All Forum Posts by: Jeremy Horton

19 days - that's almost a whole month of vacancy waiting on 1 tenant. My places usually rent out in 2-3 weeks max. 

Good thing is this potential tenant is letting you know just what they will be like prior to renting the place! 

Another thing is we charge an application fee which gives us the right to do criminal, credit etc background checks. This is not a do at your own leisure thing - we get permission, a fee and run the reports ourselves. You can see the problems you run into when you let the tenants run part of your business for you

 I think you can borrow up to 50K or 50%, whichever is less - this is with a traditional and I'd bet a solo 401k has the same rules. This is a loan. Don't withdraw you'll end up with some nice penalties. 

Unless you're buying a super cheap place you'll need to come up with a good bit more. Enter hard money lender or private money. 

The loan would work as a good downpayment for a place you do with conventional financing. Don't be scared to do convention financing - I have gotten several places (with a higher offer) using a conventional loan as opposed to cash buyers who offered less). 

How many offers have you made and lost due to not using cash? My bet is 0

Couple of things - (1) Propstream is an awesome idea as well as investor FB groups, craigslist, FB marketplace etc. You get the picture. (2) 20% down does help to cashflow, but it kills your ROI and velocity of money (this assumes you have some other expenses in life and are not living in your parents basement for free). You could buy a couple properties a year using this method. You need to find a way to make your money go farther, faster. You'll find this out after your first few properties. (3) Believe it or not, Realtor.com/Zillow/Trulia are not designed for investors to find deals - they are designed for the owner occupant - that means that 98% of properties on there (in a decent location) will not work. SFH may work with a big rehab. MFHs will likely be gone within a few days (in the current market) with a cash offer.

That being said if you're looking for SFH - try foreclosures. HUDhomestore etc

You'll likely need to complete, at best, a medium sized rehab on a SFH, or look off market to find good deals.

First deal - sure do it off the MLS to get a feel for it and understand what you're doing. Second, MLS is ok too. After that it's time to really invest

Would an extra bathroom increase your revenues 20K a year?

I doubt it seriously 

You could add a bathroom for well under 200k as well

This one is a no brainer to me

Depends how you want to calculate cash flow - lots of people do it differently. Generally cash flow = monthly income - PITI. You'll find this is how most people do it, because it is a relatively standard and straightforward way.

Your profit is a different story. Take your income minus all expenses (this includes vacancy, capex, repairs/maintenence etc) to get your expected profit per month. 

Now why not subtract capex in addition to PITI to determine cash flow? Well you might use 5% and I might use 10% so we'd end up with different numbers for the exact same offer/property. The "cash flow" is not changing, just the amount of expected profit (after budgeting everything else) is

Brandon Turner goes over concept pretty well - he separates them as pure cash flow (profit) vs cash flow (amount left after PITI)

Another reason I do it this way is that there are many gurus saying "ahhh this turnkey SFH I bought cashflows $800 per month!!1!1!! Sign up for my secret method!!11!" - Couple of things (1) they are attempting to sell you a dream and lots are really marketers acting as investors and (2) they are not budgeting for any type of capex/repairs/maintenance

1) concrete sounds like the best route to me - this is what you generally see in resorts etc 

2) what does the indoor pool company recommend? Surely they have experience building indoor pools and could easily answer this question. I'd actually talk to a few pool places/builders regarding your question

 This sounds like a very thorough way to do it - I may steal your idea. A good bit of work, but will work great once you have the property size/type/exact location pinned down. Gives you a lot more confidence and assuredness when it comes to the revenue assumptions for STRs 

 I like this method as well - the thing I run into is this:

Say we have a beach condo 2/2 across the street from the beach and we have another beach condo 2/2 on the beach with balcony views. Seems to me you'd see a 10-20% drop in revenue moving right across the street. AirDNA from what I understand will essentially take the average of these condos to come up with their numbers. Now the one on the beach costs 100k more. So which is better? Which has the better ROI? That's the hard part for me - and I may be overanalyzing this, but I'm still used to buying 75k-150k houses, not 600-700k condos. One hurts a little if it turns out bad, the other hurts a lot and would potentially set me back a good deal.

That is my sticking point with the STR market right now. That and a lot of them are still asking 2021 prices (although I've seen a decline lately) at current interest rates. The other thing that makes it hard is you have these big companies that own say 30-50% of the units in the complex - this can be both a blessing and a curse. A lot of these places cashflow more like LTRs at this point but you've got the STR risk due to seasonality, computer algorithms ranking your profile, self management, cost etc.

Don't get me wrong, I still LOVE the idea of STRs, you get an cool place that will likely appreciate well that you can go on vacation to. Awesome perks. Although I think there are a lot more intricacies with them and you really need to understand exactly what you're signing up for, the best location, the workload, special assessments etc. You'll also likely buy a place that was previously a vacation rental - this means you'll need the 20% down - there's likely not going to be a BRRRR/place you can force much equity into at a resort style location. So you'll be buying a turnkey place at market price.

I bought my last HUD home for $10 according to the deed recording.

Very cool concept - and very unique. For most flips I do there isn't enough profit to justify splitting the profits. Usually I'll settle for 15k or 10% of the ARV in my market.

Welcome - you'll find that there is a decent amount of people that invest in Louisiana here (more so Baton Rouge and New Orleans) and there are a few of us that invest in the Lafayette area. Not a huge lafayette investor presence on the forum but there's some really helpful people that do. There's also a club that meets every so often in Lafayette (I have not made it yet due to working offshore)

What are you interested in doing in Lafayette? MFH? SFH? Rehabs?