All Forum Posts by: Greg R.

First off, congratulations on finding a property so cheap that will cash flow so well. The reason a lot of investors refi is to get cash for the next deal. However, if you don't need to refi for down payments on future deals, more power to you. However, you're likely going to sacrifice time in order to save enough for the next deal w/o pulling cash out. On the flip side, if you're not pulling out cash, you're going to have a stronger equity position than if you did cash out.

I'm actually a proponent of going slow - especially for a young guy like yourself. No need to rush into mistakes. 

@Jesse Watson, great job!! We bought our second SRT in January with somewhat similar numbers to yours (maybe about 15% less).

Can you tell me how you got it rented for 4 months? I would love to find some longer-term rentals for our property, but so far, we're only getting 2-5 day bookings. 

Your income as an investor is irrelevant. That's why my original post said that relators and lenders would be impacted the most if the market crashed - not investors. My point was that a thriving market with record high prices is good for those who work in the industry and get paid based on market prices. I never said that the work is easier now than it was "x" years ago. My point is that you get a listing and it's going to sell very fast for top dollar. The buyers are swallowing up any/ everything out there. However, if you think this is the worst that it gets for realtors & lenders, that's your opinion. 

@Evan O'Brien yes, that's correct. AirDNA is a good resource, but don't count on it as the end-all. Your market research and looking at the specifics of each comp will be more accurate than what AirDNA can provide. My understanding of AirDNA is that it's more generalized and looking at comps based on entire zip codes and different pockets. However, not everything falls within a predefined category. 

Last one I did was $460k, 20% down plus closing costs. W/ closing costs & the down payment I was at about 100k. From there with my capital expenditures, I was in another 25k or so. House has super high vaulted ceilings with a million recessed lights. Many bulbs were burned out - opted to get every bulb replaced w/ LEDs. Needed a little work in a bathroom, some paint, a couple door adjustments, new filters in the HVAC returns. I put in all new smart thermostats (dual zoned HVAC system), new mesh wifi system, outdoor surveillance cameras and doorbell cam. Also had to install new blinds throughout, mount TVs, and a couple other misc. things like replace doorknobs. So, for all of that plus furniture/ decor, TVs, mattresses, coffee maker, cookware, etc., I'm in about 25k after close. 

I've had to subsidize cleaning fees in the past. Sometimes I've had to offer a certain cleaning fee to be competitive with the comps but the actual cleaning fee was more. Further, occasional deep cleanings are required. The "regular" flips generally only take care of linens, surface cleaning, and replenishing consumables. We opt for deep cleanings once every 3-6 months. 

I'm pretty sure that sites like Airdna will help you do this. 

I personally take a more manual approach. Start with estimated earnings based on comps in the area (cost & occupancy), then reduce the projections by about 10-15%. 

From there you should have your EBITDA/ gross. Now start to deduct your expenses:

- Mortgage (PITI)
- HOA
- Water, Trash, Gas/ Electric
- Cable TV/ Internet
- Supplies (toilet paper, coffee/ filters, paper towels, etc.)
- Maintenance/ repairs
- Landscaping
- Cleaning fees
- Management fees
- etc. 

Be sure to add some padding, because there are likely some expenses that you won't predict. 

From there, deduct your expenses from your gross revenue. That should give you a somewhat reasonable expectation of what you can expect. 

Also, don't forget capital expenditures such as painting the home, appliances, initial repairs, etc. Lastly, a big one that I grossly miscalculated on my last STR was cost to furnish/ decorate. Cost for furniture, TVs, beds, decor, etc., has increased substantially. Make sure you budget plenty for those items. I estimated about 10k to furnish/ decorate my place and I was well over 20k when complete.

I personally want to see at least 20% COC on STR, but preferably upwards of 30%.

For traditional rentals (1 year lease), looking for at least 10% cash on cash. More if I have to do a ton of repairs and have to carry the note for a fair amount of time during the reno

For STR I want to be at around 20-25% COC.

This is exactly my point. What does it matter if a minimum wage job has a significant pay increase? What impact will that have on the housing market? People working at McDonalds are not the ones out there buying houses & driving the inflated prices. 

As you said, most people making between 50-80k have seen stagnant wages with only moderate increases. A 3% raise isn't even keeping up with inflation. 

Let's not selectively pick the economical markers that best suite our perspective. Anyone arguing that people are better off now than before the pandemic are either delusional, lying, or just in denial. 

As of now the average American household has between 6-7k in credit card debt. Median household income (nationally) is 67k. That means that on average, every family has the equivalent of 10% worth of their gross household income in high interest credit card debt. 

Only 44% of Americans have enough funds to cover an unexpected emergency expense. 

The average American household only has $5,300 available though their checking and savings accounts (combine). 

Millennials average almost $40k in high interest student loan debt.

Home prices have been growing at about 20% over the last two years - and that's very moderate. Most of us are well aware of markets that have increased WAY more than that. 

Depending on the area, rents have spiked as much 15-20% over the last two years... and again that's conservative. Some areas have increased much more than that. 

Gas is up 60% since 2020. And please don't blame this on Ukraine, gas had been rising well before the war. 

Food costs are up about 14%, again that's pretty conservative. 

Average cost for used cars is up 40%.

This all points to the obvious... which is that it costs way more to live now than it did a couple of years ago. Aside from successful investors, the top "x" percent of wage earners, and the knowledgeable homeowners who leveraged their equity, it's almost universal that the remainder of society (the majority) is doing much worse now than before.