All Forum Posts by: Gerald Pitts

Gerald Pitts has started 11 posts and replied 460 times.

Agree with @Nathan Gesner, getting a NOO STR permit in Nashville is a pain in the butt. Most of the new builds that allow NOO STR sell at a premium and aren't worth it in my opinion. Local's HATE short-term rentals with a passion here and will call and report you for any noise violations. I used to do Uber and would see drunk girls and guys peeing on the side of the building in East Nashville when I would drive by. All I hear now is how there is no affordable housing in Nashville and of course, they blame STR investors for that.

I think drunk girls and guys peeing on the side of Nashville buildings is one of the images I will most most of my time in Nashville, and the changes that came about.

1 Vote

Quote from @James Whitehead:

Quote from @Kevin Romines:

Real estate that is held long term builds the best and biggest wealth. That said, you have equity and some cash to leverage into something more. The question is, what is the something more that fits your lifestyle? A HELOC is a great tool to use especially if you have a low existing 1st mortgage on the property. Don't give up that low rate just to get the cash out when you can do a HELOC instead. Can you make your existing home a rental and cash flow, it sounds like you can. If you do, you will then be on the hunt for your next owner occupied home. You can put a smaller down payment on that home and still have cash to buy a 2nd rental.

Bottom line, the more cash flowing properties you have the better your monthly cash flow and the more long term wealth you will build. So if it were me, I would be looking to obtain as many properties as you can while maintaining a certain amount of reserves to cover repairs and maintenance. Then let that cash flow build into your next purchases.

I hope this helps?

This definitely helps! And this is where I am trying to figure out the next best step for us, also why Im trying to find the right questions to ask loan officers, if I have multiple properties, when do I get to leverage those against more property? is it based on the equity? Whats the best debt to income ratio that a bank wont look at me and laugh when I ask to purchase another home loan from them. I plan on diversifying between STR and LTR but I would like to do STR first, mainly because while there is more work, there is more cash flow which will help me in the beginning get set up to expand sooner. But if I won't be able to get a bank to cooperate with me having those 3 properties then I want to see about getting the STR first and then letting that income build up while the market does its thing and I set up for the next piece of real estate.

As I had it in my mind(not sure how realistic it is),is to buy an owner occupied home, and rent out the one we currently live in, and then take the HELOC/Cash out, and put that against a 10% vacation home that we will self manage to primarily offset the cost of the STR mortgage at a minimum, and to ideally have its income cover the mortgage of the home we will live in. As i have been learning and reading and absorbing the fantastic information that Bigger Pockets and their investors have put out, I want to have my properties cover themselves and even if im unable to make immense profits off of them due to the current world events, I will still be succeeding in the long run with the equity earned over time as they pay themselves off and of course appreciation as well.

Here's exactly what I did:

2008: Bought a primary home for 110k in Nashville.

2015: Took out HE Loan on property and pulled out 65k. I didn't understand HELOCS enough, and feared the variable rate.

2016:Took out HE Loan on first home and pulled out 25k for rental property down pymnt.
Bought a tiny 740 sf half of a duplex in Nashville for 86k, and rented it out. Cashflowed $150 / a month.

2020: Took out HELOC Loan on 2nd property and pulled out 65k.
Bought 2 cabins in Smoky Mountains for around 250k each. Cashflowed $2000 / a month each on avg conservatively.

2021: Cashout refi'd the 2 cabins and bought a 3 BR cabin twice the size that Cashflowed $3500 a month.

Most important thing is all the deals are cashflowing. My DTI is currently trash lol, but I con't care. I will use a commercial loan /DSCR / whatever will get the deal done. At some point, the money the properties are making will be enough on my taxes to be bankable for a regular lower interest loan again. When I stress DTI, High interest rates, etc...Cashflow is the bottom line for me. Right now, it's maybe less cashflow than it will be in a few years because of the rates I'm charged, but I'm positively cashflowing a number that is comfortable to me.

You mainly want to run your numbers side by side on what your total outgoing $ is going to be with HELOCS or Cashout refis, etc, and make sure you are still in a better scenario than if you didn't do the HELOC / REFI.

