All Forum Posts by: Jacob St. Martin

Quote from @Abby Biter:

Quote from @Jacob St. Martin:

Hello Abby, 

A few years ago anyone could slap a property on airbnb and make insane money. It has some pros and cons but the airbnb market is stabilizing like any other market. That means that there is now competition between hosts and you have to give people a reason to book your unit over another hosts. There are a few things that I noticed: 

1. You interior design definitely needs work. The units are very utilitarian, in the first listing there are only 2 art pieces in the living room, they are too small for the wall, and they look like they were ordered off of amazon which isn't necessarily bad but it also doesn't stand out. There are a lot of other design upgrades you could make too.

2. Your photography isn't the best. You don't have to update your photography often if you have killer photography, but you don't. 

3. Your listing description does not highlight any nearby attractions or points of interest. 

4. You aren't offering any unique amenities. If your unit doesn't stand out in other ways considering adding amenities like a hot tub, backyard mini golf course, making your airbnb dog friendly, etc. These things make your listing stand out. 

5. You have a 7 night minimum. I don't know if this is required in your locality but if it isn't get rid of it. The only times this makes sense is if you are in a really hot market, especially seasonal ones where you might have 100% occupancy for the summer months or something. If that is the case then it is fine for your peak months but you want to turn it off for off season. 

6. For your first listing i see openings until feb 1st and then nothing until july. Are you actually booked out that far? If so I feel like you should be doing fine on revenue. If not you need to fix that asap. 

7. If you aren't already using a dynamic pricing tool you should be. It will help you adjust your pricing to improve your vacancy rate. 

8. Run your own airbnb comps and see how your rates, pics, and amenities, compare to them. Find a way to stand out. 

Feel free to reach out if you would like to talk more in depth!

 This is awesome. I did not realize one of my units had the 7-night minimum but that currently is a requirement in my city, I do not always follow it. I will certainly work on updating the photos and adding more artwork. The first unit does have a booking through VRBO. Which sites do you recommend for pricing?  Unfortunately, my units do not have any amenities besides being close to downtown. 

 Use pricelabs, I also integrate with guesty for hosts which allows me to manage listings on airbnb vrbo and booking.com. Maybe you can also look into adding some fun amenities like a hot tub as well!

Hello Abby, 

A few years ago anyone could slap a property on airbnb and make insane money. It has some pros and cons but the airbnb market is stabilizing like any other market. That means that there is now competition between hosts and you have to give people a reason to book your unit over another hosts. There are a few things that I noticed: 

1. You interior design definitely needs work. The units are very utilitarian, in the first listing there are only 2 art pieces in the living room, they are too small for the wall, and they look like they were ordered off of amazon which isn't necessarily bad but it also doesn't stand out. There are a lot of other design upgrades you could make too.

2. Your photography isn't the best. You don't have to update your photography often if you have killer photography, but you don't. 

3. Your listing description does not highlight any nearby attractions or points of interest. 

4. You aren't offering any unique amenities. If your unit doesn't stand out in other ways considering adding amenities like a hot tub, backyard mini golf course, making your airbnb dog friendly, etc. These things make your listing stand out. 

5. You have a 7 night minimum. I don't know if this is required in your locality but if it isn't get rid of it. The only times this makes sense is if you are in a really hot market, especially seasonal ones where you might have 100% occupancy for the summer months or something. If that is the case then it is fine for your peak months but you want to turn it off for off season. 

6. For your first listing i see openings until feb 1st and then nothing until july. Are you actually booked out that far? If so I feel like you should be doing fine on revenue. If not you need to fix that asap. 

7. If you aren't already using a dynamic pricing tool you should be. It will help you adjust your pricing to improve your vacancy rate. 

8. Run your own airbnb comps and see how your rates, pics, and amenities, compare to them. Find a way to stand out. 

Feel free to reach out if you would like to talk more in depth!

Hello Mike, 

It is nearly impossible to answer this question without taking a deep dive on the numbers of each but often times in expensive markets like Seattle the cost of construction is so high that it doesn't make sense to tear it down unless you can build something way bigger/nicer. The 4-plex may be viable if zoning allows it but building another single family is probably not the move. For flipping I would also normally not recommend adding an ADU. They tend to cost more to construct then they add in value, they are generally more valuable for a property you are holding as a way to generate more income. Maybe your market is different but in my market appraisers will screw you over on the value of an ADU.

If you want to talk more in depth feel free to reach out and we can discuss more. 

