All Forum Posts by: Obadiah Roszman

For any of you AibBnB'ers out there. Here is link to the policy... 

- Obadiah Roszman

I was just thinking about this yesterday. I don't have a short term rental but I do frequently use them to vacation, mostly in the Caribbean. We just looked up the cancellation policy for the reservation we have in April. Our major concern is not staying in a rental that others use, rather it's traveling by plane and going through the airports. We have to go thru 3 airports each way! 

I imagine the impact will vary by location. If we had a rental booked where we could drive to it, we wouldn't even be considering cancelling. 

That being said I'm sure their will be people that are more prone to the fear aspect of the media reports and will think about cancelling just because. If I did have a short term rental (we are in the market for one, hence the trip) I think I would post the additional cleaning and sanitation measures that are being implemented to ensure cleanliness of the rental in between renters. I would publish these right in the listing with links to the CDC or other relevant Gov agencies recommendations. 

Things such as;
keeping hand sanitizer stocked in multiple locations in the unit
Sanitizing common touch points such as door knobs, light switches, shower knobs, etc.
Keeping hand soap stocked at sink locations.

...And there are many more here

I think if you're proactive in things like these, when other owners may not be, it will make you're listing look all that much better.
All the best!!

- Obadiah Roszman

While correct that assessed value is only relevant for tax purposes, I would have to politely disagree with Tom Ott. You can certainly use Zillow or Trulia for comps. You just need to know how. First thing you'll want to do is change your search settings. You need to set the search parameters as close as possible to the property you are trying to comp; i.e 1500 sq ft, 3 bedroom 2 bathroom, etc. Also keeping in mind a proximity as close to the comp house. And finally the most important piece of the puzzle, turn off "houses for sale" and turn on "Houses Sold". You need to pull comps off of what has actually sold in the market in the not too distant past, NOT what is "for sale " in the market currently.

This is actually a great way to familiarize yourself with the local, current market. You can also change the date range to display what has sold in the last 90 days, 6 months, 1 year, etc. So this can be used to see if the locale is moving up, down or sideways... I would highly recommend using these free tools!!

This is basically how realtors and even Appraisers run comps, yes they may use the "MLS" but that is where Zillow and Truia get their data as well. The MLS may be slightly more up to date, but not by that much!

I've found that by running comps on my own and then submitting that info to the realtor for a second look builds a relationship. It shows the realtor your serious and helps save them time by not having to run comps for you all the time. 

I've also found that when listing a property, and staying up to date on comps, I've been more in-tune with the local market than my realtor! In one instance my realtor recommended to list my house about 15k lower than what I was thinking based on my comps. When I told her I wanted to list higher, she said "well, all we can do it try." We listed at the price I wanted and sold it in 2 days. If I hadn't kept up to date on the local trends using only free apps (Zillow and Trulia) I would have taken the realtors word, and listed at what she wanted. I would have been leaving money on the table! Im my humble opinion it's never a bad investment of your time to stay as up to date as possible on the market your invested in, even if that means using free resources.

Hope this helps!

What's up Big Bro! A little conundrum you're in here. I would love to have your problem by the way---doubled ARV. You dog!!

If you let that that thing wrap into the 15 year, you won't have refi costs, I would hope, and then you can open a HELOC. That's probably the way I would go. Although the 4% seems high on a 15 year. I just locked on a 15 year refi at 3.45% with Huntington and even that may be a little high now...You may want to explore different lenders, that's not cool not letting you pull the equity, especially if they told you it would be possible upfront.

"In doing my due diligence with my lender I am now told that a cash out would not be possible unless the title to the property has been in my name as an individual for a minimum of 6 months. (Has been in business name and I am single member LLC for those 6 months does this matter?)"

As far as the LLC having title, that shouldn't be an issue because you technically a single member LLC reports as an individual (you). You probably had to personally guarantee the first loan even though it's in the LLC's name. May want to check with the lender on that.

I have a local lender contact I can give you if you want to shop the loan. He helped me work around the 6 month seasoning issue.

I'll be in Findlay on the 13th if you want to do lunch...

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $45,000
Cash invested: $85,000

The "problem" (opportunity) to solve on this project was the downstairs unit. The previous tenant was a hoarder which caused the unit to be badly neglected for a long period of time. It was so bad that the landlord decided to sell rather than address the repairs. The kitchen sink had been leaking for so long that the entire kitchen floor was rotted out and I could see into the basement. The other "problem" to solve was the bathroom. 

