All Forum Posts by: Duane Richards

Hey all you good BP folks!

I have a friend who purchased a portfolio of 10 properties in the Birmingham, AL area and has had multiple issues with his PM and tenants. He's put a lot of money into trying to fix up/recover (including rebuilding a home from scratch through insurance that burned down), but at this point it may be best to unload what he can to recover from a further downward spiral financially. He's also not local to the market, so it's difficult to rehab at the scale he needs to.

Neither of us are very familiar with the mechanics of working with wholesalers, but they seem to have a larger market of interested investors willing to put in some sweat equity to increase ARV and turn distressed properties into profitable ones. Would love to chat with someone about the process and potential partnership.

Thanks!

We wanted to give it a full year before looking at total profit/loss. We also spent about $10k additional to improve our home and touch up themes, repair the pool table, add entertainment and A/C in our garage, etc. Switching PM's cost a bit as we had to restock all the beach/pool towels, sheets, mattress covers, pillows, etc. but luckily the furniture was all very nice.

Unfortunately, with the cost of ownership, we don't have a huge margin, but our goal was to own a place that would pay for itself so we could enjoy it. Since the purchase, we've stayed out there 5 times and have three more trips planned to the end of the year. Without expensing our travel and CapEx for remodeling and the replacement appliances, we are still about $7k in the hole for total ownership so far. However, to be fair, our first 4 months were with a PM charging a higher % and renting at a much lower rate with fewer nights booked. And we still have July's check coming in the near future :)

Not sure that helps, but let me know if you'd like me to get into more specifics.

Hi @Steven Gore, I am a remote investor with an STR in Kissimmee. In fact, @Shawn McCormick in this thread was an amazing person to work with to finalize our first remote/STR purchase. We started looking at 3-4 bedrooms due to the price point, but we found occupancy rates on data sites like Airdna.co showed < 40% for the smaller units (we purchased the Kissimmee data as part of our research on that site - totally worth the $50 before making a $700k+ purchase). So even with higher nightly rates, the cost of ownership (HOA, Utilities, etc.) was just too high unless you could push 70-80% occupancy, which is nearly impossible with the # of units in competition. With Shawn's help, we moved towards a better product and purchased a 9-bed, 6-bath home in Windsor at Westside. We are nearing a year of ownership, and with the help of some great property managers, we are renting out on average 20-24 nights a month, the busier summer months making up for the slower off-season ones. Our biggest problem now is finding time on our calendar to use our own property for our family vacations. You can see our listing here: https://www.airbnb.com/rooms/5...

Let me know if you have any questions!

We've been following listings in St. George for over 2 years now - our first intention to invest was in St. George's STR market - wish we had jumped on it in 2019 when we first started looking! Looking at AirDNA results, my biggest concern is occupancy rates, most of the calendars I look at have large gaps in them, and when you spend close to $500/sq. ft at current prices (in STR-designated areas), your property needs to rent well above 80% or you charge crazy nightly rates.

We've also seen very few property management companies that charge less than 25% there (and 25% is rare), and some STR neighborhoods require you to use their designated PM (Desert Colors only allows Red Rock, and they are at 40% commissions - ouch!). Basically for us, a 10-25% downpayment won't make any of these properties cash flow, let alone cover their expenses to break even. I'd love to get in down there, it's only a few hours away for me, maybe Cedar City has potential? It is starting to look more appealing for the price.

Our STR in Florida is breaking even or profitable most months, even at 10% down for a 2nd home. I'd love to get something closer that could do the same (we paid $725k for.4400 sq ft in August last year, and I just saw a 1600 Sq Ft townhome in St. George list for $799k - wow!)

Unfortunately, LTR in St. George, although the home prices are lower per sq. ft, don't have a high enough going rental rate to cover the higher sticker prices either, at least from what we've analyzed on the MLS. I'm hoping for higher interest rate slow-downs to bring a few reasonable possibilities to the market soon.

@Kerry Baird I just visited with Mountain America CU in Utah, they no longer allow HELOC on non-owner occupied properties. Going to try one of the others on your list. Thanks!

@Brian Cassanego I'm an investor in my local market in Utah (Utah and Salt Lake Counties), and while prices are going up here pretty quickly, we have still found a few deals that will cash flow $300-700/mo. At 20-25% down, you can get a reasonable cash flow and expected appreciation. Our properties over the last two years have increased our portfolio value by over 34% (thanks to increased values)! Most rents are now increasing enough that any property sub $500k can return cash per month, but it's getting harder with the increased interest rates. If you're interested, I can give you some more information - I love investing here and am always looking for new opportunities. 

@Lindsay Z. Love to see more investors in Utah :). We have a few properties in Utah County, including two in an opportunity zone, which we cannot sell for a while if we want to capitalize on the tax benefits. However, we had a lot of equity within the first year and were able to get the original bank who financed us to get us low-cost seconds on each to facilitate capital for other investments. Nice about a second, it's a fixed rate. We also have a HELOC that has been used to finance some acquisitions, and with rates climbing, the payment on that is getting a little larger, as you can imagine. A cash-out refi would get you a fixed rate as well with a great long-term, but as rates again are higher, it really depends on where this puts your payment versus your rental income.

We have considered doing this on another property where we currently have 50% LTV, so there is a lot of equity, but we are still debating, as the refi would put our PI+TI at just under our rental income for that property... However, it would facilitate our investing goals for the year, so we continue to debate :)

I also have a great Accountant who works with a lot of Real-Estate investors. I'm glad to share his information if you're still looking for one.

@Nicholas Knaebel Check them out here: https://floridavillaservices.c...

Let them know I sent you :)

@Nicholas Knaebel we found a place that will work with you on LED lighting, murals, build-out theming on a smaller level than total conversions, but in my opinion a bit more maintainable - we had Florida Villa Entertainment come in and work with us to add our Avengers wall, ping pong table and LED lighting around all our murals (to protect the edges). They also re-felted our pool table, added an A/C unit in the garage (a necessity!), and we are thinking about picking up a few more arcades from them in the future. Harold is great to work with there. Let me know if you'd like their contact info!

@Shannon Currin, We recently closed on a 9 bed, 6 bath 4400 Sq Ft property in Windsor at Westside (thanks @Shawn McCormick for getting us through the process!). I'm now on the HOA board, even though I'm a remote investor. We've used our home 4 times since closing in August 2021 and have loved it. We inherited a PM company with the purchase (90-day termination policy to enable cancellation of future bookings) and it was miserable, we should have paid the penalty for leaving early and gone with our current PMs (they are awesome!). Our home for 2022 is booked out almost completely, with only one or two weeks here and there left, so we've been pleased. We bought turnkey, and part of our criteria was the kind of stuff in it.

Just one thing to note, all HOAs have problems, ours is no different, whether it's trash, parking, pests, landscaping, staffing, etc. I would recommend gathering some info on the one you are planning to buy in, just to get an idea of what you might be walking into.

I'd be glad to share our story of purchase, PM nightmares, wear and tear on the home, etc. Feel free to reach out if you are still in decision phase. 

Good luck!