All Forum Posts by: Andy Whitcomb

I'm not sure what market you're in, but $10k seems low for a popular destination. My advice is to get nightly rental comps by going on Airbnb, VRBO, and whatever other platforms you might use. Look at only the listings that have lots of reviews, preferably SuperHosts. Look at their calendar and the nightly rate, keeping in mind that both of these might not give you the whole picture, but it will give you a general idea of how well they are renting and at what nightly rate. Keep in mind that the listed nightly rate is usually the lowest nightly rate (for example, a weekday in the slow season) and weekends and holidays could be much higher.

That research will get you an idea of what others are making, which is important to know. However, the success and income potential of your STR is very much dependent on how YOU furnish, decorate, photograph, and market your STR. It's possible that the proper operator could double or triple the income of a previous operator if done right (or if they were doing it wrong).

Creativity is rewarded in the STR world, especially in vacation destination markets.

 Yes, I am still doing this. The house has recently changed hands and the new owner is excited to continue the same model, but we are doing away with the 20% profit share and just adjusting the rent a bit.  The vacation rental climate has changed a bit over the years, with the increased popularity of STVR's, however, despite that fact our home has made even more money than ever.  We are on track to clear $170k in gross revenue for 2018.  Our success is due to our location, our tastefully designed in interior (we design and build our own furniture), and by offering both whole-house rentals and individual room rentals. 

The legislation has changed a bit, and will come into effect this January.  We'll need to jump through a few hoops, but it's not as bad as it could have been. 

Now we are focussing on buying properties outside of the city, mostly cabins in the mountains.  Our first one closes this Friday and looks like it will provide a handsome return for us and our partners (we still have some partnership shares available if anyone is interested).

Don't go off their numbers at all.  Look at similar rentals in the area, see what their nightly rates are. You can also use airdna.co to get all sorts of information about rentals similar to yours in that area. With a bit of research you can figure out a reasonable nightly rate and estimate how many nights a week it will be rented. Keep in mind it will probably be seasonal, so determine the seasonality and work that into your nightly rate and occupancy rate. 

Once you have the revenue estimated, you can use similar thinking to nail down your expenses. Factor in any debt on the property, utilities, furnishings, etc. Keep in mind you will have cleaning fees in your expense column, but those should also be included in your income column in addition to your nightly rate. 

I have an excel spreadsheet that my business partner and I have developed over the past few years.  With a few inputs we can tell roughly how much we'll be making a month and how much profit we will make. Of course it's based on projections, so it depends on how well you understand that market.

Keep in mind, what you're talking about doing is a business, so you need to think it through like you would a business. And of course, if you're going in with partners you need to make sure you have an LLC partnership and a bullet-proof contract.

I don't know much about the property, but it sounds like it could be a really successful project if it's in an area that people want to stay in. I'd be curious to hear more details if you're willing to share, as my area of focus is cabins in the mountains in Washington State.

I'd love to be involved in this Mastermind group. My business partner and I have learned tons by operating our 6 bedroom STR in Seattle, which is has averaged around 80% occupancy over the past 3 years. Now we're buying cabins in the mountains and doing the same.

What format will our Mastermind group take? I suggest we start with an online group and then meet periodically in person, maybe some sort of a mini STR annual summit?

I have a cabin under contract in Granite Falls, WA that has some erosion around the foundation due to run-off from uphill. I need to find a foundation specialist who can look at this soon (before my inspection contingency expires) to determine how big of an issue it is and if it is possible to be repaired.  It's a riverfront property so we may have some buffers to deal with.

Anyone have any recommendations?  I've spoken with R and R Foundation Specialists (two weeks out) and Rainy Day Basement Systems (6 weeks out). 

Thanks!

Andy

For meet up groups, I would check out Tarl Yarber's group called Fixated on Realestate.  They meet in Renton every couple months and it's packed with great people, many of whom are on BP.  You can find them on BP, facebook and on Meetup.com.  

I've heard good things about Seattle Investors Club, although I haven't been (also, that one has a small membership fee, i believe). Also on Meetup.com is a group called Real Estate Wholesale/Flip/Self-directed IRA Workshops and it's run by Dima and Tatiana of Sound Housing. That's a great group this is very casual and intimate so you can easily build relationships with people.

