All Forum Posts by: Wes D.

Thanks, @Zeona McIntyre, that's sound advice. Really appreciate you!!

-Wes

Hi @Zeona McIntyre!! Your book is excellent and loaded with practical advice!! It really helped us a bunch as we got started a year ago. We now have two condos in northern Kentucky and we couldn't have done it without your practical advice!!

We're still learning and have much to learn. I realized this again when we had a traveler cancel her lease about a week before moving in. Our lease had an early termination clause requiring a one-month payment, but that didn't seem fair to her as she hadn't even moved in.

How would you handle a cancellation prior to moving in?

Thanks again for writing the book!!

- Wes

 Oh good, Krysten, glad to hear. All the best on your investing journey!!

Hi @Krysten Zarembski!

This is a really good question and one I was asking a year ago when I decided to jump into the MTR business. My conclusion then was this: if an investment pencils as cash flow breakeven or a small positive cash flow, using conservative underwriting assumptions, it would be worthwhile to buy despite the high interest rates.

Real estate investing has three main sources of wealth building: cash flow, appreciation, and tax benefits. So I figured that if I could avoid negative cash flow, the other two sources would carry us until rates declined and we could refinance to lower interest expenses. Lower expenses means higher cash flow. Furthermore, if rents rise in the coming months/years, this too would increase cash flow. 

When underwriting, I did not use these positive assumptions about declining rates or growing rents. It needed to be at least cash flow neutral to meet our "buy" requirements.

One year later our thesis is working. Our net operating income (NOI) margin is 54%. After subtracting interest expenses from NOI, our cash flow margin is only 7.4%. But it's positive!

With a half point rate reduction by the Fed, our HELOC rate was reduced by the same amount, and we've begun the refinance process. The property appraisal came in at a 5.3% increase versus our purchase price.

On tax benefits, last year we had a tax loss on our MTR business that lowered our personal taxes by an amount equal to 20.8% of our MTR gross rental income. In other words, this is cash we didn't need to spend (to pay taxes) due to our MTRs.

Taken together, cash flow of 7.4%, appreciation of 5.3%, and tax benefits of 20.8% is a promising start for us. The tax benefits have been the largest source for cash income so far; in future years this will likely be lower because much of our tax savings has been due to one-time costs related to purchasing and furnishing a new property. Depreciation will continue to provide tax savings for years to come, of course.

Appreciation isn't cash earnings, of course, until the property is sold, but it does factor into the overall wealth building opportunity in real estate investing. And it grows tax free.

I hope this is helpful to you, Krysten, as you figure out how to proceed. I recommend Real Estate Rookie by Ashley Kehr; she covers these topics better than I've done here. For MTRs specifically, I recommend 30-Day Stay by Zeona McIntyre and Sarah Weaver; they helped us run a lean operation. Both are published by BiggerPockets.

All the best!

-Wes

Hi @Eric I. 

As @Julia Lyrberg noted, MTRs typically rent for more than LTRs, as they should for a furnished home with utilities included. 

For market pricing, I collect LTR data from BP rent calculator and multiply by 1.5x. Then I get STR data from AirDNA to ensure it's well above 1.5x LTR data. And lastly, I search FunishedFinder listings nearby, find comparable properties, and track the listed rent for a few months (does it increase, decrease?). Of course the listed price may not be the actual rented price, but by tracking several listings for a while you can gain a better understanding of the market. As @Robin Smith mentioned, for assessing demand I used FurnishedFinder.com/stats; you can see demand data for a given city and some pricing data too. And proximity to hospitals is key, within 15 minutes is what I seek.

When I was trying to determine demand for our area, I selected about 20 listings near the location I was focused on, and tracked them for several months. If it gets rented the owner will update the listing with a new available date; if this moves by 30 days or more you can reasonably assume it was rented. If it moves a few days after reaching the available date, it probably hasn't rented yet. Tracking several for a few months will give you some understanding about vacancy rates. Also note if the listed rent changes. Our actual vacancy of less than 10% has closely tracked the data I collected this way.

All the best,
Wes

Hi @Hamidou Keita!

We have listed our two units on Furnished Finder since we purchased our first condo a year ago; we haven't needed other sites (yet!). Our combined occupancy rate is 92%.

We use KeyCheck, a FF affiliate, for tenant screening (credit, criminal, eviction), lease agreements (state specific), and credit/debit card payments. KeyCheck is integrated with FF. We also use Bill online through Bank of America for invoices and payments, as well as Zelle for payments. 

I recommend reading 30-Day Stay by Zeona McIntyre and Sarah Weaver, and Real Estate Rookie by Ashley Kehr. Both books, published by BiggerPockets, are loaded with practical advice that was helpful to us as we got started. The Landlord Diaries podcast was really helpful too in learning how to best use FF.

