All Forum Posts by: Rob Massopust

Oh and if you want an alternative strategy, depending on what state you are in, look to ADU [Accessory Dwelling Units] Great strategy to add, build, repurpose existing and new SFR's and Multifamily into smaller portions of units, Then do the furnished rentals. Win-win

I do furnished rentals and get a great mix of short term tenants. Corporate that pays less than a full airbnb but they are there from 30-180 days.

Focus on your area - Hospitals, univerisity, near downtown centers, vacation etc

Fix up really nice - not cheap lizard brain landlord and pinches on crappy quality. But higher end nice looking. With furnished rentals you are not in the landlord business you are in the hospitality biz.

I did regular rentals for a long time and its draining suck of time and energy. Furnished rentals are fun and of course better returns. Its not for everyone though you want to have to be involved and have frequent turnover and be fastidious with the details.

Just my 2 c

All good points. Its going to pop simply because the metrics are in AIRBNB's favor. Look at it from a long term disruptor. Investors want anything that sounds interesting. I cant sell a decent deal to friends of mine but when I mentioned it they are like lets load up. Maybe im in the wrong business. Or they are just greedy and dont really understand or think RE has monster returns. I think the under current is going to be huge.

Would you want to stay in a hotel for more than 3 days if you can stay somewhere nicer, funner and more unique. Air BNB owns no property but takes 21% of all bookings. 18% on the renter side and 3% on host side. 

You have to look past the vacation side, look to corporate and business and insurance and relocation business. They also have the "experience" factor and offers. TAM [total available market] could hit $1.5Trillion. Big stuff to lean into. We do both - Airbnb and Corporate rentals - So the question is do you make money as a host or do you make more money as an investor. [ I had an amazon 3rd party store and dumped [and loss] alot in running an amazon store, but if I dumped just some of that into the amazon stock at $50.00 and now $3200 - would of made all the difference. I think alot of hosts are missing the forest through the trees. only time will tell.

They already raised alot of cash and have $3.5B in Cash.

Timing - you think is suspect and whats the hurry and is covid going to hit hard next spring- who knows.

Hosts - They state hosts minimum buy in is $300 through a special arrangement through brokerage, how much is the max buyin - not sure.

Its Class A shares that is only a 1 to 1 vote vs Class B 20 to 1.

Host price is at IPO open price [no discount- that would of been a big deal for hosts]- the only benefit is you lock in at open and most likely between the time of Pre IPO at IPO price the real IPO open price would be higher and good luck getting your order in before all the autotrades so you are going to be ahead as a host no matter what. 

If ARBN limits hosts buy in to like a $1000 whats the point - but if they offer a discount and you can dump some change in there it would be worth it. If there is no discount and not sure if there is a hold time for hosts before they can sell - not sure yet. 

As a host Im going to load up on a moderate amount and see where that flyer goes. YOu have to look 3 years out to get any kind of future value and a better metric.

Any other thoughts or ideas?

All good points. Its going to pop simply because the metrics are in AIRBNB's favor. Look at it from a long term disruptor. Investors want anything that sounds interesting. I cant sell a decent deal to friends of mine but when I mentioned it they are like lets load up. Maybe im in the wrong business. Or they are just greedy and dont really understand or think RE has monster returns. I think the under current is going to be huge.

Would you want to stay in a hotel for more than 3 days if you can stay somewhere nicer, funner and more unique. Air BNB owns no property but takes 21% of all bookings. 18% on the renter side and 3% on host side. 

You have to look past the vacation side, look to corporate and business and insurance and relocation business. They also have the "experience" factor and offers. TAM [total available market] could hit $1.5Trillion. Big stuff to lean into. We do both - Airbnb and Corporate rentals - So the question is do you make money as a host or do you make more money as an investor. [ I had an amazon 3rd party store and dumped [and loss] alot in running an amazon store, but if I dumped just some of that into the amazon stock at $50.00 and now $3200 - would of made all the difference. I think alot of hosts are missing the forest through the trees. only time will tell.

They already raised alot of cash and have $3.5B in Cash.

Timing - you think is suspect and whats the hurry and is covid going to hit hard next spring- who knows.

Hosts - They state hosts minimum buy in is $300 through a special arrangement through brokerage, how much is the max buyin - not sure.

Its Class A shares that is only a 1 to 1 vote vs Class B 20 to 1.

Host price is at IPO open price [no discount- that would of been a big deal for hosts]- the only benefit is you lock in at open and most likely between the time of Pre IPO at IPO price the real IPO open price would be higher and good luck getting your order in before all the autotrades so you are going to be ahead as a host no matter what. 

If ARBN limits hosts buy in to like a $1000 whats the point - but if they offer a discount and you can dump some change in there it would be worth it. If there is no discount and not sure if there is a hold time for hosts before they can sell - not sure yet. 

As a host Im going to load up on a moderate amount and see where that flyer goes. YOu have to look 3 years out to get any kind of future value and a better metric.

Any other thoughts or ideas?

