All Forum Posts by: Boris Mordkovich

One way to look at it is as follows:

1. Least cashflow; lease hassle - rent to a single family
2. Medium level of cashflow; a little more hassle - rent it by the bedroom to college students
3. More cashflow; same level of hassle as #2 - furnish the rooms, then rent to college students
4. Most cashflow; most hassle - furnish it and rent it out as short-term rentals. You’ll make more, but it’ll just take more energy and more of a system to set it up and run efficiently

@Lauren C.

There are typically three types of furniture rental companies:

* RentACenter; Aaron's -- this targets lower-income demographic; billed weekly.

* Cort Furniture Rental -- this focuses on corporate and military type of customers. 

* Fernish.com and LiveFeather.com -- this targets urban professionals. 

All 3 of these categories focus on convenience and, for that, they charge a significant premium. 

You are much better off buying your furniture through Wayfair or Amazon. Alternatively, sign up for their credit cards and finance it over a course of 24 months with 0% interest. You'll pay less and you'll own the furniture after that, so you'll get more value out of it when you sell.

Hope this helps!

@Staci Ryan 

After having done a number of Airbnbs in the past, I'd say that a 4-bedroom / 2 bathroom house (around 2000 sq ft) will typically cost you around $14,000 to fully furnish from scratch. A smaller 500 sq ft ADU that you mentioned will be substantially less, of course.

One thing to note, though, is that this year has been a bit strange. Most of the furniture retailers we typically use have been slowly increasing their prices, so the average cost to furnish now is, perhaps, around 15-20% higher than it'd be in a typical year. At least from our experience.

@Erik Nosich This really varies from lender to lender. As long as you have the short-term rental income on your tax return (for the prior year), most lenders will be absolutely fine with it. 

However, yes -- if you just closed on it this year and all of the income is from 2020, that will be a bit tough.

@Jerome Maisch If you're planning to take our conventional financing on your primary residence, it is unlikely that most lenders would allow you to keep it under the LLC.

To echo what others have said, just get adequate insurance. http://proper.insurance/ is a pretty well known insurance company specializing on vacation rentals/Airbnbs.

Hope it helps!

Hi @Charles Large,

I think the model that you're describing is actually really good, especially if you combine it with the property being furnished and available for mid-term leases (3-11 months).

You can take a look at how these guys do it: https://www.theblueground.com/

They provide an all-inclusive rate, but:

* the rate is variable depending on the duration (longer = cheaper)

* they charge an additional $300/mo for all utilities.

Another business model is this: https://www.common.com/

Similar to the above, but it's actually rented on a per-bedroom basis, which allows them to further maximize the profitabilty of each unit.

All of this depends on the market you're in and the demographic you're catering to, but I hope this was helpful as examples!

Boris

Hi @Nevin Hofing,

So, from what we've seen in the past, it'll be pretty difficult - if not impossible - to get a conventional loan without the income or the W2. Most lenders, although not all, intend to resell your loan after they close on it, which means it needs to meet strict criterias that are pretty standard across most of them.

Now, your options could be to:

* Go to a non-conventional lender, but be prepared to deal with much higher rates and closing costs.

* Explore the commercial properties route - where they look more at your downpayment + ability of the property to service the debt, rather than your W2.

* Do the house under your wife's name (if she still has a W2)

The first 2 options will either mean high rates or high amount of funds down. Unfortunately, in order to qualify for favorable terms and rates, you really do need that W2.

Hi @Joe S.

For furniture rentals, you can experiment with a company like this: https://www.cort.com/

Recently, there's also been a handful of startups that offer something similar. For example http://fernish.com/ and  https://www.livefeather.com/ - but they are highly regional.

All that said, though, furniture is so inexpensive these days that you could likely furnish a place through Wayfair and Amazon for the amount that it would cost you to rent it for 6 months or so. If you're unsure of your potential returns, I'd invest into a tool like AirDNA or AllTheRooms to better analyze the market and then just go for it.

Hope this helps!

Hey @Robert Gilstrap,

As you begin to scale, have you considered using a linen rental service? These services would essentially rent you linens, handle all of the washing, as well as replacements. You'd still have to figure out the logistics of getting the linens from your units to them and back, but they would probably be best suited for handling this at scale and ensuring quality control.

I'm not sure exactly who operates in your market, but this would be an example of a such company: https://crownlinen.com/linen-s...

Boris

In my opinion, when Airbnb releases these sort of processes, they do it mainly as a checkmark to indicate that they are doing something -- even if it doesn't carry any real weight behind it.

I think there is value in it and it will get a number of hosts to follow these rules. But, I'd argue that most of the hosts already considered what measures they will need to take to keep themselves and their guests safe and implemented their own protocols.

We've seen similar things occur in the past as well. For example, after they've had some issues with parties occurring during reservations, they've passed a rule that says that guests can't book acommodations for more than 16 people and cannot throw a party. However, since this is not really enforceable, guests will still bypass both of these rules and do it.

At the end of the day, Airbnb will do what they need to do to maintain their image as a safe and reliable marketplace. While many of their measures are not really enforceable, it's fairly understandable why they still take these actions.