I am an investor and newly an agent! The agents I have worked with have not really been a source of off market deals but that doesn't mean that it can't happen. However, an agent that has off market deals is likely flipping or wholesaling themselves so you may only get leftovers. 

As an agent I love to work with investors! Of course our big motivation is commission but you can get commission or a referral fee or something in an off market transaction if done properly. It would be possible in other ways like a lot of hot client leads but anything other than that will probably be specific to what that agent needs. As far as red flags, if you don't seem serious/ready that will turn some agents away. A lot of agents don't want to have to educate someone who is broke and has dreams of financial freedom through real estate just to find out you can't buy. Talk to lenders and have some options ready to go and have clear buying criteria.

One thing to take note of is that a lot of places that are established STR markets have regulations stating that you have to honor future bookings. I would check your state and local regulations.

When it comes to furniture/design it depends. Most people don't sell an STR that is making them a ton of money so odds are it could look better, although they could be selling it for other reasons. In a market like Joshua tree you will probably need to go above and beyond to stand out from other listings. I would only recommend purchasing items that fall into that vision.

Quote from @Erwin Groenendijk:

@Jacob St. Martin the property management argument isn't really an argument if you look at the bigger picture that most investors don't want to manage their properties anyways because they are spending most of the time on their main job. So you might be living in the US or in Europe, investment properties are bought to outsource and earn from the cashflow. If this isn't applying to your first investment property, it will apply to your second.  

Yeah for sure, I meant to say that buying in the U.S. you might be able to self manage if you want but international you probably don't have the option but I didn't express that super well. I will note though that lots of people manage multiple rentals without hiring a STR management company (myself included). At a certain point it becomes a lot of work but you can outsource a lot of the work by hiring VAs which is way cheaper than a management co (definitely not as hands off though)

Quote from @Mike Lambert:

@Federico Dallo

I'm an investor based in Canada, which is a market quite similar to that of the US. While I've owned property in the US and Canada, I decided a few years ago to focus on real estate outside of Canada and the US. So, as you can imagine, I completely disagree with the opinion that investing in the US is better. While I could write a whole dissertation as to way, I have no appetite to enter into a kind of discussion in which too often egos become prevalent over helping one another.

What I would do if I was in your position is to ask about investing in the US to somebody who actively invests there and ask about investing overseas to somebody who actively invests in Europe and the Caribbean and then draw your own conclusions. So feel free to DM me if you think I could help.

The other reason for me to reply to you is to debunk some untruths that are being circulated about international investing, as it could help all readers who bump into this thread.

It's not true that many European countries require you to be a citizen or a permanent resident to invest in real estate there and certainly not in the countries that you mentioned. I had never heard or read that one before so I'm not sure where it comes from. Actually, an ever growing number of Americans are investing in Europe and they're welcomed with open arms. Also, while you might have to put down 40%+ in some countries, it isn't typical and, again, it's not the case in some of the countries you mention. Don't take my word for it though. A 2-min Google or Chat GPT search will confirm.

Hope this helps.

 Not trying to argue or make it an ego thing but there are European countries that will not let you buy property as a non resident, Switzerland for example. I also have specifically looked into buying property as a non-resident foreigner in Spain and every source said that they would require a 40% down payment. 

I am definitely not an expert on international investing as a whole though so I agree that it is a great idea to get in touch with someone who has more experience with it! 

Hello Federico, 

Congrats on having 300k saved up and ready to invest, that is a huge first step! Honestly, the first question that you and your wife need to ask yourself is whether this is primarily an investment or primarily a house for fun. 

Based on your post it kind of sounds like you want a beach/lake house but like the idea of it making money too. Is that a good assumption? Another big question is, do you want the headache of self-managing a short term rental? As a short term rental owner I can tell you they are not passive and can be a headache. If you don't want the headache of management that is fine but will limit your options. 

First, let's talk about U.S. versus international. While the idea of owning internationally is attractive, in reality it tends to be much harder to buy property in other countries (especially European countries). First, many European countries require you to be a citizen, and in some cases a permanent resident, to buy property. Second, even in countries that do allow foreigners to buy investment properties relatively easily (like Spain), you typically have to come up with much larger down payments (like 40%+) as a foreigner. Third, you will almost certainly need to hire a STR management company if you buy internationally which often makes the numbers difficult. You may be able to bypass some of those hurtles based on your country of origin/where you have friends and family but in most cases investing in the U.S. will be way easier and will yield a better ROI.

