All Forum Posts by: Nick Velez

I love this question! The beauty of real estate is that you can spend as much or as little time on it as you want, it really just depends on the strategy you want to utilize and how active you want to be. 

Long term rentals are relatively easy to manage when you are just starting off. If any issues were to come up, you can easily call a vendor you trust to remedy the solution.

Short term rentals are obviously more time intensive but even then they can be easy to manage. I have 3 performing STR's in Central Florida and spend less than 3 hours week managing them.

Now if you were to be an underwater welder with zero access to your phone for several hours a day, the solution is simple, you hire a manager! You have to bake the management fee into your deals to make sure they still pencil out (which you should likely do anyway), and you let them handle a majority of the work. I have had first time investors purchase short term rentals from out of state while working full time, and they either elect to run it all by themselves after developing a boots on the ground team, or they hire it out to a competent manager and let them do a bulk of the work. In both scenario's, they tend to be very successful :)

Personally, the last thing I would want to do is purchase a STR in a community where every neighbor is my competition and floor plans are similar if not the same. When the area eventually becomes saturated or supply exceeds demand, all you can do is race to the bottom to compete on price. Sure, you can make your unit extra special through design or amenities but when most of your competition is similar in size/shape, those extra items can only warrant so much of an increase in ADR.

The short term rental market is alive and well, I am performing better this year than last with no changes in my management. When scouting an area, you 100% need REAL data to inform your decisions. Your realtor should have STR's or manage them so they can provide you with relevant market trends and data to help you succeed.

I love this topic, I have noticed a large uptick in investors pursuing this same exact legal structure. They have told me that the primary reason they do this, is to prevent their tenants from purposely trying to sue them. They tend to be very high W2 earners with significant assets, and they feel like they would be a target if they knew their identify. People would fake a slip and fall in a Walmart, but they likely aren't going to do that in an antique shop. 

I always have wondered how much protection this actually provides. Like you mentioned, if an attorney wants to find you, then you will be found. With that said, I would imagine there would still be some form of shielding from your personal assets but whether or not this set up makes you an easier target is an interesting question. 

@Brent Warner

I am a huge fan of purchasing a primary and turning it into a rental later on, it is one of the lowest barrier to entries when it comes to building a portfolio. You of course need to strategically purchase the property to where it will meet your investment criteria when you depart, which is where a good agent comes into play.  If you haven't already, you should dig into the Tampa Bay market and surrounding areas which is poised for significant growth over the next few years. @Josh Green is a killer resource in that area and can give you the pros and cons of both markets. 

@Rachael Palmer

I HIGHLY suggest you utilize @Josh Green, he has that market dialed down and has the results to back up all of his claims. 

As far as financing, the property does not need to be in a LLC. There are pros and cons to each set up but the biggest con of closing in a LLC is it typically requires business purpose loans that have less advantageous terms than conventional financing. No one can tell you which method is best as it depends on your personal risk tolerance, financial position, etc. Feel free to message me and I can through you through each scenario, but your attorney is going to be your best resource when it comes to liability.

@Alexander Phillips

Wow, this is a mess and I have so many questions. It is unfortunate that you are in this position and it sounds like you have had very little to no communication from your representation or lender. 

I assume this is a 3rd party lender you are using and not the builders lender? I can not fathom how you were not informed that this was a DSCR loan and you should absolutely inquire about the specifics such as whether your are IO or not and the pre payment penalty. 8.4% is high in todays rate environment, even for DSCR.

Unless the appraisal literally just came in before closing, you should not be informed this late into the process that the DSCR ratio does not work. This is improper communication and expectation setting.

Why is the listing agent putting tenants in the property and why are you communicating with them, do you not have your own representation? Are the leases even valid, if they are not signed by you or your property manager? 

Your options are going to come down to what your purchase agreement says. Odds are you will lose your EMD if you back out, which may be a better option than sticking with this deal (depending on the amount and how it impacts you financially.) If you have a financing contingency in place, that could have been your scape goat when the DSCR ratio no longer worked.

More than happy to review any documents you have an offer any advice I can if you shoot me a message. 

@Davidangel Muniz

The best target market for you really depends on your financial situation and what you can afford. There are some great markets to invest in such as Pinellas county, but there is a barrier to entry to have a performing property. There are plenty of transient markets in Florida where the supply of median home priced properties can cash flow well but it would make no sense to purchase a luxury property in that market. 

I would argue that the MOST IMPORTANT factor for success will be a boots on the ground team that knows the STR market in and out. Utilizing a realtor whom owns/manages properties in your desired market and can give you concrete real numbers is such much more valuable than running hypotheticals on AIRDNA.

A lot of my successful Florida investors are purchasing performing properties in Pinellas county with @Josh Green. 

@Bryce Kennebeck

Kudos to you for operating a STR house hack! When it comes to qualifying, the income reported on your schedule E for the rented units will be used for qualification. Items such as electricity/water are not counted against you UNLESS you wrote those off as an expense, which you likely did.

For the departing unit, you will need to provide a lease to have any income from that unit count towards income. This is where the tricky part of STR's come into play since no lease exists.

One thing to note with FHA is that unless you are moving 100 miles away, you can not use departing primary rental income to qualify.

I would connect with a lender to see what your current situation looks like so you can strategize for a future move. Best of luck!

There are a few maps online that show the unincorporated areas of pinellas county down to the street, and then you can cross reference the county zoning website. Once you look at enough properties, it is easy to know whether one is located in unincorporated pinellas or a different municipality. 

If you have any questions about STRs, I HIGHLY suggest talking to @Josh Green. That is his local market and he has it down to a science. 

@Ryan Marble

Orlando and Tampa are definitely different markets but like most markets, design and amenities tend to be the key players. With that said, the design in Orlando is going to be much more theme park centric while Tampa allows you to be a lot more creative. In either location, if you are not boots on the ground, you absolutely need a realtor who has STR experience and ideally properties themselves. Market metrics are great but you can not be real numbers from their own portfolios or past clients. If you are considering anywhere in the Tampa area, I HIGHLY recommend you connect with @Josh Green. 

@Josh Green