All Forum Posts by: Ashley Rothacker

I've also had good luck with Traveler's Insurance. Nice thing about Proper is that they provide the higher liability coverage ($1M to start) but tend to be a bit pricier. Since I have umbrella insurance I just went with Traveler's. 

No he contributed 20% of the total acquisition/startup costs. For example if the acquisition cost $40,000 and it cost $10,000 to furnish, it cost a total of $50,000 to get the Airbnb up and running. He contributed $10,000 and we paid the remaining $40,000. 

Thanks for the input! I feel like creating an LLC for each separate property is a little overkill though no? Could we not have all the properties under one LLC and then create individual contracts for each property to lay out the percentages and sharing profits for each investor?

@Jon Crosby Appreciate the input! That is definitely a strategy down the road that we may be moving towards but right now I think we're wanting to keep the investors to their specific property. We only have 4 properties (2 long term, 2 short terms) so we're still small :) Just trying to see if there is a correct/formal way to go about using friends money if they are sharing in the profits. 

Thanks for the info here! Our friends/family are only looking to invest $10-20k each and since we are looking at properties that are $150-200k we'll definitely need a mortgage loan still. We're already looking into alternative loans as we've run out of our options with conventional being in the STR game (DTI ratio too high since most don't recognize STR income).

Would we need to form an LLC for each individual property then? For example, our first property we have an investor in 20%. Our next property we have have two investors in both at 20% (40% total). Would we have to have an LLC for each with the different terms?

Also totally understand where you're coming from @Jacob Sampson. Right now, our biggest constraint to growing our business is capital which is why we are talking with some friends who are interested in investing with us. Ideally the friends/family would be investing in just one property at a time so maybe a fund isn't the right path?

Awesome! We'd still be getting a mortgage lender. The plan for now is to have our investors (friends/family) put in a portion of the acquisition/startup costs. For example in the message above I explained how with our first STR we had a friend buy in at 20% and me and my partner paid the 80%. Me and my partner are the ones on the loan, not the friend. He simply transferred his 20% portion to us and we pay him 20% monthly payouts (after a management fee).

@Luke Carl That's actually what we're thinking of doing down the road...becoming more of just a management company. However, right now we're pretty small and the friends that want to invest haven't invested in real estate before so aren't comfortable in buying the full property just yet. 

Our first Airbnb, my partner and I put in 80% and had a friend put in 20%. He just simply transferred us the 20% cost after we closed on the house and got it up on Airbnb. Me and my partner own the property but then pay out our friend 20% of the monthly profit (after taking a small management fee first).

Just trying to see if there's a formal way to use private money like that? 

Hello! We have some friends and family that are looking to invest in our STR real estate business. They would strictly be investors and we will maintain all the work (i.e. finding and purchasing the property, then managing the STR business) and charge a management fee. The loan will be in our names and the investors (friends and family) will receive a payout every month.

We are basically trying to figure out how to formalize using their money to purchase properties. Would the best route be to setup a real estate fund under an entity?

Any advice is appreciated, thanks! 

Oh wow, I'm surprised they were able to review then if it was cancelled. That stinks, I'm sorry!