All Forum Posts by: Jeff Ronningen

@Kumar Gaurav. In all likelihood the interest is slightly higher so that the present value of the payments covers the closing costs. The fact is refinancing is not free. It’s similar to buying a new car with 0% interest rate over 4 or 5 years.

Cody, I said your student loans MAY be tax deductible.  Depending on your tax bracket that may give you back 25 cents or so for each dollar of interest you pay.  Since the multifamily situation near you is not ideal, and you're there for 3 years, pay off the loans now.  Keep making payments, but make them to yourself and save up.  Start educating yourself on the Atlanta neighborhoods you're going to target when you move there.  Start making contacts in Atlanta - mortgage brokers, realtors, property managers, insurance agent, general contractors, lawyer, owners - all who focus on multifamily properties.  Start analyzing properties so you get good at it.  Be prepared, hit the ground running once you get there. 

@Cody Smith. How long will you be stationed there? Are there multi family properties in the area? How many people in your household? If you were transferred would you want to continue to own a property located in the area you're in now? My advice is subject to the answers to these questions. First pay off the car and resolve to never have a car payment again. I believe the student loan at least has the potential to be tax deductible. Buy a multi family (2 to 4 units, preferably 4 for cash flow) using a VA or FHA to keep out of pocket low. Keep some cash reserves if possible, or if need be build them up. Next attack the student loan and pay it off. Then build more reserves and save up for your next property.

@erin spradlin  I'm all for taking some risk and I've considered taking a swing at AirBnB.  My point is, go in with your eyes wide open.  It's a different business model with different risks.

My point about leverage, risk, and reserves applies to both short term rentals and the long term game. The difference is, with the long term game there's much more history and experience to guide decisions about how much leverage, risk, and reserves are appropriate for investors. With AirBnB the business model is newer and less mature. There are more lessons to be learned with that business model during the next crisis or downturn, and future investors will learn from those who underestimated the tolerance levels for leverage and risk, and the need for reserves. How much is enough? How much is too much? I can give you good answers for the long game, not so much for STR. A friend who is a bookie and gambler once told me lessons aren't cheap. I try to keep my lessons on the less expensive side.

@Erin Spradlin. I disagree with point #1. You say "classically" returns for AirBnB have been 2-3x. Although STR is not a new idea, it's gone to new levels with AirBnB. This is a recent phenomenon that is not tested over time, recessions, wars, interest rate and employment fluctuations, locusts, floods, you get the idea. Also the 2-3 year pocket assumption is flawed. Classically, to borrow your term, leverage involves a risk/return trade off and leverage has been the downfall of many a real estate investor. If an AirBnB invested has been conservative with leverage and if they've banked the high returns in a liquid rainy day fund they'll ride this out and survive, but there are those that haven't and won't.

@Tom Vanderlinden. Deals happen that aren’t publicly “up for sale”. Figure out how to get in on some of those opportunities. Network with the right real estate brokers, mortgage brokers, property managers, contractors, owners, suppliers, etc. Persistence and determination are your friends.

@Ashley Petersen. You said at least $5K revenue per month, not $5K positive cash flow per month which I suspect may be your intention. Your profile says you and your husband plan to move to Florida soon. Find the area of Florida where you want to be, buy a 4 unit property with a conventional owner occupied loan. After you’ve met the minimum requirement for occupying it, buy another one the same way. If you do this twice within 2 years you can easily get to $5K/month revenue.

@John D. Paraphrasing...”Someone’s individual rights being trampled for the greater good.” That’s a slippery slope and similar to the justification used by some of the worst tyrants in the last century. Who gets to define the greater good? Does eroding private property rights serve the greater good? If landlords can’t evict why aren’t they getting relief funds? Why are individuals being given relief funds and being encouraged to not pay rent by eviction moratoriums?

@Jonah Caliri. Sounds like you haven't done enough due diligence around financing options. If you're going to house hack, meaning this will be your primary residence, you should have finance options for less than 20% down unless there's other relevant information you haven't provided. Find a good mortgage broker who works with 10-20 lenders and who specializes in REI. They'll have their finger on the pulse of what lenders are willing to do and what programs may be available.