All Forum Posts by: Ty Coutts

Hi Olecia,

As a loan officer, buying a second home for use as a vacation rental (Airbnb/STR) can be a viable option, but it's important to be aware of certain considerations. If you classify the property as a "second home" instead of an investment property, you could potentially put down as little as 10%, which is a great advantage. However, there are risks, such as stricter lender requirements on the use and location of the property, and lenders may require you to prove that it is used primarily for personal vacations (not exclusively as a rental).

Additionally, using it for short-term rentals could lead to changes in loan terms, and some lenders may not approve if they suspect the property is being rented out frequently. It's crucial to ensure that you're compliant with local zoning laws and HOA regulations related to vacation rentals, as these can affect your ability to rent the property.

Overall, while it can work well, especially if you're looking for income from rentals, make sure to have a clear understanding of the financing rules, potential restrictions, and the financial risks involved.

Your deal looks strong for a first-time investor, especially with a 20-36% cash-on-cash (CoC) return. However, it's important to account for vacancy (5-8%) and maintenance (5-10%), as these can impact your net cash flow (if these weren't included in your cost calculations already). Ensuring your rental market can sustain these costs will help maintain profitability over time.

The 7% DSCR loan is relatively high, and refinancing later at a lower rate could improve your long-term cash flow. Additionally, with $50K in equity, consider leveraging it for future deals. If your market shows strong appreciation and rental demand, this could be a solid foundation for scaling.

Hi Rickey

As a first-time homebuyer, you have great opportunities in the condo market. For your mortgage, a 30-year loan will give you lower monthly payments, which could be ideal while starting out. If you can afford a higher payment, a 15-year mortgage saves on interest over time.

For the down payment, aim for at least 5%, but if you can put down 10-20%, you'll avoid PMI and could get a better rate. Since you're considering renting out the condo in 3-5 years, refinancing could help reduce your payments later. Also, managing the property as a rental could offer tax benefits.

When purchasing, keep in mind condo association fees and maintenance costs. I would be happy to help you explore first-time buyer programs and financing options to make your purchase smoother and set you up for your future rental plans.

Breaking even on your first flip isn't a failure—it's a valuable learning experience. Since you estimate a resale value of $200-215K and renovation costs of $60-70K (although you said that's on the higher end), your margin is tight, especially considering closing costs, realtor fees, and unexpected expenses. A key lesson here is buying at the right price; overpaying by $15K can make a big difference. Future flips should focus on negotiating better deals and ensuring a strong after-repair value (ARV). It is a plus that you bought all in cash and didn't accumulate any interest. As a loan officer, I've seen a few people go through the same scenario of basically breaking even. Use the experience into your next one and crush it! Any other questions feel free to DM or email me!

Hi Shelby 

To determine rental prices and demand in a neighborhood, start by researching comparable rentals in the area, focusing on properties of similar size, type, and amenities. Check platforms like Zillow, Apartments.com, or Craigslist to view current listings and trends in pricing. It's also helpful to consult a local real estate agent to understand market trends, including demand, vacancy rates, and rental growth patterns. Consider the broader economic factors like local employment rates, schools, and public amenities, which can influence both demand and pricing. Finally, speaking with property managers can provide valuable insights into rental demand, average occupancy rates, and tenant profiles in the area. This approach will give you a clear picture of both rental prices and demand in your area. If you have any more questions, feel free to DM me.

Hi Shelby,

To determine rental prices and demand in a neighborhood, start by researching online listings on platforms like Zillow, Rent.com, and Craigslist to compare similar properties.  Analyze the area's economy, job growth, schools, and transportation, as these factors attract renters. Also, Engage with local real estate agents, landlords, and community forums to gain insights into market conditions. Additionally, consider seasonal trends, as demand often peaks in summer. If you have anymore questions, feel free to DM or email me!

Given the market conditions and your hard money loan, it might be wise to first calculate your monthly holding costs, including loan payments, taxes, and maintenance. If you're losing money each month, selling now to minimize further losses could be the best option. However, if you believe the market could recover within six months and you're willing to take on that risk, waiting might yield a better return. Since renting or refinancing won’t work, your decision comes down to how much you’re willing to lose in the meantime versus the potential for a market rebound. Consider consulting a financial advisor for a more tailored plan. Though you have received a bit of advice already I hope this adds more insight. If ever in the future you're in need of help deciding between finance options, feel free to DM me.

Hey Chris

AI and Machine Learning are increasingly useful in real estate for various tasks. For calculating ARV, platforms like Zestimate, PropStream, and Reonomy use machine learning to analyze market data and comparables. When it comes to finding properties, AI tools like PropStream and DealMachine automate searches for investment opportunities based on specific criteria. AI tools like HouseCanary and Mashvisor also offer predictive market analysis, assisting investors with better decision-making. I hope this is a help and if you need any help with financing options feel free to DM me.

Hi Loren,

For tracking property details like upgrades, notes, and other specifics, many investors use a combination of tools. While RentRedi is great for property management, here are some other options to consider:

• Excel/Google Sheets: A simple, customizable way to track property details, upgrades, expenses, and maintenance.
• Trello: Good for organizing tasks and progress on specific properties. You can create boards for each property and track updates, tasks, and improvements visually.
• Property Management Software: Some users also leverage software like Appfolio or Buildium for more comprehensive tracking, though these can come at a cost.

It really depends on your preference for simplicity versus more structured systems. Using a combination of tools might work best depending on the level of detail you want to track.

Hope this helps!

Hi Edward

The main benefits of section 8 include guaranteed rent payments from the government, which can provide a steady income stream and reduce the risk of vacancies or non-payment. However, some challenges to consider are the additional paperwork, property inspections, and potential tenant turnover. For a newbie investor, if you’re comfortable with the process and ready to manage the administrative side, Section 8 can be a solid option. It’s important to do your due diligence on the specific properties and local market conditions to ensure they meet your investment goals.

If you'd like more information on how to finance these types of properties feel free to DM me.