All Forum Posts by: Justin Melton

I know there is a ton of information here which I will scour to get lots of info, but my wife and I are purchasing a home to use as a short term rental/place for my mom and dad to stay a couple months out of the year.  

The property is 2 miles from where we live.  What books or advice would you have for someone that is all new to this?  

What would the idea of me purchasing the home from them for say 1/2 market value now (I’m going to inherit when they pass away) I’m an only child.  This would give me an investment property at 1/2 the price of market, give them cash to purchase a home (or a significant down payment) so we could all have the “best of both worlds”. Yes I’m buying something that I would inherit anyway-but if they sell it I’m not inheriting it and would just be inheriting a house in my hometown.  

Would there be any benefit to purchasing a different home down there (say for 750k) in a better neighborhood using an entity instead of their personal name for potential tax savings.  Say they sell their house for $600k, they owe 180 on it. Say they net 390k.  Maybe I kick in $100k to get a home in a great area when they pass away.  Just thinking of ways to keep a home there in a “desirable” area.

My parents are purchasing a home in Indiana before they sell their home in Florida.  The are looking $350-450k price range. 

They are wanting to pay cash for the home in Indiana, but won't have the money to do that until they sell their home in Florida (30-90 days later).

Can anyone offer any suggestions? I'm not sure they financially would qualify for 2 mortgages at once using DTI ect. They have exceptional credit.

Quote from @Steve W.:

Suggestion about what to do, It really is a question of “what do you want.”

You say they don’t want to pay for 2 places. That they want to pay cash for a home to live next to you.

Is it possible they value the quality of life by living next to you, and the peace of mind of not having a mortgage or having to deal with a long distance property, more than owning real estate? Not everyone optimizes their life for financial efficiency and long term wealth, especially once people reach a certain age in life and values change. 

So I think it is important to understand why they want or don’t want the things you mentioned, and then dig deeper. For example, Would they entertain owning two houses, the FL one supported itself and even paid for their new primary residence, if it brought them income and they never had to spend a second thinking about it? If yes, how would you make that work?

You bring up good points and these are good things to consider.  Thanks so much for your thoughts! 

Thanks for the feedback.  They would then have 2 house payments and a property in each state.  

If the Florida property could cash flow or at least pay the mortgage taxes and insurance, utilities ect then they would just have a payment for their house by me.  

Would you not sell the Florida house because you think the market is going to appreciate even further over time?  I think they are thinking cash out while prices are up!

My parents own a home near Sarasota Florida and are thinking of moving back to the Midwest closer to me.  They purchased the home in 2016 for 275k and it’s now worth around 575-600k.  They really don’t want to pay to maintain 2 places year round.  

They are deciding what do to.  They owe about $150k on the property and pay about $1500 for the mortgage.  If they did an annual rental of their Fla property, they could probably get 3-4k per month. If they did it seasonally Jan, Feb, March maybe closer to $6k per month.  

They are considering selling it and using that cash to pay for a place near me and not having a mortgage. I am an only child and will be inheriting whatever they purchase or their existing home if they don't sell it. Side note, their existing home's neighborhood does not have a HOA and the neighborhood is going downhill even though prices have appreciated. Any ideas, thoughts, suggestions would be appreciated.

I know Gatlinburg is a feeding frenzy since COVID.  Where is a location preferably in the south that I can buy a cabin with a view that will cash flow or at least break even?  Thinking NC, TN or North Ga. Anywhere else I should consider or look? 

Quote from @Jan Dutton:

Harshal, 

I'm doing the same evaluation now.   Which one have you picked? 

I looked in a market in Maine using Rabbu.   The "revenue by amenities" analysis suggests that adding outdoor furniture increases the average property's revenues from $64k/yr to $264k/yr.  I.e., adding outdoor furniture adds $200,000 per year of revenue.  This statistic does not pass my reality check.   In the market overview tool, I can find no property that comes close to $264k per year.   If I believed this number, I'd buy several properties, buy a very nice outdoor furniture set up for each one, and reap the benefits.   Nope, I don't believe it. 

I suspect the statistical sample is insufficient to obtain a valid analysis. The market has 76 STR homes in it, and they estimate the revenue impact of 18 amenities. That does not make a statistically significant estimate. I'd love to have the data for each property.

I sent an inquiry to their support email but received a non-explanation reply. 

Rabbu seems ridiculously high on projected annual rents.  Sometimes more than double the accurate number.  They estimated $120k for beach condo but actual per the mls listing was $40k.  A bit off to say the least! 

Quote from @Zach Lemaster:

@Robert Johnson Thanks for the interest!  RTR has both STRs & MTRs (mid-term rentals) that you can either acquire and have managed for you or learn how to source and manage yourself in some of the best markets in the US!  Of course, managing yourself requires quite a bit more time, but much of it can be automated.  Some of the best performing assets are a hybrid where they operate as STRs during "peak season" or "travel season" and then operate as MTRs in times when there is less vacation traffic.  This is true in many markets that are not solely destination locations that would perform well as STRs year around.  That is one creative way we've been able to work with our investors to maximize income in the Short term rental space.  Hope that helps.

RTR has an outstanding reputation with more 5 star reviews than any other company on BP!  

Here are some other forum links where investors are sharing their experiences that may be beneficial.

https://www.biggerpockets.com/users/ZacharyCole/references

https://www.biggerpockets.com/forums/92/topics/765347-rent-to-retirement-review

https://www.biggerpockets.com/forums/92/topics/1116050-a-huge-win-with-cori-from-rent-to-retirement

https://www.biggerpockets.com/forums/850/topics/895660-my-first-investment-property-an-out-of-state-deal

https://www.biggerpockets.com/forums/88/topics/1047543-big-profits-from-new-construction-sfr-build-in-cape-coral-fl

https://www.biggerpockets.com/forums/92/topics/983659-first-investment-property-with-rent-to-retirement?highlight_post=5677176&page=1#p5677176

https://www.biggerpockets.com/forums/12/topics/1122318-quality-turnkey-companies?highlight_post=6413855&page=1

https://www.biggerpockets.com/co/RentToRetirement

https://www.biggerpockets.com/forums/92/topics/929410-rent-to-retirement-updates?highlight_post=5508807&page=1#p5508807

https://www.biggerpockets.com/forums/92/topics/893621-rent-to-retirement-review?highlight_post=5222888&page=1#p5222888

https://www.biggerpockets.com/forums/311/topics/915728-experience-with-rent-to-retirement-turnkey?page=1#p5345200

https://www.biggerpockets.com/forums/92/topics/808479-rent-to-retirement-experiences

Forgive me if this seems like I’m being a jerk, but having to agree to a non disparaging agreement on your website prevents negative reviews even if someone wanted to give one which I think it just not cool.  Once again, this may be the greatest company ever but I’m not a fan of that if you had a genuine issue and could not voice it.