All Forum Posts by: Rory Cummins

If looking to scale flips and create systems around it to minimize your time and involvement, I'd highly recommend putting a team in place that can handle the day to day operations. 

For the flip itself, this would mean a GC or better yet, have a crew there that can handle 60-70% of all the work meaning they are there working on it the day you close and stay there throughout the process till it's completed. 

They do everything from framing, trim, painting, roofing, siding, flooring, cabinets, etc. and they can tell you when the plumber or electrician didn't show or did something wrong. This will save you tons of time on the job and minimize delays. You can then GC the project yourself and let them help be eyes and ears and offer you the speed to get the projects done on time.

As for financing, I had great success using a commercial loan product with a small community bank. Essentially, terms were prime +1 interest only for 12 months with only 1 discount point. Compare that to hard money at 10-12 and 3-4 points and you can see, this has been very cheap money to scale. They also would finance 85% of the renovation so I was only putting 15% down. Once you have a track record of success, they'll fund you for multiple projects at the same time. 

Doing these two things alone should allow you to go from one or two flips per year to easily doing 5-10. At that point, you just need deal flow - perhaps that means its time to hire or paratner with an acquisition manager to help you find and close deals - a good realtor can step in here as well

Hi Zachary, I wouldn't think you're micromanaging in the least, just to want that visibility. That said, it sounds like the software they are using may not be as STR friendly for them to manage your place while also giving you, the owner, the visibility you're looking for. I would recommend them to get you set up for seeing all future bookings, the listing info and data, etc. and have them deal with it or simply ask them to switch their STR software to another platform specifically for those units under management... It sounds like Buildium is limited in its capacity or possibly he isn't up to par in what their software is capable of

Hi Jill, when it comes to LLCs, you'll typically run into issues using conventional loans as they won't lend on LLCs and want the investment in your personal name. That said, you can explore commercial lenders or other hybrid type lenders that are completely fine with LLC lending. In fact, some may actually require the LLC to be in place before they'll lend on the investment. So to answer your question, banks are willing to lend on LLC but you're looking for a commercial bank. Often the best ones are the smaller community banks in your area, not the large coporate banks however they'll have options as well but its normally relationship based where you'll come in to the bank to meet them and they'll be looking over your financials, credit, investment experience, etc. however once you're in with one of them, it becomes much much easier to borrow with them in the future...

Will the owner sell it outright? If so, why not partner with someone else that can help you fund the deal, either 100% or have your money partner fund 20% and a commercial bank fund 80% then flip it and split the profits w/ your money partner at whatever split you all think is most fair? The seller gets out with the sale and your'e able to do the deal you otherwise may not have been able to without your money partner but since you're willing to split profits anyway, let it be a friend/family member vs. the seller. Win win win situation?

We just switched from iGMS to Guesty and so far, it's way more comprehensive and robust than we were expecting. May or may not be worth the cost though if you're just starting out and have only 1 or 2 STRs though as you move up in portfolio size, the more features that come with your PM software the better. I've heard good things about Hostaway as well. 

For AirDNA, please know that it can be valuable yet also flawed in its numbers. Here's an easy example... say your'e looking to buy an oceanfront 3BR home that has a pool. AirDNA is normally looking at proximity / area of its closest comps to that subject property as well as its number of bedrooms when making determinations on expected income. 

Do we think a 3 BR home that is 4 streets away from being oceanfront will pull the same income as the subject property? How does that pool also increase nightly rate and occupancy year round? These are all factors to consider in your own underwriting but things that software or algorithms like Zillow, AirDNA, etc simply can't adjust for properly yet. Another example would be a 2 BR condo in a skyscraper. One is on the 2nd floor that faces another building and alleyway while the other 2BR in teh same building is on the 25th floor with an unobstructed view of the city park or skyline. Obviously there will be a huge difference in both cost of the unit and its annual revenue as an STR but AirDNA won't adjust for this.

Normally we use AirDNA for historical data but when we underwrite, we have to manually make the adjustments and really study any and all homes around us that are most 'like kind'. We then use Airbnb and VRBO to look to the future data... Which homes are most like ours and what do their calendars look like for future bookings? Do they have the same amenities? What are they currently charging per night, both on short notice, 3 weeks out and 3 months out? 

In analyzing both of these, it'll help you determine a more accurate prediction about how your subject property will perform

Hi Darnell, are you asking if there is a general checklist of items you should have in front of you to guide you through what to fix in the property? The first things you want to ask yourself is what is your backend rental target and demographic profile for your tenant. Are they class A tenants that expect new kitchen and granite/quartz countertops or Class C tenants that look for affordability and are fine with older ktichen/baths, carpet on the main floors, etc? This will help guide you not to overspend or overimprove on your remodel budget (a common mistake with investors is overspending on things that may or may not matter to their target renter. That said, if your goal is to bring the property from a Class C property and tenant to a Class B, then by all means your level of rehab should reflect what your class B tenant is looking for in finishes and quality.

In regards to a checklist, I think that is property specific but luckily not too time consuming to pull together. Best to break it down by the rooms and then the exterior. For instance, just list out all the items that need to be replaced or updated (floors, paint, interior doors, hardware, new HVAC, gutters, etc). Once done, you're ready to go out and start getting quotes then getting things scheduled. 

To stay organized, you can use a simple Excel or Google Spreadsheet with multiple tabs for quotes and paid invoices, vendors, etc. Nothing too complicated. The only things going on your checklist are the noticeable things you need to address in the property... Not sure if this is what you're referring to in your question but hope this helps...

I always use AirDNA data when moving into a new market we buy into however you have to know where this software makes mistakes in its data. Perfect example, if your looking to buy at the beach, lets say for a 4 BR oceanfront property. AirDNA will make no distinction in its comps for comparing your subject property on the ocean with another 4 BR home that is 3 streets in from the coastline. 

So knowing this, you have to then get very granular and dig into the data on comps for the true differences between your property and the ones its pulling into its algorithm. When we screen properties, we're using the historicals of AirDNA but only those that are true like kind (takes more efforts yes but takes out the risk) and hten we'll also look at the future (by going into Airbnb, VRBO, etc.) to look at like kind properties and neigbhrod to weigh their nightly rate, future occupancy and whether they are operators (lots of reviews and playing the game at a high level on their listing)  or mom and pops (less than 10 reviews and an overall bad listing and management). That way we are getting the most accurate data on all these factors to paint a true picture. 

Unfortunately when it comes to STRs vs. long term rentals, there is so much more to the Revenue game that its easy to get your numbers wrong if you don't get granular with it. Hope this helps:)

Hi Brittany, I’m an investor myself and also helping a lot of other investors here in Charlotte and surrounding areas. I’d be glad to help you with things, just let me know if you have interest in getting in touch 

Thanks !

Venue for this meeting has been set and will be in Uptown Charlotte at the Marriott City Center on Nov 29th 7-9pm. Here is the link on Meetup.com for more info. Hope to see everyone there! 

https://www.meetup.com/incomepropertiesportfolio-Charlotte/events/256150520/

OK, thanks for the replies. I"ll reply back on this thread soon with the venue location as well as the link to finding our group on Meetup.com

Thanks!