All Forum Posts by: Patrick Forelli

I'm looking to invest in a STR in savannah, but I'm confused with the regulations. It seems that most areas are not zoned for STR's and most permits are taken. Anyone have any suggestions?

Thanks everyone for the input, I really appreciate it!

Hello BP community,

I'm looking to place an offer on a home, and I think "subject to" could be a useful strategy. The housing price is listed at 300 k.

The house was originally bought with a VA loan a year and a half ago, and I'm estimating that it was a 0 % down with a 4 % interest rate. From my calculations, the seller has 257,000 to pay back their loan, and 18-20 k in agent commissions, so the seller is only walking away with 20 k.

I'm interested in "subject to" because my interest rate on a second home loan would be about 8 % with 5-10 k in fees to buy down points making my monthly payment $2400. The current monthly payment for the seller is estimated to be $ 1600.

Here is what I think, I offer a "subject to" deal to take over the existing mortgage, and I pay each agent their respective commissions (10 k each, so 20 k total). I then offer to pay the seller an additional 10 k upfront, and an additional $400 a month.

This way, my closing costs decrease 5-10 k, my monthly payment goes down from 2400 to 2000, and the seller instead of pocketing 20 k, pockets 10 k upfront and an additional $ 400 a month over 28.5 years (136 k total)

What do people think?

If anyone has experience working these deals and has insight how I should pitch to each agent and the seller, I'd appreciate any feedback or pointers.

Thanks

Im in the same situation as Devin, 

I'm looking to purchase an airbnb with a 2nd home loan. I understand an LLC cannot be on the title because that would violate my mortgage, but I am interested in establishing an LLC for liability reasons and to leverage business credit. I see business credit cards such as with US Bank offer 18 months 0 % APR.

I have enough funds in reserve to furnish and cover costs on my own, but I figured it would be valuable to have a 10-15 k cushion while building up business credit for future investments down the line.

Does this sound feasible/ legal?

Buy the property with a 2nd home loan, occupy the residence for 14 days, rent the property to my management company LLC who rents it out on airbnb, and leverage 15k in 0 % interest through business credit cards.

Would love to know what people think.

This brings me to my second point.

I found a property that I am considering placing an offer on. It's in a solid location and it is currently listed on airbnb and all of the estimations (airdna, rabu, alltherooms) indicate that the property has made around 60 k the last year which for the price would be a solid return on investment. 10-15 % COC return depending on maintenance fees. The current property is being managed by a professional management so I suspect they are taking too large margins which is why the owner wants to sell it after owning it for 1.5 years.

Is it a red flag that the property is a currently active listing? Is there a chance all of the data is wrong and the property isn't profitable? I also do not see much booked on its calendar the next two months which is concerning but that could also be because its currently on the market.

Curious if anyone has experience with these situations before. Would it be appropriate to contact their real estate agent to see if they can reveal any info, or reveal how much the property has generated? If I can see from their books that the property generated 55-60 k, I would be more than comfortable to place an offer. Just not sure how that conversation would go.

Would love to get people's thoughts on this.

My understanding is that it is regulated, so you register and pay taxes on it. I thought thats the scenario with the safest option as opposed to an area where there is no regulation. Wouldn't your current permit "grandfather you in" if legislation changes?

Hello BP community,

Looking to invest in a short term rental within driving distance of Charlotte NC, and I'm leveraging Airdna to target the right market and properties. I'm mainly looking at rental demand, ADR, average occupancy, and average revenue. I also see market trends on the number of active rentals by quarter.

The rental demand calculations isn't adding up to me. Blowing rock as an example has a 48 rental demand yet having a 59 % occupancy and average revenue of 4,900, while charlotte has a demand of 59 with 58 % occ and 2400 revenue. North Charleston has a rental demand of 86 with a 65 % occ and a 3500 revenue. Charleston has a rental demand of 74 yet a higher occ of 75 and revenue of 5500.

Is there a variable here that I'm missing, or is Airdna rental demand a flawed statistic that I shouldn't take too seriously?

Should I care at all about occupancy at all or just revenue? 

Here is a little more info about my journey. 

I am 24 with a solid w2 job (125 k base and 165 with commission) and I've caught the real estate bug. Currently do not own a home. Charlotte has great rental options close to downtown for about 1 k a month. Owning a property would mean living further away from the city, it would be hard to get any of my friends to live with me, so owning over renting would decrease my day to day experience. Looking to invest in Airbnb's within driving distance on a 2nd home loan. I've got about 55 k saved up, but with my low expenses and solid income, I can confidently save 25 k + a year.

I want to find a profitable market within driving distance (4-5 hours max). I am looking for properties in the 350 k range. Charlotte is not the best option due to an average airbnb market and high housing cost.

Here is my overall approach and I would love some general feedback.
I am leveraging airdna considering some of the statistics above to target a profitable airbnb market, then I am cross checking that with available homes and making the judgement call with whether the property I can afford, if set up correctly, can compete with solid listings making at least 60 k. (enemy method)

This investment must break even, and I am looking for safe options that don't necessarily need the highest upside. Looking for a single, not necessarily a home run. What property gives me the highest chance of making 60 k ( or 2x the down payment) so 250 k property, 50 k is acceptable, and a 400 k property, 80 k is the bar.

Upon conducting some research, I'm seeing that the general airbnb market trends don't always apply to me. Gatlinburg area is super profitable, but when I take closer look, 600 k + properties with panoramic mountain views are killing it, and a 300 k property would be a disaster.

Looking very closely into the Wilmington and North Charleston markets, potentially Myrtle beach as well.

Is there best practice on the minimum number of active listings in an area to deem it viable, or is perhaps a small market better as I can make a 350 k property pop?

I'm a little concerned that often the top 15 % suck up all the revenue, and a 300 k property is a huge risk without as much upside in a market with strong competition.

Thanks,

Patrick