All Forum Posts by: Matt J.

Hi @Matt J., STR's don't really use vacancy, it's occupancy which then is multiplied by ADR (average daily rate) to generate your gross scheduled income. Depending on how much management you are going to use it will range anywhere from 0 to 30% and then you need to figure out which expenses are variable to usage (e.g. electricity, gas, etc.) and those that are static (e.g cable, internet, etc). Below is a spreadsheet I created a long time ago that might help put it together.

Best of luck to you! 

https://www.biggerpockets.com/...

Vacany can be approximated by looking at several other properties on Vrbo and Airbnb. 

Management is a percentage. Could be 30% or higher of gross, so you should consider self management. 

@Matt J. take a look at my post from a couple years ago on my first house hack. https://www.biggerpockets.com/... 

Here is an excerpt from that thread (page 5) that I think will help you:

I have had some inquiries on the format of letter that I used to make contact with owners of multifamily properties that I found on the auditors site. Below is a snapshot of my letter with a couple of items omitted. If you are not a real estate agent, this is not a problem! Just omit any mention of that point, but you can still mention that the seller would save $ vs listing on the market because you would be dealing direct and can essentially bypass agents (if they desire, or say you have no problem if they want to be represented for safety, they key is making them comfortable). I sent out a letter to 3/4 unit owners prior to this letter which was aimed just at duplexes. Since I didn't get any good leads from my first letter on 3/4 unit properties, I lowered my search down to 2 unit properties.

TIPS:

1. Mention you are not looking to buy and sell aka flip. Mention you want to hold it for a long time. Let them know where you found their contact information so they are not angry that their address may be out for who-knows-who to find. They will feel better knowing exactly how you were able to reach them.

2. Let them know that you filtered down a big list and still are interested in their property, this lets them know that you are seriously interested and aren't sending out thousands of letters looking to snag something at a low price.

3. Tell them you will pay a fair value, nobody wants someone who is going to lowball them.

4. Be personable, let them know what you do, that you are local, etc. You are local and not an 'out of state investor shark', this is to your advantage. Make this known.

5. At the end (if they are not interested) ask them to keep your business card or contact info in their junk drawer, you never know in 5-20 years from now if they will pull out your info and call.

6. Ask them (if they are not interested), if they know anybody else with a multifamily who is looking to sell. Generally folks who own 2-4 unit properties know others who do as well.

7. I said this before but will mention again, hand address these for a better open rate. You can print the letter and the return address sticky label, but hand print the to address. Also sign each letter in ink at the bottom near your salutation.

8. Give them multiple ways to contact you, and let them know they can do it at their convenience. Email, call, or text. I would rather text someone than call, this may make them more likely to contact you.

9. If you have your license, let them know that you will be using all official broker forms. This puts people at ease. If you are not an agent, work with a lawyer to draft documents if needed and let the seller know this. This step lets the potential seller know that you are not going to try to pull anything fast on them. It makes them more comfortable.

10. Let them know that you are trying to build a positive financial future for yourself and/or your family via rental property. Many of these folks were in the same shoes in the past, and people like to help others who are vulnerable enough to mention they are new and getting started. They will be more willing to talk if they see a past version of themselves within you. This is a step that is genuine and true but many people don't want to make themselves look like a newbie. Turn it around and use it to your advantage because this is the truth.

Hope this helps!

@Matt Jennissen

Where are you getting your list to market to?

@Matt J. direct mail is a numbers game. You are going to get around a 1% response rate if you are lucky, and from that you will need to track and follow up all the leads. Many of the leads will be at the beginning phase of the selling cycle so they won't transact for months or even years. You probably will want to send 10,000 pieces in multiple campaigns in order to get 100 leads that will translate to one good deal. 

The alternative is to use the MLS. Here in Chicago I explain this to clients all the time. Driving for dollars, direct mail, probate, etc are all long term plays. There is nothing wrong with going off market, but the market is there for a reason.

I don’t think I could be a landlord. I just find the entire system to be inherently exploitative and immoral. If I ever owned more than one property and HAD to rent it out, I would only ask the person renting it to pay the property taxes and all their own utilities. And that would only happen if I inherited a house or something.  I would never buy a property for the purpose of renting it out  because I wouldn’t want to be tied to a mortgage for somewhere I don’t intend to live  

And don’t get me weight I’m not saying every landlord is exploitative and immoral.  And I respect that there are many many good people who rent out houses.  My previous landlord was great. Nice guy, always understanding and reasonable, kept things fixed and never ever came by. I saw him twice: when he showed me the place and when he gave me the key. Everything was done online and He preferred I pay rent with Venmo  when the pandemic first hit we were late with rent the first month but he didn’t give us any problem  he even accepted a check from my parents when they decided to pay our rent for April and may because they knew we were worried  

After that I made sure he was paid on time every month until we moved out  we only left because the place was too small  and we thought we found the perfect house to rent across the street. 
then we found out that this landlord for the house we are in now is a slumlord who won’t fix things and a complete jerk. He wouldn’t give me a copy  of a written lease and is now  trying to evict us for holding over because he terminated our month to month lease because we are a married same sex couple  and not brothers as he originally thought. He takes advantage of the Hispanic community by renting to them without any protections for them and then doesn’t make repairs when needed. When he wants someone out he just tells him they’re there illegally and they hes calling the police so they get scared and leave.