First Time Investor with 80k savings

18 Replies

Fellow Investors,

Thank you for being a part of this amazing community here at BP!

While having read thousands of forums and listened to nearly every podcast in my spare time, I have finally saved a significant amount of startup capital to launch my investing career.

I've been managing AirBnB rentals for the past two years during college here in Santa Barbara, CA, and have saved about 80k to invest in some larger deals.

I split my time between Santa Barbara as well as Lake Tahoe, and have been on the deal hunt for the past few months analyzing nearly everything on the market. There are currently three unique deals that I would like to explore, but would really appreciate some advice from anyone kind enough to give their opinion.

Ideally, I would like to utilize the BRRRR strategy and have found a fixer-upper single family home + land, a 4 unit multifamily, and a nice 2 story manufactured home in a mobile park.

My two issues as of now are:

  1. Tentative about vacation rental laws, and I would like to build a tiny home as a second rental unit on the single-family with land. I've looked into the laws and processes but wonder if anyone has experience with it in this region?
  2. I have great credit 740+ and a significant amount of capital, but my current job is in an unpaid position (venture capital analyst) so I'm not sure if I really qualify for any loans based on my debt-income ratio. Any suggestions for creative financing?

Any help would be highly appreciated, and please reach out if you might be interested in working together on any deals!!

@Tyler Ettner Hey Tyler, sounds like you want to buy and hold for passive income. I wish I could help you out as far as the market in the area that you are looking goes, but unfortunately I cannot. Passive investing doesn't only have to be thru rentals remember, right now with escalating prices in housing, the cap rates don't really make sense unless you find a killer deal. With that being said, lots of passive investors are investing with rehabbers and developers and making a ROI or net profits when the property sells. Have you ever thought about doing that? I have plenty of investors that think like me and say that rentals don't make much sense right now, but they invest passively other ways where it makes sense for them.

I am mainly a developer/rehabber so most of my experience is on that side of REI. But if you have any other questions, please ask, I am always happy to assist any BP'er or investor in the industry.

You're completely on the right track. You can always get a partner if needed. 

SB is pretty anti-vacation rental friendly at this point. We just got our hand slapped. :)

@Tyler Ettner I wouldn't doubt it at all... I don't know the space especially in CA, but there definitely is a niche market for that. Which from a newbie perspective, niche markets are no good when trying to grow. You want to focus on growth and overall and then when the time comes, then start getting more specific and targeting a niche community for what you do. That is how I feel about it anyways, I might be wrong. 

Hello I'm Joe Berry Broker here at Joe Berry Real Estate Co. If you require broker assistance, making offers, listing, or purchasing I'm happy to assist. I'm 24 years as a broker investor and know all the intrical parts of the real estate business call me. Joe Berry

Hello I'm Joe Berry Broker here at Joe Berry Real Estate Co. If you require broker assistance, making offers, listing, or purchasing I'm happy to assist. I'm 24 years as a broker investor and know all the intrical parts of the real estate business call me JoeBerry

Hi Tyler,

If you are interested in South Lake Tahoe specifically as a potential place for one of your vacation rentals (as I read in another of your posts) make sure to stay up to date on our current proposed ordinance changes. VHR's have been a hot topic garnering increased regulations and stipulations over the past few years with the city of south Lake Tahoe. Just over the county line (El Dorado) and the stateline in Nevada you will find less barriers to entry, but our city council has indicated that other communities around the lake are looking towards the city and the decisions it makes regarding VHRs as a starting point. Last weeks council meeting can be viewed here:

http://www.cityofslt.us/index.aspx?NID=84

with over hours of presentation, commentary & discussion on the proposed VHR ordinance changes

Hi @Tyler 

@Tyler Ettner you will definitely want to connect with a local realtor for help with all the local rules and ordinances. Multifamily units are not allowed to be vacation rentals under the current ordinance.

I am pretty fascinated with the idea of an in law unit myself but I believe that would work for a vacation rental only if the owner is in residence. Otherwise, you would have to apply for a permit for the property itself and go through the normal process. Currently, if you want to rent out only a portion of your primary residence, it is an over the counter permit and you just pay a fee. 