I hope this is helpful as you get started. Best of luck!!

-Wes

Hi @Brett Deas! I've used Furnished Finder exclusively for one year now, and haven't found the need to use anything else (yet!); we have a 92% combined occupancy rate on our two properties.

I really like the update to FF's listings, on desktop and mobile, especially the use of photos. I'm looking forward the data analytics page getting built out fully; the beta version shows promise.

The fees for credit card payment, using FF affiliate KeyCheck, are higher than most of our guests want to pay. I also offer two no-fee payment options through our bank (Bill.com and Zelle), and most of our guests have used Zelle. 

I haven't really had any struggles with FF, they've been a great help to me.

I hope this is helpful. All the best,

Wes

Hi Brady! As you consider MTRs, I recommend reading 30-Day Stay by Zeona McIntyre and Sarah Weaver, published by BiggerPockets. They provide excellent, practical advice on every aspect of MTRs including cost metrics, location strategies, market data sources, needed furnishings, and more.

For market pricing, I collect LTR data from BP rent calculator and multiply by 1.5x. Then I get STR data from AirDNA to ensure it's well above 1.5x LTR data. And lastly, I search FunishedFinder listings nearby, find comparable properties, and track the listed rent for a few months (does it increase, decrease?). Of course the listed price may not be the actual rented price, but by tracking several listings for a while you can gain a better understanding of the market. For assessing demand, go to FurnishedFinder.com/stats and you can see demand data for a given city.

When I was trying to determine demand for our area, I selected about 20 listings near the location I was focused on, and tracked them for several months. If it gets rented the owner will update the listing with a new available date; if this moves by 30 days or more you can reasonably assume it was rented. If it moves a few days after reaching the available date, it probably hasn't rented yet. Tracking several for a few months will give you some understanding about vacancy rates. Also note if the listed rent changes. Our actual vacancy of less than 10% has closely tracked the data I collected this way.

For furnishings, we bought Sarah Weaver's MTR shopping list. It's detailed, thoughtful, and specific with links for each item making it fast and easy to find and purchase everything you'll need. We spent about $9,500 on furnishings including furniture, electronics, kitchenware, bedding, towels, etc. for our 2/2 condos.

Lastly, Furnished Finder is known for providing tenant leads for travel nurses (about 40% of their travelers are nurses), but a broad range of professionals, relocations, students, and others use it too.

I hope this is helpful to you, all the best!

-Wes

Hi @Bruce Tieu! 

As you consider MTRs, I recommend reading 30-Day Stay by Zeona McIntyre and Sarah Weaver, published by BiggerPockets. They provide excellent, practical advice on every aspect of MTRs including cost metrics, location strategies, market data sources, needed furnishings, and more.

For furnishings, we bought Sarah Weaver's MTR shopping list. It's detailed, thoughtful, and specific with links for each item making it fast and easy to find and purchase everything you'll need. We spent about $9,500 on furnishings including furniture, electronics, kitchenware, bedding, towels, etc. for our 2/2 condos.

For market pricing, I collect LTR data from BP rent calculator and multiply by 1.5x. Then I get STR data from AirDNA to ensure it's well above 1.5x LTR data. And lastly, I search FunishedFinder listings nearby, find comparable properties, and track the listed rent for a few months (does it increase, decrease?). Of course the listed price may not be the actual rented price, but by tracking several listings for a while you can gain a better understanding of the market.

For assessing demand, go to FurnishedFinder.com/stats and you can see demand data for a given city. I just ran it now for Denver and it shows over 1.4 million housing searches in the past 12 months, and about 3,100 whole unit rentals available. There's also data on pricing. 

When I was trying to determine demand for our area, I selected about 20 listings near the location I was focused on, and tracked them for several months. If it gets rented the owner will update the listing with a new available date; if this moves by 30 days or more you can reasonably assume it was rented. If it moves a few days after reaching the available date, it probably hasn't rented yet. Tracking several for a few months will give you some understanding about vacancy rates. Also note if the listed rent changes. Our actual vacancy of less than 10% has closely tracked the data I collected this way. 

Lastly, Furnished Finder is known for providing tenant leads for travel nurses (about 40% of their travelers are nurses), but a broad range of professionals, relocations, students, and others use it too.

I hope this is helpful to you, all the best!

-Wes

Hi Shawn, I use KeyCheck's lease agreement (and lease addendum, as needed), and background screenings. I haven't felt the need to verify employment; I figure that if they have good credit with multiple lines in good standing--and no evictions--they've demonstrated their ability to pay on time. Once they're near the end of the lease, I request a forwarding address to return the deposit.

So far, so good.

Best of luck,

Wes