Good luck and welcome.

3 Votes

Quote from @Dominic A.:

@Dave Stokley and @Nathan Gesner are superstars here, listen to them.

Social media ads aren't going to be worth the time (unless you offer some kind of unique getaway type experience). Keep your listing up to date and looking good.

Minimums are key, you'll want to encourage longer stays to fill in the calendar (and save yourself/team from having to do tons of running around and laundry). You can probably let the calendar fill up a (little) bit first though. You won't make the kind of progress these pros have, but you'll get people into your rental for a stress test which is also valuable.

The first big step is to adjust your weekday rates. This is harder to do with the Airbnb system (as opposed to a pricing tool (which you don't need yet)), but not impossible. You just need to set your weekend/weekday days and then I would suggest doing a % increase/decrease. Keep an eye on it as well, the first couple of months should have you checking on it like it's your email inbox (assuming you check your inbox at least once a day). Airbnb has a great price tool, but it can miss local events/changes. You can "set it and forget it" eventually, but for now, don't be afraid to watch things a bit and make changes where you're seeing the potential for growth and improvement.

You don't mention it here, but I presume you have professional photos? It's shocking what a difference those make. Key tip, be prepared to stage the property a bit for the photo shoot as well (a pro real estate photog will mention that). Many future STR guests want to be able to map out the space in their minds and make plans for how they'll utilize the space (particularly for weekday/business travellers). It's true for Hotels, but MASSIVELY more true for STR that the more info you're offering potential guests the better your results will be.

A lot of great information here. I will challenge one thing, and say Idk, maybe the AirBnb tool pricing may have improved in a few years since I started, but I always hear that a pricing tool is the #1 tool in this bsns. That without it, you are leaving a lot of money on the table. That's def been my experience. The monthly cost per property is almost nothing for PriceLabs, the best pricing tool out there. And it can help you adjust down prices for weekdays vs. weekends.

VRBO has little power boost things you can use on the unbooked days. I've used them a bit, but I can't say how effective they've been. Would love to know if someone else has had good experiences.

0 Votes

Just make sure you really educate yourself on this. Research how to pitch the landlord and get them on board. (Your property will be cleaned / checked for repairs regularly, etc.) Some even create lease addendums. Just know the risks.

I recommend looking up TJ Tijani, and other experts on arbitrage. Just remember owning long term is how you create wealth. If you end up doing arbitrage, plow your profits into owning.

0 Votes

San Diego, California

Agree with Luke. Too many other markets that will make more money for zero the Nashville hassle.

1 Vote

Good luck changing the majority view's mind! :) And I don't disagree with all of their points. Really, I believe the best antidote to this is vacation markets instead of metro markets. Save your energy for scaling your business.

2 Votes

You want to look up TJ Tijani, and other experts on arbitrage. A lot of ppl have had a ton of success with this. You just have to know how to educate the owner on the win win nature of this. And know the risks. I also reccomend owning. At least at some point. I wouldn't want all my eggs in the arbitrage basket. A good strategy may be to do this as a means to an end of saving for a property to own. This is a business (and a good one for a lot). Owning long term is how you create wealth.

1 Vote

I highly recommend Yonah Weiss for doing a Cost Seg Study. And Ryan Bakke for CPA. They are both the STR go-to experts in this area.

2 Votes

Nashville, Tennessee

Hostfully is great looking. One property is free per email address if you just wanted to try it out.

I used to print it as well but that can be a pain if and when anything changes.

1 Vote

Boston, Massachusetts

Marketing.

Tweaking software.

Optimizing listing.

Phone calls ot texts with guests (rare, but not my jam).

Email (actually probably#1)

Bookkeeping.

Maintenance calls.

Cleaner communication.

I'm sure I'm leaving out some details but essentially anything where I'm in the weeds working in the business and not on scaling the business.

1 Vote

Philadelphia, Pennsylvania

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All Forum Posts by: Gerald Pitts

Gerald Pitts has started 11 posts and replied 460 times.

Post: STR regulations/restrictions in Nashville

Post: Ready to invest, whats the best way to capitalize on my situation

Post: Tips to filling weekdays

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