All Forum Posts by: Spencer Cornelia

@Kyle Tipton I furnish every room just like @Nicole Marshall does.  I order from a website here in Vegas and I've become friends with the owner.  His delivery is part of the cost and he's always available when I need a delivery.  I estimate around $600 per room to furnish.  If you want an idea of what my furniture looks like, here it is: 

https://absolutehomefurnishings.com/collections/bedroom-sets

I post my rooms on Facebook Marketplace and Craigslist.  If needed, I could use Roomster as well.  I rent to whomever.  Right now, the house has a professional MMA fighter, a grad student at UNLV, a day laborer, someone working customer service, a waitress.  I'm cool with anyone as long as they follow the rules.

My turnover is instant.  The reason why my situation is so sustainable is that I'm in a pretty desirable location and people are really struggling to find places to rent where they can afford it and qualify.  Every time I post a new listing, I have a qualified tenant ready to move in within like 3 days.  Since it's hardwood flooring, all I need to do is a quick clean of the floor and the bathroom and it's ready.

Where I think the rent-by-the-room strategy works is when you offer an alternative to apartments.  I don't charge a security deposit and I only ask for first month's rent.  I don't do a background check.  All I do is confirm employment, check their Facebook, and ask for references.  If they're employed, they've already passed any background check that I would have.

One thing to keep in mind is that you're going to be asking strangers to move in with each other and they're all counting on you to provide a safe and enjoyable living experience.  So they're compromising some of their quality of life.  This is why I charge below market, furnish the rooms, and make it a whole lot easier to deal with a "landlord" than traditional ways.

@Kyle Tipton I live in a 7 bed / 5 bath house hack in Las Vegas.  I "house hack" in the sense that I have roommates, but with the number of roommates I have, I believe I fall more in line with the strategy of renting by the room.

My gross monthly is $3,650 with me living in the house.  I can add another $50 tomorrow if one of the tenants moves out and can turn the garage room/unit into AirBnB which could add another $500-$750 a month in income.  This is against an $1800-$2000 a month expense.  Point being - it's super profitable.

But what you don't see on paper is that it is very management intensive.  I can't speak specifically on managing a non owner occupied house where you're renting by the room as I have no experience, but I imagine it CAN BE similar to my experience with this house.  Remember, you're putting strangers in a house together.  You have multiple personalities, multiple ways of living, multiple comfort/discomforts, multiple lifestyles, etc potentially in the same house.  Ideally, you figure out how to manage the house well and can screen tenants not only for the ability to pay, but the ability to fit into the eco-system of the community you've built.

I'm looking to expand this strategy further as I think the returns are insanely high and worth the management.  I personally think you should live in something like this before trying to do it non owner occupied as you'll learn SO MUCH on what to look for in new tenants, what rules to implement, how you will implement the rules, what boundaries you will set, and how you will proceed with problem tenants.

Furnish the rooms. Rent by the room. Nearly everywhere in America the numbers work ON PAPER. But you will experience so much stress if you do this poorly that there may be some moments where you wonder if the 20%+ ROI is worth it. Do it correctly and it's the easiest cash you'll ever make.

@Kyle Bliss Matt McKeever, Flipping Mastery TV, and Sean Terry (Flip 2 Freedom) are another 3 I would recommend.

@Carrie Link Spend every possible 'free' minute listening to real estate podcasts, reading forums on BP, watching YouTube videos on real estate investing, networking with people in your area, etc.

The answers you seek will arrive in your lap from various sources throughout your journey.

@Cade Zerr One option: buy a 4-5 bed house and rent by the room to college students.  Would be an excellent way to make friends, live for free, and make a bunch of money while still in college.  The experience you gain as a 'landlord' will translate well to whatever you end up doing when you leave Lawrence.

Side note: your market is pretty reasonably priced.  There are a lot of affordable options that will make you a lot of money if you rent by the room.

@Carree Todd your holding costs are going to be way higher.  When you buy the property, hopefully your contractor will be ready to work on day 1.  If not, he may not be available for 30+ days, which adds time.

The rehab is going to take longer than expected.  Since you only have one post, I'm assuming you are about to buy your first flip.  It's going to take much longer than you think.

When the rehab is complete, you will list the property for sale.  It could take up to 30 days to find a buyer and 30 days to close.  If you buy this deal now, it will probably be completed in the dead of winter which may have an effect on your ability to sell.

I would estimate at least 6 months of holding costs instead of the 2 you have.

@William Gantz You can either refinance now when rates are at historical lows or wait and risk not being able to refinance.  A common theme from everyone who talks about recessions: money dries up and getting loans becomes more difficult.  From what I've been told, I wouldn't expect you to have the ability to refinance if a major recession hits.

@Daniel Pitner "Would you do this deal"
-- We need way more information.  The most important information missing is about you.  We know nothing about you, your goals, your experience, your income/reserves.

"how would you structure the financing?"
-- Does the owner own the property free and clear?  Is the owner aware of what seller financing is?  Are you looking to get a traditional mortgage using $10k of your money + $32k from the owner to cover the 25% down payment?  Are you trying to get a lease purchase and then sell the house on a lease option?

You're about 856 words away from sharing with us enough information to adequately guide you in the right direction.

@Pope Lake Lending constricts during downturns so why would you think that you will be able to get a loan if properties were to all of a sudden drop in value?  Based on your OP, you're assuming that lenders would lend:
- to someone with zero experience
- market values are declining for your target property
- loan out 75%-80% of a declining asset when they have less money available to loan

On the flip side, some economic theory has us in position to see a recession that me and & you have never lived through before.  If houses were to drop 50-80%, then maybe holding off would have been the better strategy.

@Robert Obniski The Points Guy is a great resource for everything credit card related.  Whenever I Google search for a topic revolving around credit cards, that site always seems to be a) the first choice and b) a great reference.

I'm certainly no expert on this topic, but there are plenty of resources online that allow you to weigh the benefits of each card against each other.

It sounds like what you're looking for is cash back and points.  Most of the credit cards available nowadays have sign-up points and 0% intro rates.  If you're doing a rehab, you will qualify for all of the sign up bonuses (500 points if $3,500 spend in first 3 months type offers) because you'll be spending so much money.

IMO the best way to do this would be to have a hard money loan on the flip so that you can use credit cards to purchase material, have the lender provide the draw amount for the work completed, then use the draw amount to pay the contractor for labor and pay off the credit card balance.