As far as tiny houses go, you would probably want to go with something zoned mobile/manufactured and then use park model RVs. An RV is a vehicle, a mobilehome is a residence. You almost certainly can't vacation rent the mobile home located in a mobile home park.

Please let me know if I can be of any more help in your search in South Lake Tahoe.

Good Morning @Tyler Ettner ,

VHR's within the city limits of Lake Tahoe are under assault right now and investing any money with that intent would be unwise. That said, the COUNTY areas of Lake Tahoe (Meyers, Pioneer Trail) can be lucrative for AirBnB, and the permit is as easy as filling out a form and paying $76.

Thanks for this link @April Vogt !  I have a VR in Meyers but I think it's important to track this meetings.  For anyone else that wants to listen to the conversation it starts at about the 37th minute of the video.  

@Tyler Ettner I also have been looking for good BRRR opportunities in the Tahoe area and they really are far and few between. I ended up purchasing more of a turnkey option 2 years ago as it just made sense from a financial perspective with how much constructions costs are in Tahoe, the limited months they can work, permits and regulations, etc. If you have $80k to invest, you might still be a little light with the current market prices and cost to entry (especially if you have to furnish it yourself first). But, there is always a good deal somewhere to be found! You might want to think about partnering with somebody more local as well for the first pass.

Good luck! 

Cheers

~Jon

Thanks for all the feedback everyone, I am always astounded by the community support here! Tt looks like quite a bit more due diligence must be done before jumping into a deal here - I'll definitely look into Meyers as well as nearby cities in Nevada and see what can be found there. It is a shame that the city is looking to stifle vacation rentals - tourism is an essential part of the economics and culture of South Lake Tahoe...

Hi Tyler,

There are a lot of people thinking like you, about how great it would be to use tiny homes as VRs instead of hotel rooms. You might guess that the hotel lobby is making this difficult. They have also been fighting for rules that limit AirBnBs.  Some of the people who pretend to be angry neighbors, against VRs turn out to be related to hotel industry. 

One area near you that has been more welcoming to tiny homes is Ojai. They were allowing them as Accessory Dwelling Units, behind a residence. And, I think, they were allowing an ADU to be rented out.

There are many types of zoning with little loop holes that could potentially be used for tiny hotels. Every jurisdiction (city or county) has its own rules and regulations. And housing is also subject to all the State laws. 

If youre serious about doing this, you'll want to find a local land use attorney who will help you find the correct zoning. For example, in some parts of the State of CA there are zoning for multi-family, group housing for agriculture purposes, recreation-related housing, visitor accommodation, RV parks, mobile home parks, and other zoning that could be used very creatively.

Good luck!!

@Tyler Ettner - Like you, I have also been looking seriously into investing in tiny home rental units and starting to research different locations in and around the Bay Area. A tiny home on wheels will give you a lot more flexibility than a stationary tiny home: it's considered an RV. Each state and county/city has established regulations for RVs while rules for short-term rentals including stationary tiny homes/ADU's are in their early days and still in flux. You can also easily move a tiny home on wheels if local regulations turn against you. Feel free to PM me. I'll be happy to compare notes.

Regarding Tahoe, I see it as a good place to buy a vacation rental if you invest in a VR-friendly area of Tahoe and if you can be actively involved in property management to keep expenses low. It also helps to buy a place that needs some work so you can add value. A friend of mine bought a SFH there 2 years ago (yes, prices have gone up since then but bear with me). He put some good sweat equity into cosmetic fixes (flooring, paint, hardware, furnishings) and started AirBnB'ing it. As of early September this year, he had already made revenues above his total projected 2017 expenses so that all revenues he makes for the last 4 months of the year will be positive cash flow.

@Tyler Ettner If you're in Truckee some time, give a shout.  I invest in 2 specific midwest markets from a distance and it works great.  I sold one of my California land properties and bought 7 homes in the midwest, generating 3k/mo.  All from a rural parcel I bought in 2009 that I thought was in the path of development....turns out it wasn't but it did appreciate.  whew.