All Forum Posts by: Konstantin Ginzburg

@Tyler Ingram

The three concerns I would have are continually increasing insurance rates, the HOA fees and guidelines, and market saturation of STRs in many regions. For insurance, I am over over in the New Orleans market and I know the issues we are experiencing with insurance in this market are echoed in the Florida market as well. There have been substantial increases in premiums over the last 2-3 years due to the storms that have been impacted both states. Hopefully insurance prices have stabilized but there is going to be a constant concern that they will continue to increase as more underwriters pull out of the region. HOA is a problem on two fronts. They can also choose to increase their fees and at the same time they can choose to change their regulations, including whether or not they allow STRs within the condo unit. The public perception of airBNBs has been shifting so you never know when an HOA might turn on those. Market saturation is another concern in many popular markets. When running your numbers, I would try to look into revenue from 2018-2019. If you only focus on revenue from 2022, then you might be over estimating your revenue. Following the reopening after the pandemic, there has been a huge surge in travel that led to higher than normal revenue for STRs. In the same since, travel has returned to more average levels while STRs have surged; creating a higher supply for a product that is in less demand. Because of this revenue from the last 1-2 years should be taken with a grain of salt.

@Daniella Rodriguez

Congratulations on this accomplishment! That is an extremely impressive feat that you were able to do and you should be extremely proud of yourself. 

As far as what you should, it will be difficult to answer this question for you since the answer really depends on what your personal goals are as well as the time you are willing to give to real estate. Before you make any acquisitions, I would heavily encourage you to learn as much as you can about real estate. You have come to a great source for education on this forum and you will be able to learn a lot. BiggerPockets also has a great podcast that is worth listening too that can provide a lot of ideas and insight. You are in a terrific position with that amount of capital to unleash so there is no shortage of routes you can go. 

If you would like some ideas: I am a very large fan of house hacking. This is purchasing a multifamily property (2-4 unit property acquisition works the same as a single family home) and residing in one unit while renting out the remaining units. The rent from these other units should be enough to cover your mortgage payments. This provides a few advantages. It eliminates your primary living expense (mortgage) and allows you to practice and understand what is required of tenant management. It also does so in an easier manner since you are residing on site and have easy access to the property as a result. This route would also give you access to primary residence financing which is often more favorable than investment property financing. Another route you can go is simply to acquire rental property. Select a type of property you like (my preference is multifamily) and begin using mortgages to acquire these properties. If you run your numbers well, each property should give you a monthly cash flow which you can either use to supplement your own income or use towards the acquisition of additional properties and scale in this manner. Another option you can go is STR (airBNB). Since you are in a market that is heavy in tourism, you can take advantage of this by creating a vacation beach rental. Keep in mind, this provides the highest potential returns but also has the highest time requirement. There is also the option of large multifamily properties (more than 4 units). This delves into commercial lending practices but is another option to keep in mind.

If you have any other questions, ask them on this forum and you will be sure to get plenty of responses. You are also welcome to connect. Best of luck on your real estate ventures!

@Yiwei Cheng

Investing in an STR provides the potential for a higher monthly revenue on your property compared with a LTR or MTR strategy. The reason for this is similar to when consumers buy goods in a basic retailer such as Walmart vs a bulk retailer such as Costco. A bulk retailer offers higher priced goods but due to the bulk nature of the goods, the price per unit is less for the consumer. In the same way, a renter is leasing your property in "bulk" when they sign a long term lease because they are agreeing to pay for extended use of your property. You, as the landlord, get long term set rent. By using an STR model, you are foregoing the bulk discount. Your per night rate as an STR is higher than a per night average on a month long lease. As long as an STR owner is able to keep their occupancy high, they would be getting higher revenue per month compared with LTR (it is often MUCH higher revenue). The trade off is that STR is a far more active strategy and you are foregoing the guarantee of known rent coming in for months.

@Donna Eskew

I would do online transfers only. There are many ways to set this up. Zillow property manager allows for online transfers that tells you when payments were initiated. There are also easy transfer systems such as zelle or paypal. Do not rely on having them mail you checks or else the excuse of "the check is in the mail" might be used very often if they are knowingly late on payments. 

Using a local property manager would also be a good strategy so that you not only have someone willing to collect payments on your behalf but would also be a boots on the ground partner that can keep an eye on the property for you and perform the required maintenance and repairs before they become larger future issues. 

@Reilly Addison Curran

Different mentors have different motivations and those motivations can all be very diverse. Some people have an end game in mind such as finding a potential partner for in other deals or the creation of a sales funnel where their mentees can funnel deals to them. Other mentors simply get joy out helping others and want to have a positive impact on the lives of others. Still other mentors choose to help because they see aspects of themselves in people they mentor. I am personally in the category where I simply like helping people when I am in a position to do so. 

As for books to read aside from the ones you mentioned; some of the ones I enjoyed are: Multifamily Millionaire by Brandon Turner, Rental Property Investing by Brandon Turner, The Millionaire Real Estate Investor by Keller, and the additional books from the Rich Dad, Poor Dad series from Robert Kiyosaki such as Guide to Investing and Cash Flow Quadrant. 

Best of luck in your real estate venture!

@Zach Leblanc

Hello Zach. I'm an investor that was in the Lafayette area for over a decade. I haven't heard of any real estate meetups within Lafayette in the time I was there. The nearest one I am familiar with is the Red Stick Real Estate Investor Group that is based out of Baton Rouge. I am currently in New Orleans and there are several meetup groups in this area if you are ever in the area. I still own properties in Lafayette and am in town from time to time. I would be happy to meetup for a coffee if you ever have any questions and you are welcome to stop by the New Orleans Real Estate Investors Association if you are passing by. We typically meet once a week on Thursday night. 

