All Forum Posts by: Natalie Schanne

@Adam Galal - the instances where I’ve seen 6-12 months rent upfront have been

1. International students or international workers with new jobs and no credit who need an apartment

2. Local students with student loans helping pay housing with no significant job income who need an apartment

3. DANGER - tenants who have low credit (didn’t pay their other bills for debts they agreed to repay) who have 6 mo rent saved up (possibly from not paying rent for 6 or more months) and have been declined at so many other places that they lead with the offer, particularly with private landlords on new rental listings, hoping to snag someone greedy who will take a chance on them.

The two questions I would ask #3 are - 1. are you currently in a position where you are making 3x rent to income and you are actively saving / paying down debts (like a debt snowball, verifiable with bank statements) such that you’re on a path towards home ownership in the future if you want to own? (Higher credit, higher savings, higher income?)

2. Tell me about your current landlord.

(If they go on a rant about their current landlord being a slumlord, with everything broken and mold and such, just know that you, if you rent to them, will be called the next slumlord.)

Personally, when I was renting apartments in philadelphia for a company, we accepted a international student who prepaid 12mo because she had no credit or income to qualify for the apartment. Depending on local laws, if not allowed, this could be counted as either first months rent of $$$$$ with the remaining months $1-100 or held in third party escrow for monthly distribution.

When I was in Berkeley CA as a graduate engineering student on a $18000/year fellowship stipend, I was asked to prepay 6 months by the apartment’s electronic system (probably yardi) with a 750+ credit score because I had limited income and didn’t want my mom to cosign. I told them to pound sand when they told me I also had to pay full months rent for august when I was moving in, on like august 27. I ended up renting a spare room in a 2/1 for $800 instead of paying $2000/mo.

@Jay Hinrichs - I agree that the biggest losers are current renters who have watched asset prices increase 25%+ year over year and now also rent prices 20-25%, even more so if you are on a fixed income that hasn’t adjusted. Even if your social security went up 8-9% with inflation, and I’m not clear if it did, then that still doesn’t help pay the 20-25% market rent increase if your apartment owner is on a 10%+ rental increase path to get your apartment’s rent to market. I’ve witnessed more landlords “selling the house” and requiring it to be vacant, than ever before. That’s the most common reason I hear from rental applicants for houses.

@Neil C Stark - you can furnish a 2 bed apartment for Airbnb for $1500 or less. I don’t buy your argument that you couldn’t Airbnb it. You chose not to Airbnb it. You chose not to even list it to try. Only you can answer why and if you want to try it again later. Generally longer term renters are less headache and you can collect the cashflow and charge their security deposits for damages. On Airbnb, if they break stuff, you usually get a bad review if you try to charge them, especially for petty stuff that would be a reasonable apartment charge like a broken fridge door shelf for $60 or stained sheets/towels or stolen power strips.

I posted my first apartment on Airbnb with empty furniture less pictures and offered to furnish to suit and got a 3 month booking right away at $2000/mo (I had been trying to rent it empty for two weeks for $1400 with no takers), then I went to a couple moving sales and/or shopped locally on Facebook marketplace and put in a $50 wood dining table with 6 chairs, $50 couch, $50 desk, $200 bed with frame x 2, $300 43” Roku tv x 2, $200 wifi extender, $100 of misc kitchen stuff, $100 of linens, pillows and towels. Since the payment hits your bank account the day after the booking starts, you can pay off your credit card or whatever right away. I wouldn’t start with a $1000 brand new dining table or any of that nonsense when I’m just trying it out. You can always upgrade later.

If you do not publish the exterior photos of your home nor have an easily identifiable profile name, nor tell your neighbors, it takes some investigation for your neighbors or the township to find out if you are airbnbing your property. It’s usually not illegal for you to live in your home and have guests in your side apartment. I tend to disregard or fight rules that are unequally applied especially if I am definitively not causing any kind of local nuisance. That’s my personality. If ignoring rules bothers you, and str is noted to be against the rules, shut down this line of thinking and don’t worry about it again.

However if you did want to try to Airbnb, you could always offer your own unit at a crazy price and only clean up/ vacate if someone takes it for a weekend. (You can block your calendar however you like, or accept only bookings you want - I have instant book off). Like, hi honey, a group of 4 people wants to pay us $2000 to stay in the 3 bedroom apartment for 2 weeks, do you want to vacation anywhere? Yes/no then accept or reject accordingly. That’s how Airbnb started.

@Tasha Barnes - lots of good info here. I have properties both near me and out of state. If you factor in the true cost of repairs and coordination, I feel like close to you wins every time.

For two properties that are similar cost, rent, tenant quality - As an example - for my property in VA - if the toilet breaks and needs to be replaced, I can't find a plumber to do it for less than $450. If it breaks down the street, I get a handyman for $100 and a toilet for $100-150 at Home Depot. On average I think the costs of tenant turnover are at least 30% higher when you can't supervise properly and/or don't have a good contractor network. Also vacancy is probably higher.

If I were you, I’d buy in charlotte.

@Brian Badolato - It seems like a good experience to learn from wealthier people who are probably giving you access to expensive tools and training.

ask brother A and B to give you a power dialer (if you don’t already have one, only about $100/mo) with loaded leads and scripts. Hello, is this John at 123 Prosperity St?

Then ask them for leads for distressed single family homes you can buy as well. Then set and go on live appointments to negotiate for single families to build your skills. It seems like the brothers are trying to pay you to help them build their own portfolio with discounted multifamily.

Specifically, in every area, there’s an average $$ per unit or $$ per square foot. So if you can find an owner who wants to sell a duplex for $180k, and I know the going price is at least $300k, I will buy those all day long. And so will these brothers.

