All Forum Posts by: Neil Henderson

My wife and I became accidental landlords when we moved out of our condo and into a house. We rented out the condo at a $500 a month loss, watched the equity evaporate in the Great Recession, and eventually short sold it for half the price we bought it for. Lesson learned: buy for cash flow (even if it's your primary residence, will it cash flow as an eventual rental), buy with low-leverage long-term debt (we bought with 10% down on an adjustable rate mortgage), have sufficient cash reserves (have enough savings in the bank to weather 6 months without rental income).

After that debacle, we fell into a house hack renting out a guest house on our primary residence property as a short-term rental. Best decision we ever made, allowed us to pay our housing expenses and more.

Now we are buying self-storage facilities. 

I've had too many mentors to count.

I thinking zoning and short term rental ordinances in the areas you wish to operate would be the first things I would research. Make sure the municipality doesn't have any draconian rules against short-term rentals. Google "city, state" + "short term rental ordinance" and see what comes up.

If it's allowed, talk with the zoning department about rules for Auxiliary Dwelling Units. A lot of people got caught up in the tiny house movement wanting to make little tiny house communities and ran up against hostile city zoning departments that didn't want what they viewed as essentially a trailer park. Not saying that's what you're proposing, just a perception from cities you may be faced with.

We got our start in real estate house hacking our primary residence renting an ADU as a short-term rental. One of the best decisions we ever made for our financial future. Allowed us to have our housing paid for and pay down our mortgage quickly in an appreciating market.

If you can swing it legally, I highly recommend it.

Before doing a BRRRR, talk to whomever you plan to have as your refinance lender and explain to them exactly what you plan to do. Tell them the source of your funds to purchase the property (HELOC, Cash, Hard Money, Private Money, Mom and Dad, etc.)

The last thing you want to be doing is scrambling for a refinance lender AFTER you've already purchased the property only to discover no lenders will let you refinance.

Haven't converted one of our long-terms to short-term but we have run a short-term rental and we've interviewed numerous successful people in the niche.

The first thing to research is whether the municipality in the area where your rental is will allow It. Google "your city" and "short-term rental ordinance" to see if there is any news regarding that.

Next, I would pull up your address on Airdna.co 's rentalizer and see what it predicts as annual/monthly revenue. If the gross is more than double the current rent you're getting, it will probably work as a short-term rental. Also, don't ignore medium-term furnished rentals, especially if you are near a hospital. Traveling nurses and family in town to visit loved ones in long-term care need places to stay.

There are many short-term rental managers, the fees they charge will vary based upon how passive you want to be. It's not like managing a long-term rental. Fees could range from 10-25% of gross revenue.

Wayfair is a great place to shop for furniture.

I am a mixture of active and passive. Because my W-2 doesn't pay a huge amount, it doesn't make sense for me to only focus on passive investing. I need the outsized returns of active investing.

I actively invest in self-storage and short-term rentals (with house hacking), and I semi-passively invest in BRRRR's, and I have passively invested in a few multifamily syndications.

This is a GREAT question and something I harp on all the time. If you are a busy professional with a good paying job and you have an interest in investing in real estate, don't give yourself another job trying to invest actively. Even the most 'passive' real estate strategies typically start to become quite a bit of work at scale. In order of most passive to least passive I would rank strategies as follows (not a comprehensive list of strategies):

1. REIT's (stock market level returns and high liquidity)
2. Being a passive investor in a real estate syndication (typically better than stock market returns, sometimes substantially better, tax benefits of real estate, but low liquidity, and takes networking to find reliable operators to invest with)
3. Buying real estate notes (can be much better returns than the stock market, fairly high learning curve, and can become unwieldly at scale)
4. Buying a turnkey property (stock market level returns, tax benefits of real estate, low liquidity, typically buying at or above retail)
5. Buying a BRRRR property (better than stock market returns, can be high learning curve, very dependent on the team you build, can become unwieldly at scale)
6. House flipping (better than stock market returns, high learning curve, a second job, not impossible but very difficult to scale)
7. Wholesaling (better than stock market returns, high learning curve, definitely a second job)

Active strategies are almost always going to produce a higher return than passive strategies. That's because as a passive investor, you're giving up control to the active sponsor who is doing all the work.

If you are looking to invest in real estate syndications passively (as a Limited Partner), set up keywords alerts for "multifamily syndications", "self-storage syndications", "mobile home park syndications", etc.

Listen to podcasts that have syndicators on as guests. If you hear someone you like, reach out to them to set up a phone call. Don't be shy

I would see if I could get in touch with Mike Sjogren, The Airbnb Guy on Instagram. He recently took down a boutique hotel on the coast in Massachusetts. He might have some insight for you.

I would call around to some local lenders. Look for banks with the fewest branches in the area. You don't fit any of the boxes for a traditional refinance so most lenders are going to shy away. 

If you are going to develop a site, I would STRONGLY advise you to get a feasibility study done first by an experienced self-storage consultant. If you plan to use any financing, the bank will require it. Bob Copper and Katherine D'Agostino are two that first come to mind. A desktop study will run you $2-3,000.

Under roof storage will almost always out perform RV & Boat parking. There is an RV & Boat storage specialist in my self-storage mastermind who says the key to being successful is going bigger than 10 acres. Smaller than that and you will have a tough time making it profitable.

Document and delegate!

If you find yourself doing a $15 hour job over and over again. STOP! Take some time to figure the process you are using to do it, then document it and delegate to someone else so you can focus on the higher earning tasks.