UK/US Duo Starting Out - Cash or Finance?

Question

Hi folks,

Looking for some thoughts on starting out. A friend and I already have an entity that invests in Forex and does well. My background is IT, his is trading. We have wanted to move into RE for last few years to secure our families' futures and have decided that now is the time to do so. I am UK based, he is USA and our current vehicle that contains funds is in Luxembourg.

We have 100,000 USD cash that we are able to put into it this year to start and a similar amount annually thereafter.

I'm currently thinking we may be best to buy cash to start as I have a few concerns re: finance:
- Poor personal credit within last six years
- no previous RE experience
- Lending would either be to a new US LLC with a foreign entity owning it or directly or the Luxembourg vehicle

My thought is after a couple of cash purchases lending would be easier.

Investment wise I'm looking at getting into rentals. Short term a mix of normal and holiday rentals would be best and medium term once we have the experience and increased chance of finance to go for multi family units. Long term I'd love to be building multi family units and diversifying to eco tourism projects.

So short term options we are considering: - holiday rentals Las Vegas / Florida / Mexico (Puerto Penasco) - long term rentals in TN, USA or within UK

My questions are:
- Are my funding concerns valid and do you agree cash sale of cheaper property makes more sense or should we look to borrow and invest differently?
- Are there any initial thoughts or gotchas re: where we are looking?
- any other thoughts on where we may be better able to deploy our cash for this purpose?

Thanks,

Guy

Bill B. · Answer

@neil Henderson is dead right. Google “Vegas woman fined $73,000 for air bnb “

If you’re going to do this long distance I wouldn’t really be considering short term rental in the first place. Someone has to deal with 50-100 check ins check outs cleanings comp,aunts that must be dealt with TODAY for daily renters.

You can run 10x SFR with a managment company and not spend 10 hours a month dealing with them. With q you probably wouldn’t spend 10 hours a year.

Neil Henderson · Answer

I can speak to the Las Vegas short-term rental market. Be careful. The city is becoming more and more hostile to short-term rentals. A mix of grass roots neighborhood uproar over party houses in residential neighborhoods and quiet lobbying from the Las Vegas resort operators.

A good place to start is getting some paid reports from AirDNA.co This will give you an idea of how active and profitable a market is. After that, I strongly suggest doing a great deal of due diligence on the regulatory landscape of the market you're looking at. Many municipalities are becoming hostile to short-term rentals.

UK/US Duo Starting Out - Cash or Finance?

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