All Forum Posts by: Neil Henderson

You could implement a RUBS program (Ratio Utility Billing System). It's usually designed for larger apartment communities with shared utilities, but I suppose you could implement it as well. Would just need to find a way to legally put it in the lease. 

Agreed. It's one of the main reasons I don't current use the BP BRRRR calculator. Also, it's slow, in my humble opinion, fine if I'm putting together a package for a property I know I'm going to move on and I want something that looks nice to share with investors/bank, but too slow to quickly evaluate properties.

I've seen too many of those to count and it still never ceases to amaze me that anyone can live like that. Thanks for sharing Chris

Yes, the REIT paid a dividend, but the dividend was minimal and didn't come close to covering the losses in the overall value of the fund.

As with any passive investment, you're typically giving up control and higher ROI, in return for diversification and passivity.

I prefer the higher risk, greater reward of syndications, but those certainly have their drawbacks as well.

I got burned buying REITs back in 2006, so given where we are in the market cycle, I'm personally not a fan.

All that said, I am in favor of diversifying whatever your real estate strategy. 

Both VRBO/HomeAway and AirBnB have policies in place that will "penalize" a host for cancelling a reservation in a situation like this. Both have a top host moniker, Super Host for AirBnB, Premiere Partner for VRBO/HomeAway. A host will lose these marketing monikers if they cancel a reservation without good cause. AirBnB goes a step futher, not allowing the host to rebook the dates. 

Very kind of @Mindy Jensen to, unprompted, take my first world problem here to BP.

I'm the friend in question here. I'll post my experience here not as a whine about my specific situation, but for a larger discussion about hosting conduct in the short term rental world.

Here are the details:

- Our extended family is traveling together for a Thanksgiving reunion. 8 adults and 3 children. Short term rentals are ideal for families in our situation because we can all stay together at the same property. Also, because of the size of our group, properties that can accomodate us all can be tough to find. 

- We booked the reservation on August 8, 2019 for 5 nights (Nov. 26 to Dec. 1) for $700 a night. We paid a $1,754 deposit (which was refunded in full when the reservation was cancelled.)

- Our reservation was cancelled 30 days later on Sept. 6. I immediately reached out to the host about the reason for the cancellation and received the following response:

"Hi Neil

I am very sorry, I was travelling overseas and I didn't adjust the price for the Holidays. For Christmas/New year, we have a 7 days min stay and $900/night.

My Apologies"

- I responded that I am a short term rental owner myself and that I had been in his situation, forgetting to update my calendar for a big weekend and that the cancellation put us in quite a bind this late into the booking season for Thanksgiving and that "...cancelling the guests reservation was certainly ONE way to handle it."

- He responded "Can u do 7 nights?"

- I have already complained to VRBO customer service and tagged them in a Twitter complaint. Their response was "Very sorry for the inconvenience, book another place."

We had a long time cleaner who handled our turnovers until she moved. We then went through multiple cleaners who never really worked out. We now use a service called TurnoverBnB to find and schedule cleaners and so far it's working great for us. The key is to create a cleaning guide and checklist for the cleaner with pictures of how you want the unit to look. If you want to get even more professional, hire an inspector to come in after the cleaning to double check the cleaners. 

I'm not an operator in Duluth, but make sure it's legal before proceeding. This is an old article but it seems to indicate the city placed a freeze on new short term rentals. Call the City and ask.

https://www.duluthnewstribune.com/news/4317402-duluth-hit-vacation-rental-limit-higher-cap-proposed

Some random thoughts:

• Don't let your goals push you into doing a deal just because you feel you need a deal to meet an arbitrary timeline you set for yourself. It's good to set goals but let your deal criteria guide you, not your goal timeline.
• All things being equal, there's probably less risk/reward with doing a traditional rental. If it needs work, I assume you're buying it below market value and forcing some appreciation with the rehab. Doing that builds in a small margin of safety for you should the market soften. Make sure it cash flows! 
• The short term rental route can be profitable and fun but it's far from passive. First thing to consider is the market. 
  • 1. Are short term rentals legal in that area? Search Google for "short term rental ordinance" + "city name". If there is even a hint that a city is talking about regulating them, proceed with caution. 
  • 2. Is there a demand for short term rentals in the vicinity where you plan to buy? Near hospitals and medium sized colleges are a great place to look. What are short term rental rates like in that area? If it's less than $250 a night for a 3 bedroom unit, your margins will be thin. 
  • 3. Turnover and guest communication are your biggest issues with short term rentals. You'll want to have systems in place to ensure the guests arrive to a spotless vacation rental. You'll also want to make sure you are able to answer guest inquiries and questions in a timely manner 24 hours a day. All that is possible, but it means setting up systems. Michael Hamilton of Live Swell, Michael Sjogren (@theairbnbguy on Instagram) and Zeona McIntyre are all experienced short term rental operators who are operating multiple properties. 

Good luck to you and keep us posted about your progress.