@Arn Cenedella

I think you do bring up some good points; however I believe this view is a bit overly simplified. I personally view any investment as a combination of opportunity cost and most efficient use of available capital. There are trade offs with any investment. Some markets offer higher appreciation over time but at the cost of minimal or no initial cash flow while other markets offer lower long term appreciation but higher cash flow. It is important to remember that in the latter market; the property appreciation is not 0; those properties will still offer long term appreciation returns simply at a slower rate than other markets. In my opinion, the trade off to foregoing cash flow though is that it limits your options and creates more risk exposure. If your cash flow is minimal initially; you may have enough built up reserves for smaller repairs such as a broken window but larger repairs such as roof repairs or HVAC might wind up coming out of pocket if there has not been enough cash accrued to pay for this cost. 

Minimal cash flow also prevents other opportunities such as using this revenue source to fund additional real estate purchases which would allow you to scale your portfolio or put into other assets instead. From a non-financial standpoint; many people's ideal goal with real estate is to create a revenue source that would either supplement their lifestyle or provide the freedom to leave their W-2 jobs. This requires a focus on cash flow so that a revenue stream can be created that replaces their salary. While long-term wealth is a great goal; wealth for the sake of wealth that is locked up in properties does not hold the same appeal as a source of revenue that allows one to enjoy life in whatever means they want to; whether it be travel or more time with family. 

I see nothing wrong with your mindset but I believe it comes down to what a person's goals actually are. A financial strategy can not be a "one size fits all" that is suited for everyone but instead different financial strategies should be employed by different people to fit what their actual goals are. 

While it may be harder now to find cash flowing properties, it can certainly be accomplished; granted not in every market. This is another trade off example. Finding deals that are able to cash flow with a 20% deposit is still possible to do but will require far more time and effort sifting through many deals. I have personally been able to find such deals but doing so required sorting through dozens, if not 100s of deals to find those that met my criteria. 

@Vishal Amin

What does your lease state in this case? You should also look into what the local tenant laws state are the eviction requirements for where that property is located. Tenant laws very greatly from city to city but fairly common eviction proceedings begin with providing a written notice to vacate. After a certain amount of time (this amount varies greatly but anywhere from 5 day to 30 days is common); you can file a formal eviction with the city court. If you do not have anyone in the area that is able to be your "boots on the ground"; than you will likely either have to contact a lawyer to do this on your behalf or fly out to personally oversee this. 

There is no point in involving the police so they are unlikely to do anything, given that this is a civil matter, not a criminal one. In the long term, you may want to consider a property manager if you are a long distance investor; especially how far you are from the property. Having issues come up is not uncommon with real estate and by having a nearby manager, they will be able to handle many of these issues on your behalf as well as actively maintain the repair issues on the property before they escalate and wind up becoming more expensive problems at a later date. 

@Caroline Knight

House hacking is an amazing way to get into the real estate game. It opens up so many options for you such as primary residence financing and an easier intro into property management. One piece of advice I would offer that will hopefully help you is to heavily focus on location when you are looking for property in Illinois to house-hack. Targeting specific locations will allow you to enter in different markets that will increase the chances of you being able to acquire tenants easily. For example; targeting properties near major universities will allow you to tap into student housing tenants, targeting properties near hospitals will allow you to tap into the travel medical professional market, targeting properties near major attractions will allow you to tap into tourism and short term rental options. If that last example is a goal; be sure to research the regulations for STRs in the market you want to enter as there has been a lot of activity around the country recently regarding regulations on STRs. Welcome to BiggerPockets and good luck on your investing journey!

@Nikki Dupoux St Jean

I am sorry that you are feeling discouraged at the moment. There are a lot of obstacles that need to be overcome with real estate and it presents many challenges. If you are able to over come the challenges, then the rewards on the other side are very beneficial but it requires consistency and a lot of time. As hard as it may be, don't let yourself become discouraged. If your current finances have you approved for a loan at 9% with a large deposit; then there is a chance that you may need to work on other aspects of your financial status at the moment. I don't mean to be presumptuous; but I would guess that your credit score is not ideal at the moment if those are the financing terms you are being presented. This could be an indicator that you may need to actively work to improve that credit score. While this is a very doable goal, it will require time to do so; possibly as much as several years. Improving your credit score will open the door for you to more favorable financing options at lower interest rates. This additional time would also allow you to further build up how much you have to invest with. 

There are other options you can look into in the mean time if you still want to acquire a property sooner rather than later. Two options you can look into are seller financing or subject-to deals. This would allow you to acquire financing through the seller as opposed to a lending institution. A seller would be able to offer any lending terms they deem acceptable rather than being tied to conventional lending standards. Seller financing is a case where the seller becomes the bank and mortgage payments are made to them as opposed to a bank. Subject-to allows you take over the existing lease from the seller. A financial consultant and lawyer would be advisable in either of these cases.

The most important thing to remember though, is to not get discouraged. Real estate is a not a "get rich quick" industry. It is very rare for anyone to enter into this space and be in position for lifelong financial independence within 1 or 2. It often takes years if not decades or both practice and learning before the returns really start paying off. The rewards are worth it but require diligence and consistency. Keep on the track you are on right now. You can absolutely do this! Best of luck to you on this venture!!!