podcast, but it doesn't work for you, don't despair. Sometimes, it's just your market. Keep adapting, keep trying, and keep attacking in every direction.

I just set up a new listing on FF today, and I asked myself the same question.  The prices seem steep for a very limited amount of coverage, and we already have a good insurance policy independently of Worry Free Waivers, so I decided, once again, not to bother with them. Our tenants don't seem to mind a security deposit (we charge 1/3 a month's rent), and we've already set up our systems to ensure no co-mingling of security deposit funds and rent (or other personal) funds.

Still, I'd love to hear any experiences for good or ill that anyone has had with their services.

Sorry to miss this when it was first posted.

This type of lease is, by far, my favorite. Business to business is generally the highest paying avatar for us while also being the most professional. Yes, there are more steps to go through (often including sending in a W-9 tax form), but those steps are usually pretty straightforward.

Additionally, most of the folks tasked with finding the housing for the company's VIPs are really appreciative of being treated well by a good property manager, so you can stand above the crowd by simply responding quickly and respectfully. After a good experience with you, who do you think they'll call next time?

The stays at your property are mid-term, but for repeat business, you want to cultivate long-term relationships.

It sounds like you are well on your way to doing that. Way to go.

Jamie and Allen are spot on, as usual. :)

I would add "Is there an ideal avatar that you are looking to serve" to the mix.  If you have a competitive advantage that you can bring to your co-hosting/managing, then I would recommend looking for owners with properties that mesh well with your target resident.

For example, if you are an active duty military servicemember with unique insight into what a servicemember is looking for, lean into that. Similarly, if you are you a medical professional with strong connections at the local hospital, then target properties (and their owners) that would attract medical travelers. You don't have to fit into a traditional "avatar" box to bring valuable insight, so don't sell yourself short. :)

This is especially true if you rely on furnishedfinder.com as your primary lead source (which you shouldn't, but that's another post) as when you make that connection with a prospective resident, you are selling yourself as a landlord as much as you are the property as a place to live. Having that instant connection with prospects is a definite advantage.