All Forum Posts by: Leigh Ann Smith

@Steve B., a hobbit hole!  I would totally stay there.  :-)

@Bryan Brown, we're 30 minutes south (near 288 & Hwy 6 south).  We are thinking of targeting vacation rentals to people who like the idea of solitude.  I think there might be yuppies who would go for that (especially if they could bring their dogs).  Maybe honeymooners would like it, or writers or artists who want to get away.  There are 3 tiny homes being used as a bed & breakfast in Pasadena (yes, Pasadena!), and they are gorgeous. I have no idea what their occupancy rate is, though.  They have an event center on the property, so it's a completely different situation than ours.  Pics of the 3 houses:

I have a question for those familiar with the vacation rental market.  We are 30 minutes from downtown Houston, but in a rural area.  I should say that it's 30 minutes with no traffic - 45+ minutes at rush hour.

We are considering putting 2-3 tiny houses on our 35 acre property.  We wonder if tiny houses might have a "cool factor" that cabins wouldn't have.  Is there a market for those who just want to get away from the city for a day or two?  People coming to Houston's medical center for treatment could also be a source of potential renters.  There is nothing fun to do at our place, except that it is a Christmas tree farm, so people might like going for walks in the tree field.  Tiny house at a Christmas tree farm might be attention-getting in any case. 

Zoning is no problem for us, nor are building code restrictions, with the exception of putting in a septic tank.  That part can be a headache, but it's not insurmountable.

Do you think we'd have a market for that type of property since we are not located in a vacation destination?  

Hi Mike,

I do not have any experience with Tiny Houses, but my husband and I are interested in them as well.  We were considering putting 1-4 of them at the back of the 35 acres on which our home is located in Texas.  The difficulty I am having is figuring out what the demand would be for this type of vacation rental.  We were thinking of starting with trailer mounted houses, so that we could sell them if it didn't work out.  I would be interested in anything you have uncovered in your research!

Glad you started this thread, @Douglas Larson!  We have been frustrated with trying to find buy and hold properties with the market being so high, so we are looking into other options.   We actually live on and operate a Christmas tree farm just outside Houston and are considering putting a few tiny houses at the back of our property.  I am hopeful that the Christmas tree farm location would be a good selling point.

Like @John Cimino, I am really interested in the financials.  There is an event center on the other side of town that has 3 tiny houses & 1 small house on its property which they operate as a bed & breakfast.  There is also a tea room and coffee shop, so breakfast at one of those locations is included.  They have a very nice setup, though the area of town they are in is really a junky area.  Pics are here:  http://www.silversycamore.com/bed-breakfast/  .  They charge $155/night.  I don't know how to find out how many nights per month they are booked.  Their bookings are through a bed & breakfast site, and I did some playing around entering different dates, and all 4 cabins were available for every night I chose, so maybe the occupancy rates are not that good.  Every other rental I looked at that was a small, cottage-type property seemed to rent for about $100/night...some less than that.

Our property would need about $30K in prep (road, septic, water, and land clearing). Here is a pic of my spreadsheet. This assumes $30K for each house (in addition to the 1 time $30K prep) and $100/night rent, and 7 nights per month rented. We would pay cash, then refinance each house. Total ROI isn't really a relevant number, since the houses would be on our property, and it's very unlikely we'd sell them.

Lots to think about.  Would the market even bear 4 houses at 7 nights/month each?  Could we get more than $100/night?  Would it even be appealing to people to come out here and stay?  If the nightly rentals aren't making the numbers, would a long-term renter pay $700/month to live there?

@Johannes Ariens, would you be willing to share what you expect your costs to be and your projected ROI?

@Allen Maris, what advice can you offer on researching the title, potential liens, etc. on these properties?

@Amber Koontz, yes, I used the BiggerPockets calculator as a starting place, then customized it to meet our needs.  For instance, we plan to buy with cash, then finance the house after rehab is complete.    I added some extra space for data to reflect that.  I also added lines to show how much equity we'd gain each year, what the loan payoff will be, and stuff like that.

this is a FEMA map showing of the most recent home we were looking at:

The house is the one just above the word "Annual_Chance" in blue.  Homeowner said flood insurance was required, so wholesaler called an insurance agent who said it's not required on this property.  It seems to me that if the mortgage company is the one who will require it, they are the ones we'd need to get the yea or nay from.  Is that correct?  We plan to buy with cash then finance after the fact, so we want to be sure about this before buying.  We're probably going to take a pass on this particular house, but I'm trying to learn something from it.

Assuming that you are purchasing a SFR as a buy and hold, and you're financing it with a conventional mortgage, would you even consider properties for which flood insurance will be required by the mortgage company?

We're in the Houston area, so lots of homes are in flood zones. I really don't even want to consider them since there is no cap on the amount that the insurance can be increased.  What about you?

I'm looking at a property that would cost about $75K and needs about $30K of repairs for an ARV of $125K. The tax rate is about 2.9%. Most recent tax appraisal is $92K. Year 1, I should be able to appeal based on the purchase price and bump the appraisal down to $75K.

But, how should I look at the following years? Year 2, I'm not sure if they'll bump the appraisal up by 10% or if they will bump it on up at least to where it was, if not nearer to the ARV.

And how about after that?  I've heard that investment properties aren't capped at 10% increase per year like owner-occupied homes are.  When you are analyzing a deal, how much increase in property taxes do you calculate in for each year?