All Forum Posts by: Dan Maciejewski

Ooof, that's rough. 1st, I would try to find that actual ordinance just for my own peace of mind. It looks like Hampton, VA defines a short term rental as 80% of business receipts coming from less than 92 days rental period.  Also defined here.

A quick search doesn't show me the need to live in it as a primary but I've only looked for a few minutes.

Maybe see if you can find a Real Estate Lawyer that knows the business and can give you a consult.  If you do decide that you need to sell, I would sell sooner rather than later, so I would move quickly in trying to find out if code enforcement is "misinformed" and/or if you have to fight city hall.  Or if you even want to.  I say sooner because another quick look says the market has "only" seen 9% appreciation YOY, so the rising interest rates may hit the buyer market a bit in the next few months.  

If you can't use it as an STR, hopefully it still makes sense as a long term rental, so you can cash flow, though!

I hope it works out!  Let us know what you find out.

If you work with a Realtor, they may/should have connections.  You should be able to use a stager/interior decorator.  If all you need is the final touches and staging, they shouldn't be too expensive.  You can get that done in one consult, usually.  

The photographer you want is a real estate photographer.  The vision and staging will come from you, your agent and the decorator.  In whatever percentages work for you!

Your Realtor or A Realtor should be able to get you in touch with these professionals.  You may have better luck asking a luxury Realtor, or at least one that's comfortable in the space.  We tend to need actual staging from interior designers and a "vision" more often then the median priced home.  Ask around and definitely ask to see their work to see if it fits your vision.  

Unfortunately, I don't have anyone for you, but good luck on your STR / vacation rental!

There are plenty of very high ROI areas in Pinellas that don't include St Pete or Clearwater. Those are just the 2 biggest cities in the county. As I tell my clients, you can make money and have great occupancy at almost every price point in the county. I don't see anywhere in Pinellas dropping below 70% occupancy, really.

You will be dropping a few things as you get under median-priced homes.  You probably will not have a pool.  You will probably have to go with a 2-bedroom.  And you will probably move farther from the beaches into what I call my tier 2 or tier 3 areas.  BUT, you should still be able to get a home that will rent out well.  I would caution that the rents that have an ADR below 200 may see some occupancy and rate reduction through the coming recession, but they should still make cash flow.  This is a tourist driven area and we've been through recessions before.

Tampa has a 7 day minimum, as does the county. I have not seen them enforce it, and when I and my clients have called, the literal quote was, "try to keep a 7 day minimum." But you can never tell if they want to enforce it. The occupancy and rates and ROI seem pretty solid in Tampa, as well. With the added benefit of lower prices and the appreciation has been a percent or two lower there than in the beaches of Pinellas. You will have to worry about location a bit more, but we are still a great area with a ton of reasons to visit. From several great sports teams, to concerts and live events to an ever-growing job and business hub to attractions to brewpubs and historical locations to our beaches!

In short, I think the short term rental / vacation rental market should hold solid in the Tampa Bay area, especially Pinellas for the short and long term.  You "should" be good almost anywhere you fins a place that fits your budget.  Make sure to vet the neighborhood well -- check reviews of STRs nearby to see what guests say.

1. Know the prevailing market cap rate for the asset type (STR).

2. Know your numbers and (best case) be able to provide a pro forma and past numbers to prospective buyers

3. Price based on your numbers and the cap rate. Cap Rate = NOI / Purchase Price(market Value). Purchase Price (Market Value) = NOI / Cap Rate as a percent

An example would be a rental with NOI of 65k. Prevailing cap rate for STR in the area is 9%. 65k / .09 = $722,000. Then adjust to be competitive, eg., more real buyers above 725k, then price up a hair, or more actual buyers below, then advertise at that price. If that price is lower that FMV for regular buyers, don't worry about investors! It shouldn't be, though.

Then connect with someone or advertise in a place (like here) that has a high number of real buyers for that asset type (vacation rental/ short term rental). If you're in any groups for investors, market there. I would suggest searching for someone (a Realtor) on here that is in your area and knows what they are doing and has the buyers to market to. Be careful. Ask for their sales and make sure that they are actually selling and selling to investors in your asset class. I would let them put it on the MLS, too. I sell to people from all over the country and the world, and most sales are on the MLS.

Best case scenario: let the bidding begin!

 I'm not positive about the SEC rules for finding investors, but in your situation I think they have to be people you know -- no advertising.  So, basically friends and family, co-workers, people you know from other associations, etc.