The entry to the bathroom was so narrow that you had to walk in part way, turn sideways and walk in the rest of the way. On the first walk-thru with the realtor I realized we could blow out a wall and make the bathroom twice as big which would allow us to bring the washer dryer upstairs out of the old dingy basement. I think being able to see what others couldn't on this deal is what allowed me to buy it. It sat on the market for close to 3 years before I caught wind of it. By the time I came in I ran the numbers through the BP Calculators and knew exactly what I could pay, which was about 30k less than asking price. After a little back and forth, the owner took the offer and we were off and running. With some creative financing we were able to refi and have zero dollars in the deal in less than 3 months. The property is on a 15 year note and still cash flows 300+ per month with 40k+ in Equity. Looking for a 4 unit next to stack up....

What made you interested in investing in this type of deal?

Going into this deal I was looking for my first long-term hold. From doing flips in the past as well as being a residential renovator for my “day job”, I knew I wanted to look for something below market value that needed rehabbed. I also had a couple hourly guys I needed to keep busy for the winter so this was a good fit all the way around.

How did you find this deal and how did you negotiate it?

Found this on the MLS (Zillow)
Originally listed Jan of 2017 and pulled and relisted a few times, this one had been on the market for a while. I only knew it had been on for at least 90 days, as that’s how I run searches on the MLS. When I located the property it was listed at 69,000, my original offer was 39,000. We Closed on Dec 6th 2019 for $45,000 After the Refi, I'll have Zero $ in, and have 40k+ in Equity.

How did you finance this deal?

My Roofing and Remodeling company lent my Property Acquisition Company the money from a business line of credit for both the purchase price and the rehab costs. I made a contract between both companies, and recorded a mortgage at the County Courthouse. This enabled my bank to wave the traditional 6 month seasoning period and refinance the loan immediately.

How did you add value to the deal?

Interior remodel and new replacement windows installed. Siding slated for the Spring and additional off street parking in the summer 2020.

What was the outcome?

Overall this deal went pretty much as expected. We predictably went over budget, mostly because of splurging on better finishes. We had one unexpected major addition to the rehab scope which was a new water main that needed installed out to the road.
Added $1700 to the rehab.

Lessons learned? Challenges?

I learned pretty quick on this one that being a landlord is a totally different ball game than flipping. Having tenants added a new level of stress and complexity to the deal. While the upstairs on this one was rented throughout the rehab, it proved to be a double edged sword. The rent from the upstairs paid the holding costs, but the tenants were calling and texting quite often with issues relating to the construction going on downstairs.

The challenge on this, and most deals, is to find the opportunity and then make the deal. I wonder how many people saw this deal listed on the MLS and scrolled right past, or perhaps walked through the property and didn't even make an offer. Many people are afraid to make so called "low ball offers", but if you run the numbers, whether it be thru the BP calculators, or scribble them out on a napkin, your offer won't be "low ball" but rather the true and correct number your should pay for a property. If the seller wants to refuse your offer, so be it, you can walk away from the deal knowing you did the right thing. In this case when we closed the seller made a comment to my realtor something to the effect of “getting robbed”. But the truth is he knew exactly what that property was worth in that condition, and that’s exactly what he got paid for.

Lesson Learned - Find the opportunity, see what others can’t see and MAKE the deal!!

@Andrew Postell Thanks for the link to the article! Well written and easy to follow. That's exactly the info I got from the lender. Now to put it to the test! 

Janelle, Thanks for the response. I'm not familiar with the HUD statement method at all. As far the "recording your own note method" I'll keep you guys posted. The mortgage officer that tipped me off to this said he deals with house flippers in Chicago that do this on the regular. I'll update after I try it. I'm looking to get this done before the end of the month...

@Russell Brazil Thanks for the insight, I'll give it a listen.  

My Situation:

I purchased a duplex with a business credit line and will be paying for the rehab costs from my business account. (Technically I contracted my company to do the work, a theme for another discussion.) While the total rehab will take 3 months or less, I'd like to get this property on its own loan, so as to free my credit line back up for other potential deals I may find. Certainly the most frustrating part of the BRRR method! While most, if not all banks now require a seasoning or waiting period of at least 6 months, this can hamper deal flow, and seem like an eternity in the real estate game. So how can I, or you, shake this apple loose from the tree so to speak? Well here's a theory floated by one of my bank loan officers.

Since I used business funds (business Credit Line) to purchase the property, technically the business can record a mortgage on the property. To do this I have to go to the county recorder's office and file a Promissory note and record it with the office, much like a traditional mortgage. After dong this, my lending institution of choice will now disregard the seasoning period because now there is a mortgage on the property and they look at this as a re-fi, in essence my bank is able to "steal" away a mortgage from another lending institution,(e.g. my business in this case) so they don't care how long the property has been owned. 

I'd like to hear thoughts from the community on this.

Has anyone done this and is it a legit workaround?

Thanks!

@Tadek Stadniczuk

I would be happy to take a look at it for you!! You can check out my website at RoszmanRoof.com

Let me know if you have any questions. Thanks!