All Forum Posts by: Daniel Pitner

My wife and I just got a great deal on a 1/2 acre lot in Peoria, AZ.  Our goal is to eventually build a home on it and do a luxury house hack but I need some help thinking through some different options.The lot has two driveways (one out the back and one out the front) so the back side would be used for the guests/tenants.

 Here are the three options we've come up with: 

1) Build a large house with an attached mother-in law casita to rent out all at the same time. Pros: faster time frame to accomplish plan, mother-in law casita appraises at the same price/square foot as the main house.  Cons: very expensive up front costs 

2) Build a main house and wait a few years until we can put a large chunk of cash towards a casita. Pros: gives us time to save for a very nice ADU. Cons: We would still need to carry a large mortgage with no income to subsidize it.

3) Build a small ADU first and live it in until we can save up more cash for a large main home. pros: low living expenses for a year so we can put a big chunk of change towards the main house, ability to turn our current home into a cash flowing rental faster. Cons: small house for a while, not sure how this would work in terms of permitting with the city.

Any input and ideas you guys have would be wonderful! 

I have a lead on a property where I'd like to negotiate for owner financing.  I need some help figuring out how to structure the deal and how to approach the seller on this option: 

1) Who facilitates payments on owner financing? 

2) What is the benefit to the seller? 

3) What are the typical concerns that sellers have for this kind of deal ?

Any other advise would be appreciated! 

Does anybody have an estimate on what it costs to get land "build ready" with grading, utilities, etc in Arizona. I realize this can vary drastically, but I don't even have a context for if it could be 5,000 or 100,000.  Any help would be appreciated.

@Todd Goedeke the taxes and insurance is built into the mortgage number . I think you're right on the cleaning front. Our current STR average $60/clean and about 4 cleans a month. I just realized I forgot to factor in utilities and such as well. The condo actually comes furnished so I was largely factoring that into the cost of the condo.

I hadn't considered marketing outside of current major platforms . That is certainly something to look into. Our current STR is listed on just AirBNB as I've been a little scared t manage multiple platforms

Thanks @Jingru Sui! Good question. It's not an urban setting, however it could convert to a LTR if need be. That's a good way of looking at things.  If we converted to an LTR I could bring about $1300 in rent for it. 

I'm hoping to get a second set of eyes on this deal. It's a condo (The hoa is STR friendly) in Sedona, Arizona. It's currently being used as an Airbnb and it's annual pre-covid numbers are as follows:

• $116 ADR at a 64% occupancy

There area few comps in the same complex that are used as an airbnb. Those numbers are as follows: 

• $130 ADR, 73% Occupancy (high comp) 
• $92 with 70% occupancy  (low comp) 

Average among all comps: $102 with 68% occupancy . 

With my financing that I have in place I'd be looking at a mortgage of $950 (HOA fee included) . Based on the average comp we are anticipating a revenue of $2108/month. Our anticipated net would be around $831/month once cleaning, utilities, capex, etc is accounted for. We would be putting around $25k into the deal so my anticipated CoC would be around 36%.

I had a few questions I was hoping to get some answers to: 

1) Am I missing something in my numbers? Help me poke holes in my data

2) Is it too risky to buy a STR in our current climate? (we currently have one that has made do, but I'm a little nervous to expand to another)

3) How much in reserves would you put aside for a property like this? 

Thanks in advance! 

@David Rushton House Hacking is a wonderful option for the Phoenix area. A traditional house hack, where you find a duplex and rent one side out, may be hard to come by because of the lack of duplexes in the Valley, however it is still possible. One thing you can consider is finding a place in the Scottsdale area with an ADU and rent out the main house as a short term rental. Right now the STR (short term rental) market is down due to COVID, however it won't stay that way. Scottsdale is consistently rated as the best STR market in the country. The cashflow you would receive on this is far greater than a long-term renter.

Best of luck! 

@Alan Robert Litz I've found some success in short term rentals here in the valley. You're right, the numbers don't work very well for cashflow on a traditional, SFH rental. But in the right areas (Scottsdale, Cave Creek, down town Gilbert, etc) short-term rentals can give you unbelievable cash on cash returns. This, however, comes with a down side. It's much more hands on AND STR rules and laws could change at any time. @Ryan Hoover has some great input here on appreciation,especially the way our market is moving even in-spite of COVID. 

We are interested in building a small subdivision where we would build our homes and either sell the empty lots, or build on the empty lots and rent out the homes.  I'm not even sure where to begin researching how to do this or finance a project like this.  Any direction you guys could give me would be appreciated! 

At some point I'm hoping to make a small housing development for me and my family and then sell the remaining lots. Is something like this economically feasible? Where would I even start to research how to begin this process? Any direction would be helpful!