Hi Aaron,

Generally, you need three things to buy a property.  You need money, you need a deal, and you need to know what you're doing.  If you don't have one, you better have the other two.  

I recently purchased my first property, a 4-plex, and I basically used none of my own money to do it.  First thing I did is exactly what you are doing:  educate yourself.  This is the #1 most important thing you can do.  The BP podcast is awesome, read all the books you can get your hands on, and then after you're exhausted of reading and you feel like you know it, then move to the next step.  The next thing I did is I started surrounding myself with people who have done it and are currently doing it.  As Jim Rohn often said, "you are the combined average of your 5 closest friends".  So if you hang in circles where people are buying houses, flipping houses, and renting houses, then pretty soon you'll be doing it. Yes you'll get connected, yes you'll learn more, but MOST importantly, you will start to truly believe that you CAN do it.  That YOU can do it.  It takes knowing people who have done it, and watching them do it, for that thought to travel from your mind to your heart. 

Then, after all that, the next thing I did was find a deal.  Now, deals are hard to find, but you will only find it if you know what you're looking for.  If you skimp on the first two steps, it won't happen.  You need to know your stuff.  Once you have a deal and you know what you're doing, then the rest is easy.  The money will come.  In my case, I found a good deal on a 4-plex, got it under contract, put the whole deal together, then got my brother to buy in to the deal.  He funded it with his heloc, we renovated it over the summer, put in tenants, and now we are refinancing to pull out the initial investment to repay the heloc.  I wish I could say it worked perfectly, but we had all sorts of problems.  Some came from me being new, others could not have been foreseen.  But ALL of them were learning experiences, and the deal is a success. 

Long story short; Educate yourself and surround yourself with the right people, THEN look for a deal, and finally look for the money (in the form of partnerships).  Honestly, all of this takes time, so in the mean time you can improve your financial situation in any way you can.  Credit, income, savings, learn money management, etc.   Do anything and everything you can, and always keep your eye on the goal of R.E. Investing.  It will happen.

After years of searching and dreaming, I found the perfect cabin for my first vacation rental.  It needs water and septic, but that's no big deal because people put in wells and septic all the time!  Then my lender mentions to me that I need to have a Hydrology report  to determine if I have the right to use the water my well produces.  This would be the first time I heard of the Hirst Decision.  

I spoke with the county (Snohomish) and they told me are basically ignoring the ruling and issuing building permits as usual.  They said it's up to the Dept of Ecology to determine if I can get water rights.  I spoke with the Dept of Ecology and they said it's up to the County.   Neither could give me a straight answer, and basically admitted that nobody knew what was happening.  Where does that leave me?  My lender won't lend on something without water rights, and the people who are supposed to be in charge can't give me a straight answer.  

Each conversation I have confirms that nobody knows what to do, and they are hoping the law changes before it catches up with them.

Does anyone understand the Hirst Decision and what I need to do to get water rights?

Does it even affect my area?

How should I speak with my lender, who is probably just as confused and probably scared of Hirst as me?

Any help or advice on this would be VERY helpful!  

Hey BP!

I am planning to buy a cabin out in the mountains to fix up and keep as a short term vacation rental. I would like to use the BRRRR strategy, but now I'm realizing that I won't have a lease to show when I refi. Has anyone ever done brrr on a vacation rental? Any recommendations on how to refi without a lease in hand?

Also, I am planning to purchase this property in an LLC, which ads another layer of difficulty to the refi.

Thanks!

I just saw this thread, wanted to join in on the conversation.  @Nicholas Bankus I love your excitement!  I think you should have no problem hitting financial independence by age 40, especially investing in Kitsap County.  

I live in Seattle and just picked up my first 4 plex in Bremerton. I've been excited about the opportunities of Kitsap County for a while now, and plan to focus most of my investing in that area. (thanks to @Bob Malecki for peaking my interest in Kitsap at a meetup in Bellevue). 

I really want to connect with ALL of you fellow Kitsap investors, because there is nothing like the power of networking to get you where you want to go.  Does anyone have info on the Reaps meet up? Where and when it takes place?  I'll definitely be there.