All Forum Posts by: Rod F. Hatefi

A word to the wise ... aggressive attorneys usually cost everyone concerned more money. Unlawful detainer attorneys are notorious for being uncompromising and unfair. That's not a reputation that will serve you well as a landlord.

IMHO, try and find a fair and reasonable attorney that knows how to negotiate like a business person, not a lawyer. 

Hi Jonathan,

Don't be reluctant to show a negative P&L due to depreciation expense. Seasoned investors and lenders will recognize this as a tax savings and will look to your cashflows for their ROI analysis.

Your prospectus should include a 5-10 year projection and all the investment metrics that a typical RE investor / lender is looking for (e.g. cash-on-cash, cap rate, IRR and NPV).

Good luck securing financing and let me know if I can be of service!

Rod

Hi @Mark Neiger,

When you're comparing properties, use cap rates because its calculated before financing. This makes for an apple-to-apple comparison.

However, in the final analysis, you'll want to look at your bottom line, which should include cost of financing. IRR discounts your future earnings to the present using your personal cost of capital. You typically plug in your opportunity cost of return on a comparable investment as benchmark in the calculation of IRR. Keep a check on the IRR by using NPV, which should be positive or it's a no go.

As a financial analyst and Realtor, I help my clients do the number crunching and helping sense of it all. Let me know if I can be of service.

Happy Investing!

@Amber A. Be careful when relying on any of the online sources mentioned above. Professional real estate investors and property managers always conduct a custom "rent survey". Tap into your local property managers and Realtors that know the neighborhoods, property mix and tenant pool. You may want to hire a smart pro that can not only optimize your asking rent, but save you from many other landlording pitfalls ;-)

Hi Michael,

Operating a vacation rental business is not a passive activity. It's much more like running a business. And if your location is already popular with monthly long-term tenants, you may discover that the net difference isn't really worth the effort. 

But doing a vacation rental is definitely a good strategy if you want to live in the rental part-time and maybe travel the rest of the year. After doing your due diligence like others have recommended above, look for the most popular AirBnB hosts close to your location and copy what they're doing. There a lot of resources out there for running a successful AirBnB operation.

Good Luck!

Hi Roy!

Welcome to BP!  You're smart to educate yourself before jumping in. There's a lot of good advice here that can help you avoid some serious pitfalls.

Despite the market's high valuation, this is a great time to buy and hold because rents are up and vacancy rates are way down. Barring any major shocks and since there's not much supply coming online anytime soon, rentals are bound to hold their own as a viable investment for the foreseeable future.

The type of property that you'd want to invest in depends primarily on your end-game and available resources. Are you investing for cashflow or appreciation? There are other variables that will help determine the best approach for you. Feel free to drop me a line if I can be of further assistance.

Have a great day!

Rod

Reserving a room via AirBnB is like staying at a hotel. The "guests" are not tenants and there is no lease or rental agreement required. These guests are considered "transients" and that's how the City can charge a hotel tax or transient tax. I believe the break-point to becoming a tenant is at the 30 day mark vs. vacation rental guests.

You can ask guests to leave your property immediately if they break the rules. They are technically trespassers at that point vs. tenants that have leasehold rights that affords them due process via eviction action / unlawful detainer. 

If you are going to do a vacation rental, make sure that you check your City ordinances, HOA restrictions and give a head's up to your neighbors. There are a lot of ways to be a good host ... Let me know if you want to consider a vacation rental management company.

Hi Andrew, you can cashflow in San Diego and earn a decent return over a 10 year hold. The range of available rentals is truly diverse here. From standard suburban SFR, tourist district vacation rentals, military and student housing to retirement communities, you have your pick. And you'll be better able to manage your investment in every way since you live Here! IMHO, investing out-of-state is very risky and will be harder to manage and hang on to when the market turns.

Hey, I also live in Carlsbad and would love to connect with you sometime. 

Have a great day!

Rod

Hi @Eric Gee,

Thanks for reaching out and sharing your background. Taking that first step can always be a little daunting. But you're going about it the right way by educating yourself and networking with other real estate professionals.

I am a real estate investor, financial analyst, Realtor and property manager. I help my clients build and manage their rental income portfolios using a local network of contacts that can help with management, financing, exchange, design, improvements and much more. 

Feel free to drop me a line or call any time. It will be great to meet up sometime. I'm usually around and available in the La Costa area.

Thank you!

Rod

Hi Tim,

Any California licensed attorney can help you form an LLC and draw up the operating agreement. I can make some recommendations if you're still looking for a legal advisor.

But beware that having an LLC or trust is in no way a guarantee that you won't be sued and held personally liable. And in the process you can make life more difficult and expensive by going that route.

I work with investors and landlords like yourself and specialize in the North County/Carlsbad and environs. Feel free to give me call if I can be of further assistance.

Happy Holidays!

Rod