All Forum Posts by: Elaine Perales
Elaine Perales has started 1 posts and replied 8 times.
Post: Purchasing the company (LLC or Corporation) that holds the property
- Investor
- New York Metro
- Posts 8
- Votes 4
Jorge, I'm in the middle of trying to figure out how do to this with a current LLC with a short term rental property. I'm stuck trying to figure out how to structure a contract but more importantly how to get the right loan. At the moment I have a DSCR quote but they only lend as a real estate purchase. I'm trying to at least get an appraisal to know if this property will provide the right return. Do you have time to talk live? My lawyer is struggling to advise me and the seller is not excited by how long is taking. Your advise would be great.
Elaine
Post: Seller wants to sell the LLC that owns the STR plus reviews
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- New York Metro
- Posts 8
- Votes 4
Quote from @Josh Ball:
Just went through this with a top STR property in my town. We looked at purchasing, great record, unique property. The owner said that "we could put the property in an LLC & sell the LLC". I reached out to Airbnb support, they confirmed, this is not a loophole in their system. You would need to start fresh either way.
We ended up skipping out on the deal that on paper was killer at current numbers. But being we would have to start fresh, the current revenue was pointless & just proof that we could get back to that at some point. Good luck.
Post: Seller wants to sell the LLC that owns the STR plus reviews
- Investor
- New York Metro
- Posts 8
- Votes 4
Quote from @Andrew Steffens:
The property is worth exactly what a residential appraiser says its worth + possibly a separate bill of sale for the furnishings. I'd recommend you start over - you'll get your own good reviews in a couple of months. Also, take a 30 year conventional loan.
That's our approach now with this seller. We are superhosts already and confident it won't take long to stabilize. I just hope this seller sees his valuation is way off. Willing to pay above home appraisal but not 30% above.
Post: Seller wants to sell the LLC that owns the STR plus reviews
- Investor
- New York Metro
- Posts 8
- Votes 4
Quote from @John Underwood:
Quote from @Michael Baum:
Hey @Elaine Perales. So this is kinda weird.
This would be common for a "normal" business like a retail store or the like, but when you are dealing with a real estate business featuring STRs, things are different.
In the end, the house is worth what the comps say it is worth. The rest of the business...hard to analyze that. There are 200+ reviews, ok, what else is there?
Technically the reviews can't transfer and both VRBO and AirBNB might not allow it even if the LLC stays the same. The LLC will transfer to new owners so that might trigger them to force you to start over so I wouldn't rely on that at all.
IMHO, the business side is worthless. The value is in the property. If they are charging you a premium, then I would pass. There is a reason they are doing it this way. They might want more money than it is worth and know it won't appraise at the value they want.
The bottom line is that past performance is no indication of future earnings. You aren't buying a McDonald's.
I would pass.
Michael nailed it as usual.
The house is only worth what comps say it's worth. This is what the bank will loan on.
The LLC is near worthless to me.
Thank you !! I needed that sanity check.
Post: Seller wants to sell the LLC that owns the STR plus reviews
- Investor
- New York Metro
- Posts 8
- Votes 4
Hi ,
I found an amazing STR for sale. DSCR ratio above 2, CoC 20%+,. Great! But the owner wants to sell the property plus the business. No seller financing no , no earn outs
What should I pay for the business 1x or 2x? It has two years work of performance and 200+ reviews avd 4.9+ stars.
Killing me since I would have to finance over 10 years at SBA rates .. yuck.
Thoughts on better approach to this offer?
Post: Short Term Rentals in USVI | Virgin Islands
- Investor
- New York Metro
- Posts 8
- Votes 4
Quote from @Nikki Stoddart:
Quote from @Elaine Perales:
Quote from @John Underwood:
maybe message other lists and ask if they have any cleaners they would recommend.
Also see if there are any local FB groups where people share this info.
I hope you manually checked the numbers and aren't depending solely on Airdna data which can be inaccurate.
Yes I did a lot of various scenarios to understand the risk and I do agree AirDNA is not 100% so I also added more conservative data.
Hi Elaine! Did you end up buying the property? How is it going?
Yes we closed in April. Really happy we got the property. Still looking to see how the high season goes. So far in low season is doing well enough to cover. Found great cleaners who are doing well and design consultants to help uplevel some furnishings.
Post: Short Term Rentals in USVI | Virgin Islands
- Investor
- New York Metro
- Posts 8
- Votes 4
Quote from @John Underwood:
maybe message other lists and ask if they have any cleaners they would recommend.
Also see if there are any local FB groups where people share this info.
I hope you manually checked the numbers and aren't depending solely on Airdna data which can be inaccurate.
Yes I did a lot of various scenarios to understand the risk and I do agree AirDNA is not 100% so I also added more conservative data.
Post: Short Term Rentals in USVI | Virgin Islands
- Investor
- New York Metro
- Posts 8
- Votes 4
I'm about to close next week on a condo. We've had a different experience through the selling and buying agent than here in NJ but so far it's all on time. Lender has been working out as well. We went twice to the location to make sure it was the right one. We did all the air dna analysis. Only issue is we are still trying to track down cleaners and such to build a local team. Been tough to get call backs or anyone offering recommendations. I'll let you know how it goes. If you want to message me on specifics go for it.