All Forum Posts by: Natalie Medved

Pardon the typos - typing fast and didn't proof!

Hi everyone:

My husband and I are in the process of furnishing our transforming our second home in the White Mountains (Thornton, NH) into a STR. The market has a lot of baseline - economically friendly STRS but only a few luxury STR's, most of which are dated and drab. Our goal is to me a more accessible luxury option for couples and families. I personally prefer staying in a nicer STR and appreciate nicer finishes, details, and a unified ascetic, and want to provide a similar experience to our future guests. I am a lover of interior design (think Amber Lewis and Architectural Digest) and could easily go overboard decorating and furnishing the place, which I'd like to avoid haha. I also recognize that AirBnB's can be used and abused, which makes sturdy and reliable furniture selection even more important. But where does one find ascetically pleasing furniture that is built to last without breaking the bank?

What are your favorite places to buy furniture and goods for your STRs?  From night stands to linens, we'd love any and all input!

Thanks in advance!
Natalie

 Hi Mike: 

Do you host the properties, use a co-hosting service, or have a property manager?

My husband and I want to list our house up there but aren’t sure what the best management option is. 

Thanks for the help!

DO NOT CONTACT THE DEBTOR-TENANT. This is bad advice and could expose you to significant liability. 

There is a reason the attorney told you not to contact the debtor-tenant and it’s called the automatic stay (see 11 U.S.C. section 362). Generally, when a debtor files for bankruptcy the automatic stay goes into effect, which is an injunction that enjoins pretty much every type of collection activity (look up that code section and read through the subsections).

As a landlord, you even contacting the debtor-tenant with a bill or amount due or otherwise could easily be viewed as a violation of the automatic stay, which could expose you to liability (attorney fees, actual damages, punitive damages, emotional damages). See 11 USC section 362(k)(1).

Here’s the deal, just because the tenant filed doesn’t mean you are completely screwed. I don’t have enough details but the fact that the the tenant filed for ch. 13 could be encouraging.  A chapter 7 is a straight liquidation while a 13 is a an individual reorganization.  In a chapter 13, the debtor is required to submit a chapter 13 plan that proposes a repayment plan over a term of 3 to 5 years and allows the debtor to restructure debts or other obligations. Each case is different and you have no idea what the debtor’s attorney is going to propose in the chapter 13 plan.  

You have actual notice of the bankruptcy (and hopefully the bankruptcy case number) so your next step should be calling the Clerk’s office of the bankruptcy court to make sure you are on the creditor mailing list / requesting notice of anything filed in the case and— this is important— 
Confirming the Proof of Claim filing deadline and filing a claim in the case for whatever damages you have pursuant to the lease (with a copy of the lease) and any other supporting documents ASAP.

By doing that, you can protect your ability to be paid out as an unsecured creditor with everyone else in that class (or perhaps a different class of creditors with a higher priority- not sure what your situation is so I can’t comment).  

I am a Rookie and first-timer multi-family buyer looking for help on a deal analysis and some perspective.  After living below our means and saving for years, my husband and I submitted an offer on a 4-unit, 15-bedroom property (3 X 4BR and 1 X 3BR) with a long history of renting to college students and young professionals.  Now I am second-guessing myself and looking for perspective on how (assuming it gets accepted) we can increase cash flow on the property or if we should walk away (which we can do).

First, some background on the property.  The 3BR unit rents for $3,500 per student per semester (roughly $777 a month per student), and the 4BR units rent for $3,300 per student per semester (roughly $734 a month per student).  The property is being sold subject to the 15 leases that expire in June (college students and young professionals), so we can raise rents for the following school year or lease to year-round tenants.  Utilities (heating, water/ sewer, electric, internet) are included (which makes me nervous given the rising costs of electricity and oil and our inability to increase the rent until the leases expire in June).  Last year, the property grossed around $101K and netted $61,980K after operating expenses.  The property appears to be in good condition (the owner has invested in major projects regularly to update the property and maintain its condition). It is located in a desirable area (a stone's throw from campus, stores, bars, and restaurants) in a small college town, has 13 parking spaces, and has been owned by the same owner for the last 40 years (he moved to CA and is retiring).   

I started running numbers and comps the second I saw the listing.  It is in much better condition than other buildings that rent to college students, and the rent is lower than those buildings.  The showing was a mob scene.  Agents and potential buyers were all over the place when I went to see it on Monday (which was also the first and only chance to see it).  Initially, I wasn't going to put an offer in because I didn't have an interest in getting into a bidding war and was worried about the cash flow.  The seller set an offer deadline of 5:00 p.m. last night.  I started kicking myself after I missed the initial deadline because good multi-family properties with 4+ units rarely pop up, and our chances at securing multifamily like this nearby (so we can be actively involved with its management) is dwindling given ever-increasing interest rates (the tea leaves suggest we are headed for rate increases like those seen in the 1980s and 1990s).  

Here is the offer.  We came in at $595K with a $2,500 escalation clause up to $615K.  We are preapproved at $700K, 25% down at 6.99% (ugh...the pucker factor).  I ran multiple reports using expenses with some upward adjustments.  Also, the property is located right down the street from where we live and work remotely. We want to be actively involved with its management (so we can save on the management fee). 

Any advice? Should I call and retract our offer? Is it worth holding the property to work on cash flow? Am I just panicking?

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