Within the U.S. if you want to avoid the bureaucratic nightmares that often follow STRs you will probably want to invest in a well established STR market that already has laws favorable to STRs. If you buy in a market that does not yet have rules on STRs, they will someday and you don't know what direction they will go. Also if you do not want to self-manage, you will need to be in a market that has established STR management companies.

The big downside of these established markets is that they tend to be expensive and hard to make cash flow. This is where we will go back to your primary goal (Owning a cool property that you use sometimes vs. a pure investment property). 

If getting the highest ROI is your goal then you will want to self manage your airbnb and you will want to do it in a market that is not already saturated. I would actually recommend looking near where you live in nashville. Certain areas of the city have outlawed airbnb but others allow it. Because of this the supply is relatively low which means the ones that do exist tend to make good money, especially if you theme it toward bachelor/bachelorette parties. It also has the benefit of being local which is great training wheels as you learn how to be a killer host.

Now assuming that you mostly want a cool property to stay in sometimes near water and don't want to spend a ton of time managing I really like the outer banks in NC. It is a very well established market with solid, steady revenue, and it is beautiful to visit. There are also great management companies there if you don't want to self manage. Another option is that you could partner with an investor who will do the work of management and help you find a great deal. I partner with investors in this way and would love to talk you through how I structure that type of deal. If you aren't interested in that I'd be glad to connect you with a killer agent in the outer banks. 

Best,

Jacob

Quote from @Robert Ok:

Quote from @Jacob St. Martin:

Hey Robert,

This is a good question! I would say that most of the information in that book is still relevant, but many of the numbers will be outdated. For instance, depending on your location insurance costs could be much much higher than indicated in the book, construction costs are a lot higher, etc. 

Also I will note the ideas of what constitutes a "good" investment mat not be the right advice for anyone. For instance, someone making $500k a year and living in a very highly appreciating market might be extremely happy on a deal that loses $200 a month but is getting 5% appreciation on a 2 million dollar property in San Diego, butut that doesn't make sense for the investor with 30k and a lower paying job.

When it comes to the book series I agree with you that the order doesn't make sense (having read both). One thing to remember is that while BP is amazing, it is a business owned by a VC firm. They know who their primary audience is, people who are broke, newly interested in real estate (maybe from tiktok), and want to get rich off of possible income without putting in the effort to make a bunch of money. The other book you mentioned caters more to that audience and gets people hooked on the idea that they can invest in real estate with no money and then teaches them how in subsequent books. 

I didn't think it is necessarily a bad thing, just is more of a sales strategy than anything else.

why do you think that the concept of investing in real estate with 0 money is an "idea" instead of a real thing.  Is it not the actively working and realistic practice used all the time? We're all talking about the creative financing, asset-based lendings of the world right?  I'm curious what your skeptism is about this practice considering you've been in the REI world a while.

 I didn't say it was JUST an idea, I just said that the idea is appealing to new investors who don't have a lot of capital. I have personally done creative finance/low money down deals. From experience I can say that it is way harder, you have to find absolute home run deals instead of base hit deals and do often take on much higher risk. 

It is good to learn about but I think it is not the wisest to overly push the idea of creative finance, not that BP is necessarily doing that, I was just explaining likely motive behind why they want people to read that book first

Quote from @Timothy Franklin:

Thanks Jacob. Could you detail the process for a traditional wholesale and any monetary requirements as you understand it? We are looking to wholesale outside of our chosen market to help build capital for projects within our chosen market (Louisiana) as I have potential deals in other markets and am not confident in how to proceed with them contractually, (don't want to be stuck with a bill I can't handle currently and also want to ensure I'm operating correctly). As far as ethically that is part of my nature and I don't care for the aggressive (potentially predatory) strategies discussed by others, but I see value in offering a transparent and convenient service with lower costs and faster turnarounds than traditional MLS transactions.

Our business plan actually includes rehabbing distressed properties and conducting off-market transactions with owners currently occupying distressed properties using equity to reduce the out of pocket costs for the seller/buyer and to simplify the process. The market we are in currently is ideal for such but we need the initial capital and assets (rehabbed) to begin execution on the model.

 You pretty much had the outline for the double close above which you do need the purchase amount to do. There are some lenders who specialize in lending for double closes and will basically send you the money for a couple days but I personally haven't done this and don't know what the charge. For the typical wholesale the steps are really just fine a deal through marketing, have them sign a wholesale contract, have an established buyers list and send it to them, get a buyer to sign an assignment of contract agreement, and when you close you get paid out your fee from the title company. You really don't need any up front cash other than having an attorney review your contracts