All Forum Posts by: Neil Henderson

I've done two BRRRR's across the country from where I live. The key is a rock solid contractor and then a good property manager.

My first suggestion would be to read David Greene's book Long Distance Real Estate Investing.

Second suggestion would be to find a market where it makes sense to invest and then find half a dozen property managers who operate there and make appointments to see them when you travel there. Get there expert opinions on the market, where the good rental areas are, etc. Then, start asking them for referrals to contractors and investor friendly real estate agents. We interviewed Antoine Martel and he had a great story of how he went about building a team on the ground in an unfamiliar city.

Have you confirmed the property is in an area that Wilmington allows a short term rental? 

Wilmington Short Term Rental Ordinance

Short Term Rental Map

@Aaron Butler 

First, when doing a BRRRR it's always wise to talk to a refinance lender before you buy the property. Be very open with them about what you plan to do.

Second, this sounds like more of a restriction of the delayed finance program which requires you to put the rehab budget on the settlement statement. I'm almost positive this will not be required if you do a traditional refinance with six months of seasoning. Not ideal, I know, but better than getting a large amount of capital stuck in the deal.

It will be very difficult to convince the leasing office of a large apartment community to allow you to lease a unit and then run it as a short term rental. Not without building a really strong relationship with them first.

The first thing I would do is research the short term rental regulations in the area you want to operate in. There are areas that have regulations stipulating the short term rental can only be operated by the owner of the property. Also, beware of HOA's, especially in condo communities. The municipality may allow it, but the HOA will ban it.

I would recommend first finding the area where it is actually legal, not a gray area. Then reach out to landlords who are advertising long term rentals on Craigs List and start a discussion. 

I would echo what @Landon Bleau said. See if you can find some sort of house hack. Either a duplex where you can live in one side or a single family home with an auxiliary dwelling unit (this is how we got started). Be warned, the word is out in many markets about house hacking small multifamily properties, so the competition to secure them is fierce!

We ran a very successful short term rental house hack in Las Vegas for 6 years until the regulations finally shut us down. 

It's not the most short term rental friendly city. 

The Las Vegas valley is made up of the City of Las Vegas, City of North Las Vegas, City of Henderson, and Unincorporated Clark County (most of the Las Vegas Valley). 

• Unincorporated Clark County - It is illegal under Clark County Code 30.44.010(b)(7)(C) to rent residential property for fewer than 31 days in unincorporated Clark County. If you have evidence a property is operating a short-term rental in violation of the Clark County Code, please complete and submit this form and include additional supporting documentation. Discussions are in the works to legalize it and regulate it, but I have my doubts it will ever happen.
• City of Las Vegas - Short-Term Residential Rentals are limited to owner-occupied homes that are three bedrooms or less, are at least 660 feet from another short-term rental, and must comply with licensing, noise and parking regulations. All conditions must be met, no waivers or deviations are allowed.
• City of Henderson - Any property owner intending to operate a short-term vacation rental within the City of Henderson must register with the City of Henderson on an annual basis and comply with the following City of Henderson STVR regulations.
• City of North Las Vegas - The City of North Las Vegas adopted Ordinance 3040 (Short-term Rentals) on October 21, 2020. The ordinance will allow for the operation of a short-term rental with the approval of a Conditional Use Permit (CUP). The applicant must receive an approved Conditional Use Permit (CUP) prior to applying for a business license. During the first sixty (60) days (October 21, 2020 to December 20, 2020), the applicant must provide proof of ownership of the residence for at least one (1) year prior to the adoption of the ordinance.
  
  

Tarl Yarber has some great thoughts on this. He was a very successful flipper in the Seattle market but recently he started holding as many BRRRR's as made sense. The good news is flipping and BRRRR are somewhat complementary skills. The flipping will exercise your estimating rehab costs muscle, as well as your deal finding muscle. I wouldn't say you could rehab every property and then decide whether to flip or BRRRR after the fact as a general rule, but it's definitely an extra strategy you could employ.

Keep in mind, before you try a BRRRR, you'll want to have an open conversation with whomever you plan to use as the refinance lender about what you are planning to do.

10k is a great start! Kudos to you!

Keep in mind that when doing a BRRRR, eventually you are going to have to go to a lender to execute the refinance. In fact, I would START with finding a lender and explain to them what you are planning to do. Spell it out for them best you can. You do not want to get into a deal and then start reaching out to lenders only to discover none of them will lend on the deal.

Most lenders are going to require you have 3-6 months PITI (Principle, Interest, Taxes, Insurance) in the bank in order to qualify for the cash out refi. While you might be able to generate enough forced appreciation with a rehab, you'll likely being borrowing funds from a hard money lender to cover the cost of the initial purchase, the rehab, and the holding costs.

Not saying this can't be done, but you may have to get creative. Do you have access to any sort of line of credit like a HELOC? That's how we funded the purchase of two BRRRRs.

I would suggest paying for a market report from AirDNA. It's not perfect, but it should give you a pretty good idea about what the short-term rental market looks like in the area.

I have been very pleased with @Steven Hamilton II and he is in the Chicago area.