All Forum Posts by: Matt Rothwell

@Caleb Heimsoth, @Account Closed, what specific kind of plants do you recommend?  I think the house would look a little plain with no bushes in the front beds, but I'm interested in alternative suggestions.  

I own a property in the Sunset Hills Area of Raleigh. Its a duplex, sharing a front yard, with separate, fenced in backyards with a total acreage of 0.4. I lived in one side and rented out the other, and it was a nice little house hack.  When I moved away from Raleigh last summer, I decided that I would try "self managing" for a while, and just visit the property every few months since we still have a lot of friends in the area. 

For the most part, its actually worked out pretty well.  I have a decent network of people I've used for repairs when I lived on one side, so when I've had minor maintenance problems I've been able to just call them and set up the service.  However, the one thing I haven't been able to get right is lawn care, since I just did it myself when I lived there.  

I had a guy that I was paying to come 2x month to mow, trim the hedges, and weed-eat the edges. He also only charged $100/month.  The price was nice, but he did a terrible job, killing all of the grass I worked so hard to grow when I lived there.  Oh and also, he never trimmed any of the bushes and finally one of my tenants complained that the bushes were blocking her windows.  Oops.  Well I fired that guy and now have a guy that will mow for $160 month.  He does an okay job, but never does the hedges either, he wants $125/session to do that, which seems pricey.  For a summer month, I'd be looking at almost $300/month for just lawn care, which seems super high.  I think he's going to get fired too.  

So anyways, for the people here that have services do their lawncare, how much are you spending?  I would have a tenant do it if it was a single family, but I'm trying to defuse any potential conflicts between tenants if the "designated tenant" decides to be lazy and not mow for a month or two.  

If I were you, I'd just run the numbers, they'll tell you what's worth doing. I have no short term rentals, but this applies to any business.  You need to know how much you can make, and how much it'll cost to make that money.  

I would:

-Figure out what the average occupancy rate is and then pad it by 10-15%

-Look and see how much similar units are renting for, and pad it by 10-15%

-Get some quotes for house cleaning, since its going to get really old cleaning that place over and over again after guests leave it a mess

-Get some quotes to figure out how much it'll cost to build the houses, build the driveway, lay the septic, run the power, dig the well, etc.  

None of that should cost you any money, just your time. If you do that and it looks like you'll still make money, then run with it.  

Also, if it were me, I'd probably figure in a finance cost.  Basically, I'd figure out what the monthly payments would be on a loan to finance the capex and subtract it from my revenue. That's essentially the "cost of your money", even if you use cash reserves to do the original building.  

One last thing--I would probably build the houses as "real" houses, so you could long-term rent if you get tired of short term rentals.  

@Account Closed, I don't mean to be rude, but if you have to ask, you're probably not going to do very well in REI. I suggest you look at the inventory and comp numbers (rent/buy prices), then you can tell us if you think its a good market.

@Chris Martin: Oof, I guess building isn't the way to go right now in Raleigh.  That sounds like a giant pain in the ***.

@Kory Denny: Yea, I think this idea is a dead end.  The values of the homes renting high are higher than $400k.  They must be trying to limit the bleeding by renting.  

Ah well, sometimes thinking outside the box only gets you...outside the box.  On to the next bright idea, right?

@Matthew Tringali, I was kind of thinking the same thing about the accidental landlords, that's why I asked if there was anyone on here doing it intentionally.  

The thing that attracts me to the higher end instead of the $1200-1600 rentals is that the ~$100k homes market is really really really fierce here in Raleigh.  Houses are sold hours after they go on the market, and there's not much room to get a discount off of market value.  There's a defined shortage of units in that price range, and I think that the money to be made in that market is in building, rather than renting.

With the higher end homes in Raleigh though, they sit on the market for a couple weeks and sell for less than list. I'm thinking it'd be a more relaxed process, and with less competition, since there aren't many people out there buying a $400k home with cash. The math sort of works, a $400k home has a ~$1900 PITI, and could maybe rent for $3000, so that's a ~16.5% cash on cash return before maintenance and management with a 20% downpayment?

I was kicking around on Zillow today, and noticed that there's a surprisingly large amount of properties (currently 21 for rent right now in Raleigh) for rent between $2500 and $3500. That seems crazy high for Raleigh, but it seems to be fairly popular, at least from what I could seen on Zillow. Anyone here have their rental business built around these high end SFH rentals? What kind of cash on cash returns are you seeing? How much did your properties cost you in purchase+renovations to get them rent-ready?

@Ben Biggs, it could just be that Jamie likes to speak in the third person.  Matt Rothwell also enjoys speaking in the third person.  When speaking in the third person, you can make incredible statements that no one would question.   

For example:

Matt Rothwell is the coolest guy around.  His biceps are huge!  He has great hair and is smart as a whip!  Nobody is better at doing anything than Matt Rothwell.  

If that was said in the first person, you'd probably think Matt Rothwell was boasting, but in the third person, it sounds extremely credible.  :D

When people say that the market is hot, they usually say that because a large percentage of the deals they analyze are just plain overpriced.  Here in Raleigh, its not unusual to see a duplex with plenty of deferred maintenance that rents for $600/side priced at $200,000.  Even if you pay with 100% cash, that's a bad deal. Sure, it might appreciate, it might not.  Who knows?  But its stupid to buy an overpriced property regardless of the market temperature.  

By the same token, if the numbers work, then by all means, go for it.  

@Tiffany Alexy, that's not a bad idea. I'll check out the Facebook group.