I found a great property in a great area, at a great price. Air BNB are popular there and people are making upwards of 80-80k year off doing just that. Rents are $2500-2700 according to rentometer but realistically places smaller then this one are renting for $3000 in same area. Place is almost turnkey, needs roof and a wall thrown up w/ door to turn bonus room into 2nd bedroom and a closet thrown in. City doesn’t know the layout so there’s no need to get any permits They already think that a bonus room is the second bedroom. I know this is a good deal but in order for me to get it I would have to get a loan out and after rent I would be cash-flowing in the negative, because the properties in this area cost around 600,000-800,000. Having said that This place has $100,000 instant equity. What should my exit strategy be? Wholesale the deal? Where would I find buyers and how would I go about finding them? Help please
Based on those numbers it sounds like it would make a much better flip than a rental.
@Sheila Arca don’t try to force a property to be something it isn’t. If the numbers don’t work as a rental, don’t try to force it to be a rental.
Run the numbers as an air bnbAnd a flip. How much could you expect to charge per stay? How much is your mortgage going to be? How long are air bnbs vacant in your area? For the flip, what’s the actual scope of work? How long will it take to get done? How much will it cost? How many days on market will the property sit? How’s much will it sell for?
Answer all of these questions and you’ll be able to find out the best use for the property
So if the place has 100k equity, and they go for 600k-800k, that means you're purchasing for around 500k, mininum, yes?
And the rents are about ~$3000 a month, generously, yes?
And you'll lose money month over month with this model, yes?
So what is there to talk about? It's a bad rental deal. As others have said, run the numbers on the other possibilities, but I would assume AirBNB is a lot of work and follows the "if you built it, (hope) they will come" model, which scares me. If real estate is selling like hotcakes and this is still on the market, you need to ask yourself why. In my neck of the woods, I see marginal deals being snapped up in hours -- either people who can execute flawlessly on a flip and make money, or investors who are in over their heads. Proceed accordingly.
@Joe P. Yes purchasing for $475000.
House has a funky layout according to my agent, I’m going to take a look at it tomorrow.
Don’t avoid permits because you can probably get away with it. We had a contractor do this on our first investment property. Someone from the county drove by, popped their head in, then issued a stop order. It turned out the county required things the contractor was going to skip, and I’m really glad they did.
Also, from what I understand, there’s something like “residual liability” at play. (I may have this term terribly wrong) But it says that if you did an improvement, and someone were to be hurt as a result, and you never got a permit, you could be liable - even after selling the property.