Basically keep doing research, saving, learning numbers.  And then the more you learn and get excited, the more you;ll talk about your goals.  And then attract the people you need to.  There was an early podcast where the guy was a cop or firefighter and had some group meeting with coworkers.  That may be applicable.  You definitely need to know your numbers and goals and worst-case scenarios, though.

I love this question!  I've been getting it daily.  My take:

1. This will be market dependent.  Markets that have recovered (Tampa Bay area, Phoenix) will fare better than markets that are very far from recovery (Chicago, NY, LA, Detroit)

Source, Knowland Meeting Recovery Report

Meetings and other transient travel track together, especially considering pandemic recovery.

2.  This will be dependent on price point.  The recession is going to hit the places that are at a lower price point harder.  The $69/night Days Inn is going to be worse off than the $512/night Ritz-Carlton.  The people that will have to cut out luxuries to fill the gas tank are going to cut travel 1st.  Especially vacation travel.  The people that may have to not max out their investments are still going to travel.  Their work travel will stay the same and most will still be able to vacation.  This is broad and sweeping but for the most part, should hold true. 

So, in essence, it's better to be in a good location that will allow for travel, and it's better to be at a more resilient price point. If you can have both, great! I would want at least one. I would advise against a low-rent STR in Detroit for the next year or so for example.

Good ideas here.  USF and University of Tampa are great areas to check out.  MacDill, as well.  The contractors should get per diems and renting a room could save them some cash.  Also by any of the big hospitals.  There are a lot of travelling nurses that need rooms for a few months at a time, too!

The easiest, and often cheapest way is to get a seller carry-back.  Also called seller/owner financing.  I say often cheapest because sellers don't usually ask the rates that hard-money lender charge.  They usually ask a percent or two above prime, which sometimes can equate to the rate a bank quotes you.  This can be the whole mortgage, or more usually in my area, the rest of the down payment to cover conventional bank financing.  They have to be willing to take second position and the loan type has to accept it in the second case scenario.

The cons of this are that most sellers don't want to take the risk, and the ones that do usually want a big down payment.

Another option is to find partners.  This is a great way to raise your price point and to get into a great house that cash flows well.  I advise having a partnership agreement before starting.  That way everyone knows their obligations, splits, exit strategies and buyout options, etc. . . 

You can try to strategize against the market as a whole but always keep in mind that you will have to outbid the other people offering on that house.  

If you have a great realtor that segments the market, they should be able to tell you exactly what people are bidding on that exact house type.  NOT the neighborhood comps that everyone uses.  I just ran 2 reports for two different house types and price points for 2 different clients.  I checked for the closings in the past 2 weeks, which would put them under contract since the rate hikes -- that way we can see how the market is reacting.

The lower price point (just below the median for the area) was 1/7 cash, 1/7 FHA and 5/7 conventional. The lowest sale was 100% of ask, the average and median was 3%, and the highest was 6% over ask. That's a big drop for the area; 2 months ago the same segment was 10-30% over ask.

The higher price point (above average and way above median price) was 1/3 cash, 2/3 conventional and triple the number of sales.  The average sale price was 4.6% over ask with the 2 highest 11 and 15% over ask.  This segment is still waiving appraisals, although we're starting (trying) to just waive the amount over ask and not way more.  This is also a big drop, but as you can see, the market isn't shifting here like the news would have you believe!  

Each market is different and each segment in a market is different.  Segment is according to price, condition, pool/no pool (or other BIG amenities that matter in your area like finished basements) school zones, etc. . . Basically the big differences, not just neighborhoods.  Its's harder to do looking backwards, so start to keep files of the segments and homes as they come up -- then you can see when they close and track the numbers that way. The list will build and you can start to see trends as they are happening.

My advice is to not skirt the rules.  

I definitely wouldn't lie about owner occupying -- that's way too easy to verify.

You'll need to look into starting your own management company. I would guess that you'll need to be a licensed Realtor or Broker and you'll need a business license and jump through all the hoops that starting a business entails. I don't think having an LLC is enough to be a management company but you can always call the town and ask -- if you're leery about doing that, then you already have the answer!

That leaves having someone within 30 minutes for emergencies.  If you are self-managing remotely, you'll need to have that person anyway.  Who is going to swing by when the tenant calls at check in and says the coffee carafe is broken, the door is stuck, or any other handyman-type stuff?  Some people use their cleaning company and some people have an actual handyman.  You just need someone that you can pay on a gig basis that will answer their phone if the need arises.  Offer a good amount per call -- you won't need to use them often, if ever.  Honestly, you can probably have a few, have your number posted in the unit, and then call around to your couple of guys/gals to see who is available.