All Forum Posts by: Zachary Cain Humphrey

Quote from @Enrique Laguna:

Looking to expand my portfolio across the country and really want a short term rental in Columbus. If anyone could tel me what the market is like out there and where are the best areas (most recommend) to buy a sort term rental property 

 I have 11 airbnbs in Columbus, Ohio. They are north of the university. They do well

@Zachary Cain Humphrey I agree with you, but those 20% returns are going to be on smaller numbers. I'm of the opinion that an STR is not worth it if it cannot do $80-100k per year in gross revenue. Sure, I could go buy a property near Mammoth Cave for $180k that does 40k/year in gross bookings. That would get me to 20% cash on cash, but I don't want that property. A $5k capex item also turns 20% spreadsheet returns to far less than that because your topline booking revenue is not a larger number.

I've been at this for a couple of years now and have learned the difference between the spreadsheet return and the actual return. Unless you manipulate the numbers by doing a 10% down 2nd home loan, buy a cheaper house, do renovations/furnishing on a 0% credit card and not count that money into your cash on cash calculation, the real returns of 20% or more on a property that can do $80-100k+ of booking revenue can only reliably be found through value add projects. Sure, there are needles in the haystack to be found; that, however, is the exception and not the rule. We invest in Maine for our STRs, by the way. We found a forgotten corner of the country that was a couple of years behind. Smart, out of town money is seeping in to that market as well. The gold rush is over. It's a market for those that have a very specific focus and can do necessary the blocking and tackling. 

Hello, I am new to the real estate journey, and I was wondering how the market for downtown Cininnati looks for STR and MTR? I live out of state, but I feel like there would be a great start for me there.

Hey Nick, Cincinnati is a great market.  I live about 60 miles north in Dayton, OH.  Our market is much lower price point but we have a lot to offer and rental prices are still above average.  Would love to chat.

Hi all, 

I have had some experience in small real estate investing but a friend of mine has approached me to start investing in short-term rentals. I am aware of the main differences and landscape but was just curious of the biggest operational challenges that owners/operators face in this space? In addition, are their adequate services/technology to assist with those challenges?

I really appreciate any guidance here so that I can determine if this is a correct decision for me personally. 

Thanks in advance. 

Quote from @Shalini Haylock:

Quote from @Engelo Rumora:

Quote from @Shalini Haylock:

Hey BP,

I finally transitioned from the podcasts to a Pro membership lol. Currently getting my financial affairs in order to purchase my first rental. I'm located in So Cal and decided out of state investing would be the best strategy for me to start with. Looking forward to all the wonderful connections and resources BP has to offer.

Shalini

G'Day Shalini,

Welcome to BP 👍

Slow and steady.

I've said it for years.

Take your time in finding the right people/team more so than focusing on the stats/demographics of a particular market.

If you can establish the right team, they can make your investment good/profitable even in a poor market and vice versa.

Toledo is great but can be a tough cookie also.

Enjoy the wealth of knowledge BP has to offer and much success with your investing 🙏👍

Hey Engelo. Thanks so much for the welcome. I appreciate your advice. I definitely want to take my time and do my due diligence. Instead of feeling overwhelmed about establishing the right team, I wrote this post lol. There aren't any local meet ups in my area so I decided to connect with where I know the people are. What would say is the tough cookie part about Toledo?

”Tough cookie” part about Toledo IMO would be the talent pool and somewhat of a “small town” mindset. It’s tough finding competent and willing contractors, maintenance people, realtors, property managers, etc… not many are willing to put in the extra yard and only want to do barely enough.  

Let your wife work from home and manage the properties!  Let that real estate create some freedom for her!  That was me 15 years ago... I took over managing our properties - I still outsourced problems but often cheaper as I found a good handyman and not every clogged toilet needed a licensed plumber etc...  I would drill the tenant more on the problem to find the true problem before sending an electrician to realize, the light bulb is just burned out, etc.  I tend to think the owner is always going to care the most about the property and its condition.  Our state only requires a RE license to manage someone else's properties but get experience on your own properties.  Doing a background check and screening tenants is not hard and automating rent payment is too easy these days.  We eventually did more fix up purchases as I had contacts in place from managing to fix up properties and then I found I really enjoyed fixing up properties and turned many of our long term rentals into short term rentals because I found I liked keeping them in better shape than our tenants did...  and now our short term rental business has grown that my husband just left his job to work full time with me so we can do more.  Power of real estate and freedom!  If she wants to manage them and leave her job, go for it.  Who knows what's next as a result of not being tied to her W2.

Is STR even worth it? My take is that it is not worth the hassle unless I can get 20% on my cash. The only way that I know how to do that in this market is to take on a project. Like a real project - roof, foundation, etc., not just a cosmetic remodel - the kind that may not qualify for conventional financing.

Texas is tough. You're competing with too many rich people that just want a vacation home and don't care if it makes any money. Case in point, good friend of mine here in Houston reached out last year because he was buying a lake house on Lake Travis. Wanted me to help him figure out how much it would rent for when they were not there. We went on to calculate some rudimentary numbers, tax savings with bonus depreciation against his high tax bracket W2...built out a really good framework that covered approx 80% of his mortgage - on a very expensive property - and saved him some money on taxes. 

Then he found a lake house that he really wanted that had an HOA and did not allow STRs. He paid $2M for it and can't rent it out. He doesn't care. He just wanted an awesome lake house. Same goes for hill country, beach house, etc. You need to thread the needle of a place that a lot of people go but is not top of mind for rich people buying a vacation home. Anything pretty in Texas has HUGE vacation home demand. That drives prices up enough to squeeze out the returns that I believe are necessary to take on an STR property.

Quote from @Zachary Cain Humphrey:

Quote from @Javier Duenas:

Quote from @Zachary Cain Humphrey:

Quote from @Javier Duenas:

Hi all, I'm new to bigger pockets pro and new to investing. I have many questions and concerns as a newbie. I'll give a quick summary of my situation. I only own my primary home in New Jersey and do not have any personal cash available (unfortunately). I opened up a HELOC which is my ONLY available funds. After analyzing a few properties on my own and now utilizing the calculator on BP, it seems that nothing will work because the HELOC payment at probably 8% or 8.5% variable is destroying my numbers. The market in NJ seems too high. I was thinking possibly start with fix and flip to make some personal cash and not depend on HELOCs. I was advised not to because of the risk and the taxes that I would have to pay on capital gain. I also thought of the BRRRR method, but again, between the mortgage for that property plus paying the HELOX back doesn't work. Do you guys have any suggestion as to what I should do, or where I should look to help purchase my first investment property. Thanks.

Depending on the size of your heloc could have enough for down payment on high cash flowing rental like STR

Hi Zach, yes, I'm probably gonna start off with fix/flip to make some money. Although, now you got me thinking about STR (airbnb). I'm confused! Lol.

Only thing with air bnb the property needs to be ready to go vs. fix flip you got the flip aspect and not dealing with guests. So there are various ways you could think about it. If your going to buy and hold then I recommend STR just because the cash flow makes more sense especially when your starting out. If you're buying a property and only making 2-300$ a month then in my opinion it isn't worth the time.

I agree. If I decide to go with rental rather than flip, then  I would go with STR. I’m still on the fence, but I’m leaning towards fix/flip to make some cash and hopefully after a few, I can start using some of my personal cash rather than the HELOC. Thanks