All Forum Posts by: William M.

@Gerardo Azpeitia thanks for the comment! I am selling a new and improved version on Etsy for $10

Excited to share this item from my #etsy shop: Vacation Rental Income Estimator https://etsy.me/2LNxP9o

Ok yall! I have uploaded a Spreadsheet to my Etsy Store, just $10, instant download! https://www.etsy.com/WLSignatu...

UPDATE:

To be honest I've been a bit overwhelmed with everyone requesting my spreadsheet. So I've cleaned it up, putting it through some testing, and will be selling it to anyone who wants to download it from my Etsy Shop for $10! My intention is to provide any Real Estate Owners the opportunity to compare potential Vacation Rental (VR) Income to Long Term Rental (LTR) Income. Additionally I will have a month-by-month break-out of Income and Expenses so that you can compare your actuals to the predicted income values. Potentially, this could be used to capture seasonal patterns as well. 

Thanks everyone for your support! I'm glad that this endeavor will be helping people make big decisions about their Real Estate Investment options.

Stay tuned for the Link to download the Spreadsheet!

Don't try to catch the dagger! As you watch stocks plummet, don't try to time the market to get it at the lowest it will go, just keep a long term outlook on your investment!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $115,000
Cash invested: $5,800

FHA Loan Live-in-Flip. I bought this house in order to advance my portfolio, allow for my previous permanent residence to transition into a full time STR, now a full time LTR. The FHA loan process was relatively painless, I had roommates that paid for half (with one roomie) to all (with two roomies) of the mortgage.

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

I was interested in getting my second property to get over the 2nd home barrier, learn more about the home buying experience, and decrease my living expenses.

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

Found this deal using my realtor in Bossier City, used the Rental Property calculator to make sure it was a manageable deal, and negotiated $5000 at closing.

How did you finance this deal?

Used the FHA loan and my own savings to purchase the house at 3.5% down (around $5500).

How did you add value to the deal?

Remodeled the kitchen and opened up the kitchen to the living room by removing a non-load bearing wall. Tore out all upper cabinets, cleaned up some mold, repainted the walls/scraped the popcorn ceiling, put in faux shiplap (8in plywood strips), hung up open shelves, installed new light fixtures, painted inside and outside of under the counter cabinets (dark Blue), replaced drawers, added new stainless steel cabinet/drawer handles.

Lessons learned? Challenges?

You're going to have things break when you take on an older property. I had the hot water heater gas regulator go out on me ($100 item off Amazon), the Furnace died ($846), and there was a gas leak on the side yard (city's responsibility luckily). Have a back up fund for these types of scenarios - if I had to pay for the gas line repair (possibly $7000) I was prepared, but it would have put a big dent in my savings runway.

Also scraping popcorn is a pain in the butt.

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

Shane Cheatham is great! And the experts at Union Home Mortgage really did a great job at making the mortgage process easy for me!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $115,000
Cash invested: $5,800

FHA Loan Live-in-Flip. I bought this house in order to advance my portfolio, allow for my previous permanent residence to transition into a full time STR, now a full time LTR. The FHA loan process was relatively painless, I had roommates that paid for half (with one roomie) to all (with two roomies) of the mortgage. Rehabbed the kitchen: tore out all upper cabinets, cleaned up some mold, repainted the walls/scraped the popcorn ceiling, put in faux shiplap (8in plywood strips), hung up open shelves, installed new light fixtures, painted inside and outside of under the counter cabinets (dark Blue), replaced drawers, added new stainless steel cabinet/drawer handles, tore down non-load bearing wall, replaced tiles, re-routed light switch, and painted window panes.

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

I was interested in getting my second property to get over the 2nd home barrier, learn more about the home buying experience, and decrease my living expenses.

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

Found this deal using my realtor in Bossier City, used the Rental Property calculator to make sure it was a manageable deal, and negotiated $5000 at closing.

How did you finance this deal?

Used the FHA loan and my own savings to purchase the house at 3.5% down (around $5500).

How did you add value to the deal?

Remodeled the kitchen and opened up the kitchen to the living room by removing a non-load bearing wall.

Lessons learned? Challenges?

You're going to have things break when you take on an older property. I had the hot water heater gas regulator go out on me ($100 item off Amazon), the Furnace died ($846), and there was a gas leak on the side yard (city's responsibility luckily). Have a back up fund for these types of scenarios - if I had to pay for the gas line repair (possibly $7000) I was prepared, but it would have put a big dent in my savings runway.

