All Forum Posts by: Joe Splitrock

If it is close to campus, yard sign is your best advertising. I know it sounds old school, but your target customer is walking or driving by the property all the time. You can add arrow pointer signs on major roads. I would also advertise on Apartments and Zillow. These are not student specific, but they will still see it. Just put in the listing description "3 bedroom house by Temple University" to get their attention.

@Nicolas Sanhueza

@Chris Mullinax I have never used these services, but my concern would be access to money when there is damage or unpaid rents. @Nathan Gesner what is your experience with placing claims? Do they want receipts and how about unpaid rent claims?

I also see this as an added monthly expense for tenants. I like a deposit because it requires someone to come up with a good chunk of money. I see this as a test. If you can't come up with two months rent, that is a bad sign. 

Obviously it depends on the type of properties you manage, target tenant and location. This could be a good option in some circumstances. 

@Tim Sharkey look at all sides of the equation. Short term rental will yield higher income but also means higher expenses. You are paying higher insurance, utilities, supplies, cleaning and furnishings. It will still yield higher net income, but someone needs to manage the property. STR are very time intensive and require fast response.

Location is another factor, because it determines what type of guest you will get. There are many decisions to be made when hosting, so it is really an entire different business to learn. It took us several months to get in the groove on our policies and we worked hard for five star reviews. Bad reviews tank your business, so you need to not only do a great job, but find ways to get customers to leave good reviews. High reviews yield higher income and high quality guests. Bad reviews attract worse guests at a lower rates with more vacancy.

Having done both long term and short term rental, I much prefer the passive aspect of long term rental. However, if I had a cabin in the smokies or place on the ocean, the rent returns may make STR worth it. It is just harder if you are not a highly desirable vacation location.

@Hiep Pham if the value went up 15%, you may just be better off using their financing, versus cancelling the contract. Without seeing their contract, it is hard to say if they had rights to cancel. Many builders have owner occupy requirements to keep developments form being overrun by investors. 

I would caution you at taking legal advice from anyone but an attorney who has read your contract.

Decide what your end goal is here. Are you trying to close the deal? Suing them for more than your original investment is unlikely to be worth your time. Your attorney will tell you what your options are.

@Benjamin Dougherty liability is the biggest risk. Standard landlord policies do not cover short term rental, so odds are good the landlord would not be covered in a lawsuit. Even if the least says their tenant has liability, that will not stop someone from suing the property owner. In fact most lawsuits target the easiest market with the deepest pockets. That is why you want good short term rental insurance with high liability limits. It will cost extra money. The insurance offered by AirBNB is junk, broken promises and false sense of security. 

Repairs could create extra stress, because in a short term rental, your repair turn around time needs to be faster. Guests are brutal on reviews and if things are not working right, it will tank the hosts rating. That could put pressure on the landlord for fast service time that could cost extra, so work that out ahead of time.

Most guests in short term rental are great, but due to volume, you will get some bad ones. The actual condition of the property may be better with a short term rental. The property will be cleaned 1-2 times per week. If things are not kept clean and operating, the host will get bad reviews. 

Quote from @Owen Thornton:

Originally posted by @Chris Levarek:

For sure

I agree, I think that it depends on the risk you are willing to take. I personally would be up for this sort of leverage, as I analyze my deals considering the use of raising debt, from investors, or simply using lines of credit, bank loans, etc. 

I think its a very interesting strategy, and a way you could build up rather quick.

Do you know if the nicks in your credit score would come out from hard pulls from the banks, taking out loans? Or can you request soft ones?

Have you ever thought about using business loans for this? 

It really depends on your personal situation. Business loans are going to need a defined purpose. You may be able to get a business line of credit. If you have no existing business or track record, it could be difficult to get a business loan or you will need to personally guarantee. Racking up a bunch of credit card cash advances can run your credit score down. At the end of the day, anyone lending you money wants to see one of two things:

1. Personal financial responsibility, which is credit score and payment history. They also may be concerned if you recently took on lots of debt. Credit pulls will affect score too.
2. Business track record. How long have you successfully run a business or rentals? They will look at two years tax returns. If you are new to the business, you are seen as higher risk.

When you are talking about financing down payments, it generally means you will have low monthly cash flow after debt service. Combine that with credit card interest and it is high risk. The main reason rental businesses fail is overleverage.

Quote from @Ricardo Ramirez:

@Jared Garrison because if I found it first and had in under contract? Obviously if he found it first it literally makes zero sense for the seller to go with the wholesaler.

Any investor could just contact the listing agent and let them know you are trying to wholesale. The deal would fall out of contract and the investor could buy it directly. Not saying you can't wholesale off the MLS, but people are going to search the address and see what you are doing. It is a difficult strategy, so my advice is find off market to wholesale.

@Ricardo Ramirez the question itself implies deceptive intent. You don't "get around" proof of funds, you either have proof of funds or do not. The key here is transparency of intent. If you tell them you are a cash buyer, they will believe you have cash, because you literally told them that! If you don't have cash, then don't claim you do. 

As others suggested you have two options:

1. Find a hard money lender who will extend you a line of credit and provide a proof of funds letter.

2. Have your end buyer provide proof of funds.

The key here is don't misrepresent what you are doing. If you have no way to close the deal yourself, don't tell people you do. This is why wholesalers have a bad reputation. They misrepresent intent and sign contracts, without means to follow through. Don't be that guy.

@Nathan Gesner the more someone resists inspection, it just makes me feel more urgency at getting into the property. We make it clear to people, you have the right to be present during repairs or inspections, but if you are not available, it will happen regardless. COVID was a tough one, because of legalities around forcing yourself into a property. It also depends on state laws. I like to tag along when there are repairs and use that as a way to do inspections. When things are broken, the tenant is more accommodating. 

@Mike Terranova given the highly inflationary environment, people are seeing groceries and other things increase 6-18%. You are proposing a 1.8% rent increase which is far below historic average inflation of 3%. I wouldn't even spend one more second worrying about how this will be received, but I would question if you should be increasing it more. My landlord insurance is going up 25% and most cities will increase taxes to match escalating property values. Make sure $25 is enough.

As far as how to send it, I would send via email and regular mail. I would follow it up with a text. Just notify them, don't ask if it is ok or approved. They have the option to give notice and move out. 

Just to be very clear NOBODY will move out over a $25 rent increase. The cost and time involved in moving would be more expensive than that. If they do move, they were planning to move anyways. Generally speaking people do not move when rent increases. They move for a nicer property, better location or because they are buying a home. Keeping rent low will not stop people from moving, unless you jack it up above fair market.