All Forum Posts by: Justin Ellis

@Steven Denio that's a great idea (Selling part of the property so you fit the 250 yard rule), glad you were able to find a solution!

@Char Silk I would think as long as the additional expense for the insurance was factored in and you're still able to cash flow decently then why not?

This is not speaking from experience, I'm just into the numbers. If I'm not mistaken they base that on "potential to flood in the next 100 years". If i have appropriate insurance to cover me IN FULL incase of loss, the potential headache seems worth it to me.

I guess if you're double thinking it, throw out an extreme low ball, a number that would make the deal worth it to YOU and whatever happens happens. Nothing to lose if you're leaving towards "no", RIGHT?!

It's funny, I read this thread and then when checking my eMail, got this....

" Dear Vrbo Partner,

The Arizona State Legislature has formed a Joint Ad Hoc Committee on the Impact of Short-Term Rentals on Arizona Communities. The Committee’s charges are to:

1. Compile data, reports and testimony on the prevalence of short-term rentals in Arizona and individual communities;

2. Consider the community impacts of short-term rentals including on municipal residency, workforce housing stock and residential rental prices;

3. Evaluate the implications of tax revisions on the short-term rental market; and

4. Discuss opportunities to address emerging challenges presented by short-term rentals."

For those that don't know Arizona is one of the few states that have legislation in place prohibiting cities from banning and regulating STR's, however, based on the above we can see that this is under attack and will most likely be overturned at some point.

As I drive neighborhoods I often see "movements signs" in people's yards, "Neighborhoods are for neighbors, not vacation rentals". Obviously there's a grass roots component here (along with the hotel lobbyist's obviously).

I say this, in this tread specifically, not to play chicken little but to make potential short term rental investors in the Tucson, Phoenix, Scottsdale, Flagstaff and other communities aware of the fact that Arizona will not always be the "Airbnb Wild West" and to be prepared for the eventuality of STR regulations being imposed here, as is happening all over the country.

Now, most of the regulations that I've seen that have been imposed have a grandfather component so getting in ahead of the "smack down" could stand to secure the value of your rental, but this has not always been the case, some places simply shut it down (Which I don't think AZ would do, if anything they'll just impose a permitting requirement as it shows good faith to the lobbyist's AND increases tax income).

Also, government regulation isn't ALL bad, as it slows the influx of competition in an area, helping to keep prices from bottoming out.

I say all that to say this. If buying specifically for the purpose of STR....

- Make sure to buy in a place that you could easily convert to LTR and still cash flow

- Don't count on the high COC numbers forever (this game is getting more competitive DAILY. Just wait until Airbnb gets in full swing of flooding the platform with THEIR OWN properties. What? You though they were building this platform for YOU, HAHHAHAH! Fool me once Amazon)

Don't be deterred by this, there's good money to be made. Just be AWARE and cautious when making moves in the STR space!

@Annie Pasbrig that's interesting! Is that written into the law there or is it a work around you've seen or executed?

I research STR regulation a LOT and have never heard of this angle before. This obviously only works with specific property types (and maybe only in specific markets) but it's intriguing, please expand on this as you may have solved the OP's problem in a big way!

@Lucas LeBlanc unlike @Ned Carey I'm a big fan of STR however I agree with him that I don't like this situation.

If I understand correctly, if the current tenant bails and you needed to rent it to a standard tenant you would lose money monthly? If so, that's a bad contingency plan.

On a side note, this leads me to believe they're paying more than market rent in exchange for the sublease privilege? Moving on...

STR may be legal where you're at however it's a real touchy subject within communities now, especially those with an HOA. Legal or not, the HOA can rule it out and it's done. They don't usually grandfather like municipalities do, it's "effective this date in the near future, all activity must cease". And I assume your tenant has a clause in the lease that lets them out if regulatory changes prohibit them from using the property as intended? (I know I would)!

So there you sit with a big *** property that can't be used for STR and is a loser when rented to a standard tenant. Way to risky in my opinion....

"And for that reason, I'm out" :)

@Pedro Tavares short of getting paperwork from the homeowner, are there any specifics that a novice such as myself can look for to tell the difference between mobile and modular? It seem built well, nothing like the "mobile homes" I've seen in the parks.

@Pedro Tavares it's (as described by the homeowner) a manufactured home.

I've recently started wholesaling in Phoenix, Tucson and Scottsdale Arizona. I've been focused on some particular areas for a few investors, I feel confident talking to people in these areas as I've been given parameters within which the investors will buy. I've been 100% driving for dollars but one day decided to post a few Craigslist ads just to see if it would get any calls. About a week later I get a call from a lady who owns a Modular or Mobile Home and is tired of being a landlord. Enter whole new set of parameters...

- First of all it's a mobile home, not the SFR I've been looking at. Did some research on BP seems there's a market

- This is halfway between 2 major cities (Tucson & Phoenix) off the interstate in Arizona City near Casa Grande. This is the middle of nowhere, however there's now housing communities popping up in the area?! (That's gotta mean SOMETHING)

- I looked at the surrounding property values and compared to this one and it's the most expensive one in the area as the homeowner added about 800-900 sq feet and a garage.

- I went to see the property and it needs quite a bit of work, I would say $20-$30k to get it rent ready. (But I'm not even sure how to find out if this would rent out easily)? 

- That being said, is there any flip opportunities? (Seems like most of the mobile home talk on BP is for holding)

I'm just confused as to where to start on this as there are so many new variables I wasn't prepared for (scratches head).

I would like to find someone who buys in this area and work with them on it as I have good rapport with the owner and I think if I can make an offer with a serious buyer she would go forward, even if it's below what she's hoping to get.

I briefly mentioned owner financing but she still has a mortgage to which I mentioned the potential of a wrap (Which I know next to nothing about and made that clear to her) and she didn't seem to mind the idea. She just want's to offload the thing and I don't really know how to help her make that happen without the right buyer.

Sincerely,

Confused

@Amber Gonion @Austin Works

Good thought Amber, however don't forget to factor in the furnishing costs. 3/2 will cost you $4k-$7k depending how nice you do it and furniture depreciates faster than cars so the resale is pointless and time consuming. Better to leave it all and sell it furnished if you were going to do that.

I'm passionate about STR and am constantly looking for reasons to push people to do it, but I think it's not a good vehicle here to bridge a gap "and for that reason, I'm out"

Sell it!

@Dana McMahan

Yep! Lesson learned for all of us who've read this. That's what makes BP so great! I get to NOT make the mistakes you've made and vice versa, hahhaha!

Glad it all worked out though, you'll find an even better deal now and be glad you missed that one.