Jacksonville Investor – Subject-To + PadSplit Conversion Project

Investor · Jacksonville · Member since 2021 · 12 posts · 9 votes

Hi BP Community,

I’m an active investor here in Jacksonville, focused on creative financing strategies (Subject-To acquisitions) and value-add conversions

My latest deal is a Subject-To property we’re renovating into a 7–8 room PadSplit. I’m targeting strong monthly cashflow once stabilized.

I’m here to connect with other investors, private lenders, and local partners who are active in the Jacksonville market and interested in learning more about creative strategies. Always happy to share what’s worked for me so far and hear how others are structuring their deals.

Looking forward to building with the community!

— Kevin O., IKAN LLC

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Chris Grenzig

Property Manager · Orlando, FL · Member since 2016 · 479 posts · 277 votes

I second what @Basit Siddiqi said, Padsplit is very hit or miss right now. One of my concerns too is how big is the market for rent by the room for tenants? A lot of investors have been trying it and still are trying to increase their revenue and make deals work that they bought in years past or new ones, and at some point there is going to be more supply than demand.

Maybe that threshold is 50 more rent by the room listings, maybe it's 5, maybe it's 100,000, I have no idea. However, my suspicion is that the market for rent by the room is not a huge percentage of the overall renter pool, and the more people look to do it, the less you'll be able to charge and thus the increased work to do rent by the room won't justify the smaller increase in revenue versus other types of lease options.

I'm not saying this to say anything negative against your specific deal, you, or the idea of padsplit in general, we just saw something very similar happen with furnished mid term rentals and short term rentals and we've had a lot of conversations with owners the past 1-2 years about taking their short term rentals back to traditional rentals because it just didn't make sense anymore.

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Joe S.Pro Member
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
1y
Quote from @Kevin James O.:

Hi BP Community,

I’m an active investor here in Jacksonville, focused on creative financing strategies (Subject-To acquisitions) and value-add conversions

My latest deal is a Subject-To property we’re renovating into a 7–8 room PadSplit. I’m targeting strong monthly cashflow once stabilized.

I’m here to connect with other investors, private lenders, and local partners who are active in the Jacksonville market and interested in learning more about creative strategies. Always happy to share what’s worked for me so far and hear how others are structuring their deals.

Looking forward to building with the community!

— Kevin O., IKAN LLC

Are you going to be self managing your padsplit? Have you done one of these kinds of homes prior to or is this your first?
0 Reply
Kevin James O.
OP
Investor · Jacksonville · Member since 2021 · 12 posts · 9 votes
1y
I've done some short term rentals and I have a traditional rental since 2021 same tenants but this will be my first sub-to and PadSplit.
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
1y
I would be careful going all in on padsplits unless you can see that this is profitable.

I know many investors were recently selling their padsplits in Jacksonville.
[email protected]917-280-8544
Basit Siddiqi CPA4.979 Reviews
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- Kevin James O.
  OP
  Investor · Jacksonville · Member since 2021 · 12 posts · 9 votes
  1y
  @Basit Siddiqi You’re right that PadSplits are not a one-size-fits-all strategy that's why i ran the numbers carefully on my deal including ARV, rehab budget, and projected rents and the model still produces strong cashflow margins even after expenses and PadSplit’s fees. I also have built in exit strategies in case the PadSplit approach ever stops making sense and my goal is to have multiple strategies (not just PadSplit)
  1 Reply
Chris Grenzig
Property Manager · Orlando, FL · Member since 2016 · 479 posts · 277 votes
1y
I second what @Basit Siddiqi said, Padsplit is very hit or miss right now. One of my concerns too is how big is the market for rent by the room for tenants? A lot of investors have been trying it and still are trying to increase their revenue and make deals work that they bought in years past or new ones, and at some point there is going to be more supply than demand.
Maybe that threshold is 50 more rent by the room listings, maybe it's 5, maybe it's 100,000, I have no idea. However, my suspicion is that the market for rent by the room is not a huge percentage of the overall renter pool, and the more people look to do it, the less you'll be able to charge and thus the increased work to do rent by the room won't justify the smaller increase in revenue versus other types of lease options.
I'm not saying this to say anything negative against your specific deal, you, or the idea of padsplit in general, we just saw something very similar happen with furnished mid term rentals and short term rentals and we've had a lot of conversations with owners the past 1-2 years about taking their short term rentals back to traditional rentals because it just didn't make sense anymore.
2 Reply
Lesley Resnick
Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
1y
Pad split is neither good nor bad. It is location and market driven.
There is an insatiable need for affordable hosing in most cities including Jacksonville. I currently have one. I had four at one point and converted them back to sfh.
Challenges to be aware of:
1. LOCATION is the most important criteria. Is there public transportation, the bus. Is it walkable?
2. How close are you to the local Walmart, dollar store?
3. Do you have enough parking? Otherwise you will be constantly battling with the neighbors.
3. What is the zoning? There are very few places in a city that you will find the correct zoning for the pad split model/ However, most cities do not have any significant enforcement.
4. The neighbors will make all the difference. Of they call city and the police, you will spend a lot of time managing that situation.
These criteria are mostly same for SFH.
1 Reply
- Kevin James O.
  OP
  Investor · Jacksonville · Member since 2021 · 12 posts · 9 votes
  11mo
  @Lesley Resnick well said, location and easy access to walkable areas makes the difference
  0 Reply
Ivan Terrero
Investor · Naples, FL · Member since 2016 · 256 posts · 75 votes
11mo
Quote from @Kevin James O.:

Hi BP Community,

I’m an active investor here in Jacksonville, focused on creative financing strategies (Subject-To acquisitions) and value-add conversions

My latest deal is a Subject-To property we’re renovating into a 7–8 room PadSplit. I’m targeting strong monthly cashflow once stabilized.

I’m here to connect with other investors, private lenders, and local partners who are active in the Jacksonville market and interested in learning more about creative strategies. Always happy to share what’s worked for me so far and hear how others are structuring their deals.

Looking forward to building with the community!

— Kevin O., IKAN LLC

I have a sub2 deal near Macclenny, let's connect!
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