Yeah if someone just dismisses a deal because it has a low cap rate they are missing part of the picture. 

One secret is if you can parse out valued where others miss, this will give you an edge.

There are so many other variables to factor in.

Like financing [commercial, residential, owner carry]- Interest rates, terms etc.

ie: Owner occupied 4 plex vs an investor owned - Same price - totally different metrics and outcome.

What is the future upside, can you increase revenue. Can you add sq footage [now can you convert or add an ADU] What is the lot size has a better function of value that might not represent future upside.

Can you create a higher and better use of the property. Is it in the path of progress. Can you invest and be in the path of progress. 

Here are some other terms that is a good idea to familiarize with that will affect your CAP rate and your overall strategy.

NOI - Net Operating income

GRM - Gross Rent Multiplier

CASH on CASH - How much income to you make on cash invested

Real estate is like the weather - different in all areas.

2008-2010 - what crashed the market [besides the scapegoat of subprime borrower mortgages] and besides the over extended of credit is the very same but opposite side of credit. There was a extreme liquidity crisis - there was no funding, once there was no more equity on the table most borrowers had to or decided to let the property go. Unemployment was only 10-15% in most areas. So that means alot of people still had jobs, just no one could qualify in a "dont catch a falling knife" scenario lack of liquidity for most borrowers. 

The big greedy corporate hogs jumped in and mopped up alot of those - because they had the liquidity.

From 2012 on the market took off because low interest rates. And those that could afford it got a house those that could not had to rent at ultra high prices.

Cheap  money makes it hard for asset prices to stay low. Couple that with the extreme need for yield from investors and flippers pushes higher the price and reduces inventory.

Housing should function as what it was designed for - a place for people to live and raise their kinds, go to work, or start a business. Real Estate as an asset class might get demoted though higher property taxes and more borrowers can afford as prices soften and interest rates go done. But that has not happened. And it might not....

Yesterday a major lender just released the 1.99% 30 APR Loan - do you think others will follow - yes. Thereby putting pressure on prices to trend higher even more. Do you think the Fed/Gov/FHA etc wants to keep Liquidity in the market - yes. The reason they are offering forbearances is to stave off the bloodshed of 2008-2012 - That is not good for a society - unless the goal is for a massive transfer of wealth from the first rung of homebuyers to the 1%. Its never fair for the little guy.

Evictions are not going to happen in a grand scale[despite the news- most tenants are paying rent]. Maybe in some areas and where tenants are gaming the system. But any property that has a GSE backed loan that owner can get a forbearance. 

Do we have alot of uncertainity in the market - of course. We all want and think the floor is going to fall out but as long as there is cheap money, a modicum of jobs and such an unprecedented demand for housing this might not transpire the way we think. And if prices do drop - those same investors will mop up the good deals. 

Case in point - there are still so many properties going over asking with multiple offers. Not even from investors but owner occupied. When you can buy a house for cheaper than rent that metric will keep the market solvent in most cases. Everyday all I see is properties going on the market 2-5% of last sold even from just 2 weeks ago. Question is what does this look like in 6 months to a year. 

So dont speculate, buy something that makes sense fundamentally and look long term. When else could of got financing so cheap.

Here is the first problem with wholesaling and wholesalers.

1. 95% of the investors/wholesalers are chasing ~2% of the deals. Then the iBuyers, Ugly House, take their 5%-7% of the market. Agents take 90%+ ! <br> 

Next

2. Every guru out there touts that flipping is the only way you can make money in RE. I have never seen a weekend seminar at the Marriot on how to become an attorney or doctor or even a landlord. There is no sizzle and oversized expectations where people pay $30K to some HGTV bonehead for the secrets to flipping. <br>

3. Wholesalers have to work 2x+ times as agents. How they continue I have no idea. It has not worked for me.

4. Wholesalers are functioning without a license [many states ban it] and operate with no disclosures, safegaurds or what not - for the buyer, seller or even themselves.

Well it seems if we could all duplicate our best deals we would be much better off. 

I have had quite a few deals and wish I never sold them. 

One deal in particular, I had about $10,000.00 left on a 1031 Exchange and bought a house in Highland Park CA [Los Angeles] with a wrap around mortgage - I was in 4th Position and took over the 3 other loans in some stage of distress, I fixed up the property, made it functional and liveable and put on the MLS. Got tons of offers and sold in less than 30 days. I put about $5000 in rehab and sold for over $100k of what I bought it for. I thought I did pretty good but now that damn house is worth [relatively] $900k - makes no sense. Highland Park homes are going for over $1000 per sq foot. Should of kept just one!

Joel you can do quite a bit.

1. Buy fixer owner occupied with just 3.5% down, convert to Junior ADU and add a 2nd ADU

2. You can buy with Zero Down for other deals too.

3. Buy a 2-4 unit - Rehab and rent - add a extra unit or even a ADU

4. Auction Properties, off markets, there are deals out there you just have to look at other metrics.

Works best for owner occupied. Investors just look at the deal, the financing is what is key.