All Forum Posts by: Charles Kennedy

CRE does not follow the 1%-2% rules, it's all based on cap rates, which is annual NOI/purchase price. You should base your sale price from taking the property NOI applying a cap rate (you'll need to do research about your market and that asset class in that market). For example if we assume you have an expense ratio of 45% on that 16k monthly rent, we get an annual NOI of $105,600. If you worth $1.3MM that means your assuming a cap rate of 8.12%. I can't tell you what cap rates go for in your market, you'll have to find that yourself.

@Andre Wilson oh ok, well if one credit union told you that, then don't go talk to any others.

Just give up.

Tom, this is a debate on risk in my opinion and is something YOU have to decide yourself, but I'll try to help weigh the pros and cons:

FHA:

Pros: Get in for significantly less capital --> use remaining capital to buy another property

Cons: Higher debt amount, if property values fall, you'll be "under water". You'll have higher monthly mortgage payments, which will reduce your cash flow (but almost certainly a higher Cash-on-Cash return).

PMI payments

Ultimately, you'll only get in to trouble on the FHA after you move out and the market experiences a downturn and your rents drop.

Traditional:

Essentially switch the pros and cons from FHA. Biggest benefits are no PMI, and having more equity in a property significantly protects you in a downturn. You lose a property when your monthly payments exceed your cash flow and that occurs if you monthly payment is too high and the rents are too low.

Go to other banks/credit unions. Banks lend on investments all the time.

Don't cap rents on home owned. Mobile home valuations are based on lot rent - expenses capped. You can then add back in the value of the mobile homes he owns. If you cap the value of the mobile home itself you are drastically overpaying. 

The latest podcast touches on this briefly. I'd go give that a listen as well as listen to the guests podcast on mobile home park investing. 

@Christopher Hunter the bank would give you the loan at the closing table. Auctions you must pay in all cash (not literal cash, but verified funds at least). You could later then go get a loan on the property.

This is because the auction company does not want the risk of not closing. If you bring the full amount, in cash, they know you will close on the property.

@Logan Poe, most FHA loans require you owner occupy for some time period, typically 1 year. After that point, you can move somewhere else and then rent out the property.

If you look on the county assessors website their should be two addresses listed: the property address and the owners address. Mail to the owners address. Simple.

@Michael Glaser it has be to very market dependent. I wouldn't have assumed that low of a rate (then again I don't know Kansas), but if the numbers work at that low of an occupancy, the rest is just icing on the cake!! Make the pictures, description, etc. look great to drive it up. I'd try to really encourage those first guests to write a review if they enjoyed themselves as my understanding is that reivews are crticial to Airbnb.

I'd be interested to hear vacancy rates on AirBnB's in different markets. If any investors who specialize in AirBnB check out this thread, I'd appreciate them commenting on what they typically in terms of occupancy for each city they invest in.