Also scraping popcorn is a pain in the butt.

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

Shane Cheatham is great! And the experts at Union Home Mortgage really did a great job at making the mortgage process easy for me!

@Diamon Higgins @Brian Chupek Thanks for that info! 

Diamon, to answer your question, I had lived in the house for 2 years before I started doing Airbnb full time. I did have Airbnb set up (part time) as a "Shared Space" house, so I was actually renting out the rooms to travelers while I was living in the same house. The VA never complained or gave me a warning and neither did my lender. The laws in Louisiana, that I researched at the time, did not have stipulations about STRs and it best fit under a "roommate" situation - where the living expenses are split versus rental income. It really wasn't until 2 years after I purchased the property that I started to make money off of the house as a full-time STR. Beforehand I was happy if it paid for my utilities.

Brian, Thanks for the region specific info, you're right that it is all local laws dependent. My next STR project is in an area that charges 7% rental income tax for STRs (VRBO/AirBnB).

@Brian Harker Hey man! I actually bought the house in order to live there as my primary residence. After I failed to garner some roommates, I looked into Airbnb as a means to cut down on some expenses. There's nothing in the VA loan stipulations that prohibits renting you home out to roommates or doing STR as long as the residence is your primary residence for one year. But don't take my word for it! I suggest that your friend research the VA loan stipulations to make sure he is not breaking any of the rules: https://benefits.va.gov/homeloans/lenders.asp

Six months ago, I made a great decision to do a House-Hack BRRRR Live-in-Flip! Listening to the BiggerPockets Podcast, as we all have been known to do from time to time, I kept hearing that buying your second property was a hurdle to overcome as quickly as possible! Also having heard some about a "BRRRR" I wanted to utilize a similar strategy to overcome the "second house hurdle" (SHH – trying to make that an acronym, I'm not trying to Shush you). With my income capped at the time, I knew that I needed to utilize a low or no-money down loan to make it happen. Being a service member, I could use the VA loan (like I did on my first property), but I have other plans for my VA eligibility … (will explain this cliff hanger in a future post). That pointed me to the FHA 3.5% loan as my primary option! Something else I learned from BiggerPockets, during one of my nine-hour treks across Texas, was about a loan that covers the purchase of a property as well as the cost of the estimate rehab, the FHA 203(K). For this to work for me as a BRRRR, the property and rehab costs need to be 70% of the ARV, to get away with spending only the 3.5% down payment (i.e. FHA 203(K) Loan = $70K, post Rehab house appraises for $100K, conventional refinance 70% of appraised value).

Yes I know that with the right deal, you can recoup all funds from the project, but this was something that I wanted to do as quickly as possible, so I lowered my expectations to get over my SHH (remember what that stand for??). I knew that my first house would make much more dinero on Airbnb without me living in it and I wanted to be nearby to continue cleaning on my own and monitor the guest’s usage. That story is a whole other post on its own (here: https://www.biggerpockets.com/forums/530/topics/715486-airbnb-income-calculation-spreadsheet?highlight_post=4219176&page=1#p4219176).

However, in my search, I was road blocked by the fact that many FHA 203(K) eligible houses fitting the right requirements, are banked owned foreclosures and not on the MLS…They wanted the money in one bag of unmarked bills. So, I gave up and started playing RuneScape.

NOT! I adjusted my search to find a house that needed fixing up that also supplied an acceptable living space.

Bam! Welcome to my House-Hack BRRRR Live-in-Flip!!!

Enter the 3 bed 1.5 bath for $120K with the garage and giant backyard! I utilized the FHA Loan (non-203(K) version) and was all in at $5,220 for my down payment and closing costs. I'm living in it now with a couple of roommates and have the kitchen DIY remodeled and a compartmentalized wall removed for under $2000. Expected ARV is $130K, and the roommates are going to rent it for $1200/mo once I move out in December. I will hold off on refinancing until my renters pay the mortgage down to $90K (or I pull the trigger on making the garage a fourth bedroom and bathroom). Currently my Airbnb is grossing $2000/mo on average, and my roommate is paying me $800/mo allowing me to easily save $3000/mo the last 6 months of my Air Force career.

Making this move allowed me to make more money at my Airbnb, save at a more aggressive rate, and buy a ring! (…which was also appraised for $7K more than what I bought it for) so I’m feeling pretty good! 

Hope you enjoyed this as much as I have! Now go do something!

@Paul Sandhu You should run for Mayor!