All Forum Posts by: Tim Delaney

Make sure you understand your state laws about eviction. I have done them successfully myself, but then I also found out that in NY it is illegal to do an eviction without an attorney if you own the property as an LLC. It is obviously more costly to use an attorney, but the time savings of not having to start the process over again because of a technicality can save money in the long run.

If it was good I'd use it for an initial scan, but wouldn't rely on it solely. With all the free tools out there you'd have to also be willing to practically give it away to get traction.

I'd also be wary of states starting to regulate this - there are already some lawsuits against rental pricing software.

Quote from @Stephanie Cruz:

We purchased a second home earlier this year using a conventional mortgage, and we plan to live in it for a year while doing some DIY work to fix it up. We plan to turn this into an Airbnb and buy another home under a conventional mortgage once our one-year period is up. We noticed our windows leak when it rains, and during the winter, the windows had ice inside the home, causing puddles of water to form on all of our window sills when the ice melted. I have had to use a towel to remove the leak from the window sills on our windows at least twice a day during the winter. 

Is the cost of replacing the windows worth it in this situation? We're hoping to start getting quotes next week.

Absolutely. It would be crazy not to replace them. The fact that you have water intrusion may mean that other problems could already be developing or could have developed prior to you owning the house.

If for some reason you decided not to replace them how do you think your Airbnb guests would feel about water coming in when it rains?

Don't overthink the LLC thing. I see way too many people getting caught up on that rather than finding a deal. You are already throwing money away potentially by setting up an LLC in a state you may not even invest in. If you set up an LLC in Wyoming you may still need to set up another one in the state you invest in or at least register that Wyoming one. All of that costs money and more importantly right now time and effort. Just find a deal first.

If you really still want a complicated LLC structure you can often set that up between when you put the home under contract and closing. I have done it numerous times.

Do you have anything in writing from the city promising you the ability to get the water and sewer taps?

I don't invest in that area, but from what I hear from people that do is that you may have missed the boat on great deals. Prices have skyrocketed over the last few years, making it harder to find cash flowing opportunities.

Which part of running the numbers are you struggling with?

Many buyers that are buying from wholesalers are usually value add investors - so they are doing fix and flip or BRRRR investing.

So I would utilize the BP fix and flip calculator to start with and enter the numbers. Run the numbers as though you are the flipper. In the Purchase Closing Costs section do a detailed breakdown and add in what you want to get paid as your wholesale fee. The calculator will then spit out what the maximum YOU will be able to pay for the house and collect your fee and allow the flipper to profit. You can do something similar with the BRRRR calculator as well.

Without knowing where it is and what the market is like it is tough to give you exact advice.

The best thing you can do is go on Zillow, Facebook Marketplace, craigslist or whatever other service is popular for listing homes for rent in your area and look at the competition. Do other homes like that have a fenced yard? Nice deck or patio? Ceiling fans? Particular kitchen or bathroom amenities?

Is STR legal in the neighborhood? Look at AirDNA and Airbnb to get an idea of what you may be able to make as a short term rental if you furnished it nicely. Or look at Furnished Finder to see if it makes sense to try to rent it to traveling professionals for 30+ day stays.

Another alternative that is growing in popularity depending on the market is renting by the room. It comes with more managerial headaches, but can be far more lucrative (you probably need two full baths for the four bedrooms). Is there a way to add a 5th or even 6th bedroom? That could make it even more lucrative.

Hope this helps.

I have not gone through that in NY, but I do own properties in NY (Erie County) and can tell you the eviction process is long and drawn out. Maybe a judge would have less sympathy on a now former home owner that lost a $1.8M house than they would tenants in a class C neighborhood, but personally that sounds like a headache.

Quote from @Sylvia Castellanos:

Tim, your comments have been immensely valuable.  I did a Google lookup, and this came up on the DOD Small Business web site:

Small Business Scam Alert: "United States Business Regulations Department" Letters

It has come to our attention that some business owners have received letters, ostensibly from a U.S. Government agency called the “United States Business Regulations Department,” notifying them of a registration requirement and potential financial penalties. Upon investigation, it has been confirmed that these communications are not from any legitimate government entity but rather from scammers attempting to defraud unsuspecting small business owners.

In the days since receiving that first notification, I received yet another, telling me I ought to get  a Pennsylvania Certificate of Good Standing for the low, low price of $87.25, as businesses may require it for routine transactions. 

I will report it to the FTC.

 Most of those letters are probably barely within legal guidelines - there is usually something on them that says "you don't actually need to do this" or "this is not actually from the government". It's like the extended car or home warranty letters/calls that I get all the time - they make it sound like the world will end if you don't sign up immediately. It's just a sales tactic (a crappy one though!).

Glad that helped.