All Forum Posts by: Travis Steinemann

Hello Agustin, I have 14 long term doors and 3 Airbnbs in Baton Rouge. I'll echo what Stephen said, insurance makes things tricky as well as the high interest rates impacting the rest of the country, but if you get a good enough deal you can maybe make it work. Our numbers were really good two years ago, less good today, but still ok because we bought right. 

Investment Info:

Townhouse buy & hold investment.

Purchase price: $90,000
Cash invested: $36,000

Value add purchased from a wholesaler that we renovated and turned into an Airbnb. We did a lot of the labor ourselves with this one to keep our basis down and give us multiple exit strategies. We are currently working on refinancing it.

What made you interested in investing in this type of deal?

It honestly is the only way we can still acquire property in this high interest rate environment.

How did you find this deal and how did you negotiate it?

A wholesaler brought it to me since I purchased another deal from him in the same neighborhood. He thought it was worth more than it was, but had not actually been inside the property. I sent him pics of all the damage and told him where we needed it and he was ok with it.

How did you finance this deal?

Private money

How did you add value to the deal?

Renovated it completely and turned it from a college rental into an Airbnb. We did a lot of the construction ourselves. Built and installed the cabinets, trim work, sanding the stairs, drywall repair/patches, demo, pressure washing, installing new doors, fixtures, etc..

What was the outcome?

Beautiful Airbnb with an 130k basis and 180k ARV that brought in 3k/ month in revenue the first two months of service. This month occupancy is a little soft, but it will pick up in the fall.

Lessons learned? Challenges?

Working on it with my business partner and doing the labor on nights and weekends was frustrating. That was the last project I will be swinging hammers on. The wholesale/realtor/flip side of our business also was completely dead during that time and we had a lot of vacancies in our LTRs so it was a very challenging time.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $185,000
Cash invested: $40,000

This one was an accident. We were targeting Pre-foreclosures to buy subto and sell on a wrap but we were not able to sell it for what we needed. After trying for three months with Facebook Ads, Flyers in the Hispanic areas of town, and posting on every Facebook group possible we ran the numbers as an Airbnb and discovered that it would work really well.

What made you interested in investing in this type of deal?

Necissity. Our first plan didn't work and we would have had to take a loss if we sold it. The loan was at 4% so the cash flow was solid, the only issue is we have more money stuck in it than we would like.

How did you find this deal and how did you negotiate it?

We stopped a foreclosure. We were doing a text campaign to pre-foreclosures from the Clerk of Court website. The seller was the most lazy person I have ever met. I literally had to go knock on his door to get him to sign things because he was too lazy to open his email to do the docusign. I do not recommend buying from this type of seller.

How did you finance this deal?

Subject to the existing mortgage of 170k @4% originated on 1/1/2022 plus catching up 20k of arrears/escrow/legal fees and then eventually Airbnb Furniture and holding costs of another 15k from private money.

How did you add value to the deal?

Furnished and painted it. Saved the seller from foreclosure and gave him 2k to walk.

What was the outcome?

Not a great deal, but it makes money every month instead of losing money. We have very little equity so we made lemonade out of lemons. We pay down $262/month and make another $2-300/month in cash flow. We brought in $31.37k in revenue with 89 bookings and 83% occupancy $136.98 Average daily rate from 9/1/23 to 6/1/2024. Our note was $13.14k over that time.

Lessons learned? Challenges?

We learned that it is very difficult to get 20k+ down payment for a wrap. We also learned that having a seller who is not very cooperative is horrible for a subto deal. We should have switched strategies sooner to Airbnb. Additionally, getting the insurance sorted was very difficult since he had a lender placed policy. They wouldn't accept our policy so we created an LLC in the name of the seller, which allowed us to change the insurance and still be protected as the named insured.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We used Constant Close as our TC and they had to self perform the closing since it was an FHA loan.

Investment Info:

Townhouse buy & hold investment.

Purchase price: $106,000

Townhome near LSU that was a college rental and we renovated and turned into a STR.

What made you interested in investing in this type of deal?

I love the architecture of the buildings in this neighborhood. It is very unique for our market, so I thought Airbnb guests would appreciate it more than college students.

How did you find this deal and how did you negotiate it?

A wholesaler sent it to me and didn't have any pictures so I went, took pics for them and we worked out a deal.

How did you finance this deal?

Commercial loan for the bulk of it from a local bank. They gave a purchase and rehab loan of $131,998 @ 6.255%. It was a 5 year loan with the first year interest only and years 2-5 P&I with a 20 year am. Private money and personal funds covered the rest.

How did you add value to the deal?

It needed a large renovation, so we did that. I also saw a gap in the Airbnb market for that area and thought a nice Airbnb at an economy price would do well.

What was the outcome?

Average occupancy is 75% while the zip code averages 40%, so we are doing very well on it. There has been a lot more competition entering the market, so we will see how it does long-term, but the first year we did well. We spent $46,884 on the renovation. All in around $152k, with an appraisal of $185k. We don't have as much equity as we like, and we also paid $10k for furniture, but we brought in $42,286 in revenue in 10 months.

Lessons learned? Challenges?

We fired our contractors after they didn't clean anything before painting, including the tile floors where we used a special tile clad paint. They painted over dried drywall mud, bugs, hair, and anything else you can think of. The project took much longer than expected because they had to re-do the floors twice, so we couldn't set up the kitchen and baths.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Equity Hub was our wholesaler. Title2Land was the title company. Synergy Bank did the financing.

Looking forward to it!

Houses aren't selling quickly, however sellers aren't accepting that there is less demand. Many people think their house is worth what their neighbor sold theirs for last year, which isn't the case. Eventually prices will start coming down but there is a disconnect between experienced investors who know what the market is doing and the general public (sellers) who don't know what is going on. 

@John Morgan I use the AAOA (American Apartment Owners Association) screening now and it is very good. They are a great resource as well for all things landlording. It is more expensive though, so I may look into yours too, thanks.

 Haha yeah they are terrible. And you also run into people saying, "Zillow says my house is worth $350k!" when it is only worth $280k. Gotta love it. 

I will let you know when I figure that out! 

Hello all, 

I was going to review Zillow on Google, but I guess they are too big to need reviews. I have 12 units and have been using Zillow for applications and screening, and everything was going OK until recently. I had a tenant apply, but he told me he was charged with a felony for drug possession in 2018. Zillow said his background was clear. That was strike 1. Then, we filled the unit with another tenant who Zillow once again said had a clear background. Fast forward 21 days and the police bust the apartment door in and arrest him for drug trafficking and possession of a stolen firearm as a felon (according to the newspaper). I searched him on Forewarn and 17 violations came up. Now we have to evict him and he is in jail. 

DO NOT TRUST ZILLOW BACKGROUND CHECKS. 

If anyone else has had a similar experience, I would love to hear about it. This is a major problem in my opinion.