All Forum Posts by: Sergey A. Petrov

 I suppose there are two ways of looking at this. If the plan is to buy multiple properties, turn them into rentals, and create a job for yourself, skip the professional manager (and the cleaner and the contractor for minor fixes). Just make sure your time is fairly compensated. And there is so much more to short term rentals - constant contact, immediate replies, calls in the middle of the night, managing the Airbnb, VRBO listings, monitoring the market, etc etc etc. I don’t know what all goes into it but can almost guarantee that someone who has been successfully doing it for X number of years will more than earn that 20% (if you are lucky; the going rates are closer to 30% in Seattle) and maximize your return a whole lot more. 

And if the goal is to invest and call it a business, a reliable manager on your team is a must.

I am 100% hands off on my short term rentals, the ratings on the properties are 4.9+ stars and we achieve near 100% occupancy. Watching them do what they do (checking their phones constantly at a meetup or happy hour or dinner), needing to step out often to make / take a call, work through damage claims, and I am sure a million other things I am not even aware of) I don’t want that job. 

Call me biased (I own a management company) but self management is one of the worst decisions one can make. Yes there are lots of exceptions but I am sure the time those exceptional individual investors put into the effort would’ve produced a better return if they focused on what they do best. I have awesome staff and know the value they bring to our clients. I jump in either when things are really complicated or when the phone rings and the caller says “so we’ve been self managing and now have THIS happening”. I always have the fix and the solution, often with attorneys, architects, engineers, and CPAs needing to be brought in and that plus my hourly rate quickly erodes the years of hypothetical “savings” in professional management fees. And yes not everybody ends up in that position but I see it very often (which is yet another reason I don’t self manage - too close and too little separation between the emotional/ personal attachment and the professional businesslike approach).

@Jon Anderson

Realizing this post is a year old, curious if you were able to collect… lots of options there - the easy ones are to hire a collection agency or sell the judgment. May be able to get 30-60% of the face value of the judgment if you are lucky. The more complicated ones would include garnishing the debtor’s bank account (how did you pay your rent? Security deposit? Has the landlord ever written a check to you? These would tell you where they bank and could include the actual account number you could garnish). Garnishing wages - is this a small landlord with a W2 job somewhere? That is also “garnishable” with an actual judgment that withstood an appeal. Do they own a business? Believe it or not you could garnish the check register in their place of business (essentially take all the cash from the cashiers). These are a bit more involved and if you want to do them yourself, the learning curve will be steep. Depending on the value of the judgment a collection agency or a law firm specializing in that area might be your best bet. 

a personal purchase is different than an investment purchase. for personal, buy whatever fits your lifestyle and you can afford. the markets will go up and down, different opportunities will come and go, but your personal place of living is something you should enjoy for yourself every single day. nothing wrong with renting as some mentioned but the place I call home is something I would want to own, do what I want with, and not be constrained by lease terms, the possibility of the landlord selling it next month, or whatever else.

if you rent and are a landlord you need landlord insurance. if you own and occupy you need homeowner insurance. if you rent and occupy you need renter insurance. if you own a motorcycle you need motorcycle insurance. if you own a car, you need auto insurance. if you own a boat, you need a marine boat owner's policy :)

Depends on the association. I manage associations and also represent investors. There is more to it than just STR restrictions. There are rental caps, waiting lists, owner occupancy requirements before you are able to rent a unit and a plethora of other things to be aware of. Green light and could be a great investment if you know what you are doing. Many people try to stay away from HOAs because they don't know how they work and what they are getting into and for that reason alone there are great opportunities. I have a very short list of associations that allow STR in the Seattle area for my investor clients. And another list of non-investor friendly communities.

It is all in that 500+ page disclosure doc you receive from the seller / HOA. Unfortunately not too many buyers or real estate brokers know how to read and interpret them!

one more thing - changing rental restrictions might not be as easy as one might believe. In WA, a 90% vote of ALL owners within the association is required to make changes (with a few minor exceptions). The bar for the changes (the number of owner votes required to adopt such a change) varies from State to State. I am not familiar with NY…

Long term relationships have always worked for me. A reliable customer who pays on time, doesn’t micromanage a project, and trusts the crew to do it right will always get a leg up, often at the expense of other projects being put on hold. And when schedule really is driving your dollars (whether it is high interest on financing, ability to move a tenant in at a certain date or risk losing them or something else) and the contractor is working with several other reliable customers you can offer overtime rates, timely completion bonuses, or just plainly ask them what you can do to get the top priority. The answer might be simple - they might dealing with a complicated something that you may have an immediate solution to within your network!

Good to hear! It sounds like the worst case could’ve been the lender finding you in default and calling your loan at which point you either appeal / do something or just pay it off and refi later. Still an unlikely scenario in my mind since a random one sentence letter describing how one might have felt at any given moment doesn’t change the terms of the loan or the ownership of the property. If they need to redo some paperwork to account for the Tesla, let them. That’s what I told mine at the time - I am doing what I am doing, you do what you need to do on your end although I don’t understand how that cash purchase makes any significant difference in any way, shape, or form.

would that be double bank fraud? None of us have the full picture or know all the details but Gary is clearly concerned. And the fix is - it is ok, just hide it better and make sure whatever it is you are going to do next is not done in your name?

Long time reader here but this would be my first post / reply. Fits perfectly as i went through this nearly identical scenario. Pretty funny. That was 2012. At that time, the Tesla has been on order for 3 or 4 years. I was in the process of purchasing a property. The car was scheduled to be delivered after all the financing, etc but before closing. Same message from the lender - don’t make major purchases. I am buying a Tesla. Don’t. Why? We may need to redo some paperwork. OK, do what you need to.

I bought the Tesla. It was going to be all cash to begin with anyways plus financing for Tesla’s was nearly nonexistent back then. Lucky for me, nobody slipped me any last minute papers at closing (sounds like a shady lender or some other party involved in your transaction) and nobody really cared before or after closing regardless. The purchase had no impact to my credit, the debt to income or any other ratios, my ability to close on the real estate purchase, or own it and service the debt after closing.

The question is - what is that letter that you signed?

Just a random “to whom it may concern I wanted a Tesla yesterday but i changed my mind today and may instead buy a Ferrari or maybe I’ll change my mind again tomorrow and go for a Toyota Prius? No, a scooter sounds better if i think about it for two more days. Or maybe a jet so i can bypass TSA when I travel. We’ll see next week. I may get run over by a bus in the meantime”.

Or if it is not the above, was the warranty deed changed to say your ownership of the property is subject to you never owning a Tesla? Or was the deed of trust changed to say buying a Tesla puts you in default? Not sure how a random to-whom-it-may-concern letter changes the legal side of things.

I would definitely reconsider who I am doing business with for the next transaction