All Forum Posts by: Account Closed

Hi All,

I have an offer from a private party and it's not listed on any websites yet. Long story short, I befriended a 75 yr old woman at a dog show and she brought me this offer. No official cap rate or NOI yet.

It's a triplex in a gentrifying town. She lives in 1 and rents out the other 2. Each unit is 2 bed/1bath around 1000 sq ft with a massive private yard for each unit. Her late husband remodeled the 2 rental units in 2019 and they look fantastic. I have toured them and they have brand new LVP floors, trendy white kitchen cabinets, quartz counter, SS appliances etc. New bathrooms, fully tiled. The rent is $1000/unit/mo. All utilities included. No extra pet rent even though both renters have multiple dogs. 2 parking spots per rental. Roof is 9 yrs old.

The husband was planning to remodel their own unit in 2020, but he unexpectedly passed away. Anyway, the wife does not want to deal with being a LL and wants to sell and buy a senior apartment. 

Per my research, the base rent for a similar apartment would be $1200-1400/mo with additional pet rent. Utilities extra. If I adjust the rent to market, add on RUBS utilities and pet rent, we are looking at close to $1500/mo rent. I will need to remodel her unit, but I have the budget and know-how. Renters are month-to-month,

I am still trying to calculate the operating expenses, but even with 20-25%, it's a great deal with the asking price of $525,000. I feel like this is too good to be true? What should I be looking at (outside of an inspection)? She is quite inexperienced and told me she basically got an allowance from her husband for 55 years and can't handle money and doesn't understand credit cards. When I asked her why she picked the asking price, she said the senior apartment costs $500k and she wants a "bit extra."

How do I evaluate this offer? I have a basic, hand-written rent roll and a huge box of her husband's files that I am still reviewing. I will get an inspection done. What else should I look for?

Finally, if this is the real deal, should I send her to agent to appraise the property? I think she is asking below market and I feel a bit guilty.

@Nancy Bachety yes! Researching local laws are my main homework, but the 3 properties in Chelan are all existing STRs and our agent said we could continue using them as such. We'll need to do our own independent research before making any big decisions.

@Steve Vaughan agreed! But all 3 properties are existing STR's and our agent said that we can continue using them as STR's. I will need to review the regulations more before we make any decisions, but thanks for the great info.

@Michael Baum thanks for all of that info. Lots to consider for sure. We are looking at a couple options at Lake Chelan, Leavenworth and Wenatchee this week, so we'll have more options.

@Michael Baum The Suncadia numbers are from other owners as well my own previous bookings. We spend 4 weeks/yr at an identical unit and pay $800/night split among 8 people. I wouldn't use VRBO since they don't list on it or Airbnb. They have their own portal. It's managed by Hyatt/Suncadia Property Management hence the high fees. That said, I agree with you that we may too optimistic.

The long beach home is oceanfront with a view. I got the numbers from an agent and it looks like there is some exaggeration. I plan to get the last 5 years rental income history from the owners.

Thanks for your tip about the renters. I definitely want to avoid either extreme and look for a family friendly places.

@Paul Sandhu my town and many surrounding towns have banned STR rentals. Minimum 6 month rental only. Also, I live in VHCOL town in the Seattle area and STR would not be a lucrative option here. Long term rentals were somewhat lucrative until COVID hit and rents dropped 20%. Renters' rights are strong and my friend has not been paid in nearly a year and no way to evict just yet.

@John Underwood I would love to buy in Florida or the Carolinas, but feeling quite nervous about long distance management. With COVID, I can't imagine flying there if needed or emergency service calls. I need to figure out how to build relationships with cleaners and handymen.

@Paul Sandhu I agree with you, but we are concerned about the drawbacks of buying cheap and renting to a rough crowd. Property damage? Noise complaints? 

@Michael Baum So glad to see that you are from WA too! So #1 is Suncadia and #2 is Long Beach, WA. 

#1 - 4 bed/3 bath with a hot tub, fire pit, high end finishes. We vacation at Sundcadia twice/yr and this house would rent for $800/night during summers and holidays and $500-$600/night during moderate season and $400/night during the lull (if it even books up). Due to COVID, most homes have been booked up at 90%+ occupancy in 2020 with tech employees working/schooling from home at these units. We also pay HOA (200/mo) and hot tub maintenance (80/mo). Higher utilities and property taxes.

#2 - 3 bed/2 bath, no amenities. Will most likely rent for $500-600/night during summers and holidays and $200/night off-peak. No HOA or other fees for this home. Lower property taxes. lower mortgage, lower cleaning fees.

After crunching numbers, we are looking at similar profits with #2 being slightly higher.

Hi All,

My husband and I are looking to invest in a short-term vacation rental. We are mulling over 2 options and would love some guidance.

1. Luxury, brand-new home at $1.1 million in a resort community. Right next to a lake, river and 15 min to the ski slopes. I know multiple people renting their homes here and the profit margin is great. Moreover, it books up most of the year with a lull in March and Oct-mid Nov. However, the on-site management company takes 41% of the booking. If we choose another company or self-manage, our guests will not have access to their free shuttles, 3 pools, gym and rec center. The pool ban would hurt summer aka peak bookings, especially those with families. The shuttle ban would hurt adults who like to enjoy the on-site wineries without worrying about driving.

2. Nice, but not luxurious house near the beach for $700k. This would mainly be summer and holiday rentals. Local management companies quote 10-20% but we figure out the cleaner or handyman depending on the plan. The 20% plan includes hiring the cleaners, not handyman.

We will most likely end up with very similar income from both properties at the best management plans, but my husband prefers 1 because we get to own an incredible home in a very sought-after neighborhood, but I prefer 2 so we can have a lower down payment and mortgage payments freeing up cash for another investment. #1 is close to us allowing us to enjoy the property while #2 is 3 hours away. 

Any guidance on how best to analyze and view these 2 options?