So to get dollars in your pocket faster, ask for permission to find ANY distressed sellers, then lock them under contract and work with the brothers to flip or wholesale the contract. There are millions more condos, townhomes and single family homes than multifamily properties.

Once you know how to do this skill, you can easily branch out as your own wholesaler (with YOU paying the overhead costs).

You talk about leaving them, but it seems like they may dump you as well if you don’t get results so they can pour their time and effort into other acquisitions managers. There’s one investor in my area who is always posting on social media to hire acquisitions managers - anyone who is commission only, is net $$$ in your pocket assuming they don’t cost you a lot of time.

@Matthew Rembish - I have seen very few instances where the owner was able to get full / top market value while a tenant was living in the property. Two things work against you:

1. Their showing schedule (some tenants block showings or insist on being there, which is rarely a good thing)

2. Tenants usually are living in the property in a way that their possessions and cleanliness affect the average buyer’s impression of the home (for example, misc dishes in the kitchen, pizza boxes, random clothes and boxes on the floor). They have almost 0 incentive to maintain the property in a “staged” condition. Only once have I had a tenant, and once a seller, whose house was just so beautiful and nicely staged & decorated, that it was a net positive that they were living there.

Additionally, we are going into the winter soon and a lot of people are fearing a recession. If you list now and get under contract, the home will likely sell in October or November. Yes, interest rates are increasing. If they weren’t, I’d propose maybe waiting until March to sell.

I think your best next step is sending a notice to raise rent to market 10-15% (rents went up 20% year over year) and having him choose to move out. If he stays, your cash flow is up. If he goes, you sell it. I wouldn’t list it with him in place unless he is a perfect tenant and everything is always in place. Usually you can present a property in a much better light when everything is freshly touched up (new paint, etc.) However, I will admit that sometimes it nets out nearly the same. Example: Option 1) Tenant moves out. You touch up paint, flooring, etc. Sell property for $10,000 more. Option 2) You keep tenant in place and tenant agrees to move out before the walk through at closing. You collect $2000/mo rent and don’t have to pay house utilities for 3 months ($500/mo) while property is waiting to sell and close. (((The difference may end up being negligible))).

@Abdul Azeez - The market is softening. It is possible that your next / backup offer will be lower than if you adjust your price a little and close now. Also factor in your holding costs and time value of money. (Probably $3-5k/mo).

It’s not your agent’s fault that the appraisal came in low. I think you should consider him or her a good listing agent for getting more than you were asking (and probably multiple offers), and being so proactive on your behalf. If you listed for below the amount you were willing to accept, that seems strange. In normal markets, average homes sell for about 92% of original list price.

Since you only have a week to wait, I would see if they close or not. You will know if the buyer is responding to title communications and/or signing the 3 day alta / loan disclosures and you can have your agent prepare to launch another open house the following weekend and/or do another “highest and best”. You can adjust your list price to be the offer you hope to get. However, it’s possible to price your property so high that agents don’t show it because their clients aren’t asking about it. You just need one real offer to sell a house.

I wish you good luck. It seems you are stressed out by the buyer’s lack of communication. Usually a lack of communication is an indication that the deal is going south and likely to be cancelled. But the buyer may also be trying to come up with the extra money to close as planned.

Let us know how it goes

@Andrew Rodriguez - are you in an area where you could Airbnb if you wanted to? I’ve had pretty good success getting strings of month long or longer occupants while also getting 20-50% more than a standard rental.

How much do you think your property has appreciated since you bought it?

Any unexpected repairs you’ve had to do even though it was new construction? Or relatively maintenance free so far?

@April L. - As an investor, I would say that TN-GA Airbnbs got very hot in 2020-2021 and I think more deals are going to hit the MLS after some newbies realize this isn't for them and the projected revenues aren't what they were in 2020-2021 when gas was cheaper and nobody could travel overseas. So now you have a lot of airbnbs hitting the market where there may be local animosity towards that particular house as a STR (they may or may not clearly disclose it to you upfront) and often at tip top prices (far above 2018-2019 prices for equivalent vacation homes). I know cleaning fees have increased and Airbnb is also more challenging in terms of now threatening you with $$$$$ fines if you cancel a reservation for any "avoidable" reason, and also taking the guests side sometimes when they break your stuff like your hot tub (by leaving the lid off) or your air conditioner (by leaving the door open).

I also want to say that you should be making offers on at least 50% of the houses you go tour as str investments. Write an offer for a price that works for you. Then you will seem serious. If you are just touring and not writing offers, then I think you are not serious. I also would think you are not serious if there’s a discoverable feature about a town or property and you make us drive around for hours and decide you “don’t like the neighborhood” or “it’s not close enough to stuff”. Do your research.

I also would say that it’s ok to have different agents in different markets within the same state, if disclosed upfront. Like I would use different agents between Knoxville TN and Nashville TN. Anything that’s out of 30-60 mins radius, any agent will be a lot less familiar with. I personally am not an expert in the area right outside NYC like Bergen County or Hudson County. I don’t have a clue block by block values in rent or pricing. But I do in the 30 mins around my house near Princeton Nj.

@Angelleena Arevalo - if a zero review, new account, local person requests, I usually ask if they’ve used Airbnb before as a booking guest. If they say yes, then I think maybe they ditched an old account because of a bad review. I usually don’t want to host anyone local on the platform itself, I’d rather meet them in real life first. Usually you can share your address and meet someone before you accept their booking. If you would rent to someone month to month as a local person, then proceed. If you wouldn’t rent to them month to month given what you know about them (no credit or background check), definitely be wary. A lot of people got evicted recently and Airbnb doesn’t care if your booking guest will pay first months rent and then squat.

That being said, a lot of my Airbnb guests are renting a private bedroom in a shared house for multiple months. Because it’s a shared house with an electronic combo code, knock on wood, I haven’t had anyone outstay their welcome.